Medallion Financial Q4 Earnings Call Highlights

Key Points

• Medallion delivered a record 2025 with total loans of $2.567 billion, full-year originations of $1.5 billion, net interest income of $216.9 million (Q4 NII $56.4 million) and net income attributable to shareholders of $43.0 million, with net interest margin around 8.06%.
• Consumer lending remains the core business—recreation made up 63% of loans at $1.6 billion (Q4 originations $97.2 million) and home improvement was $810.2 million—but credit actions rose as Q4 provisions jumped to $27.7 million and recreation net charge-offs were $17.9 million.
• The company’s strategic partnership program hit a record $258.3 million in Q4 originations (loans on book $15.1 million), equity investment gains were $8.8 million in the quarter ($24.6 million FY), and management is targeting mid‑teens growth in 2026 while expanding recreation and home improvement.

Medallion Financial NASDAQ: MFIN executives outlined what they called a record year in 2025, pointing to growth in net interest income, net income, originations, and total loans, while also discussing credit trends, expenses, and priorities for 2026.

2025 results and portfolio growth

President and CEO Andrew Murstein said 2025 produced “solid performance across our core financial metrics and operating segments,” with loan demand remaining healthy and credit performance described as solid. Total loans reached $2.567 billion at December 31, 2025, and total originations were $421 million in the fourth quarter and $1.5 billion for the full year.

Executive Vice President and CFO Anthony Cutrone reported fourth-quarter net interest income of $56.4 million, up 8% from the year-ago quarter, and full-year net interest income of $216.9 million, up 7% from 2024. Net interest margin was 8.04% in the quarter (up 20 basis points year over year) and 8.06% for the year, essentially flat versus 2024.

Cutrone also provided funding and yield details, including a fourth-quarter total interest yield of 11.70% and an average cost of borrowings of 4.24%. At year-end, the average interest rate on deposits at Medallion Bank was 3.87%, up from 3.71% a year earlier.

Consumer lending performance: recreation and home improvement

Murstein said consumer lending remains the company’s largest and most profitable business line and highlighted growth in both portfolio size and interest income. He stated consumer lending interest income was $74.5 million for the quarter and $289.9 million for the year, up 5% compared with the same period last year and up 8% year over year.

Within consumer lending, the recreation portfolio grew 5% to $1.6 billion at year-end, representing 63% of total loans. Fourth-quarter recreation originations were $97.2 million, up from $72.2 million a year earlier, and recreation interest income rose 6% to $54.2 million. Murstein said 90+ day delinquencies in recreation were 0.82% of gross loans, while the allowance for credit losses in that segment was 5.32%, up from 5% a year ago.

The home improvement portfolio stood at $810.2 million, representing 32% of total loans. Fourth-quarter originations were $61.7 million versus $82.5 million last year. Murstein said 90+ day delinquencies were 0.16% of gross home improvement loans and the allowance for credit losses was 2.41%, compared with 2.48% a year earlier.

Management emphasized borrower credit quality in both niches, citing average FICO scores on new originations of 688 for recreation and 779 for home improvement.

Commercial lending, equity gains, and “strategic partnership” originations

In commercial lending, Murstein said fourth-quarter originations were $4.1 million, down from $7.3 million in the year-ago quarter, but full-year commercial originations rose to $40.6 million from $14.3 million in 2024. The commercial portfolio increased to $123.1 million from $111.3 million, and the average interest rate increased to 14.22% from 12.97% a year earlier.

Murstein also highlighted equity investment activity tied to long-term strategic investments. As of December 31, Medallion had “more than two dozen” equity investments with a book value of $8.1 million on the balance sheet. Gains from equity investments were $8.8 million in the quarter and $24.6 million for the year. In Q&A, Cutrone said the quarter included “a little more than half a dozen” recognized changes and gains, with about $8.5 million tied to three exits (including a gain on a warrant and two equity gains).

Murstein said the company’s strategic partnership program posted a second straight quarter of more than $200 million of originations, reaching a record $258.3 million in the fourth quarter. Loans held at quarter-end under the program were $15.1 million. He said these loans are mostly outside recreation and home improvement, often offered as employee benefits by large employers for unplanned or elective medical procedures. Murstein added that the program reduced income by approximately $1.8 million in the quarter and $5.4 million for the year, while more than doubling from the prior year and expanding each quarter.

Credit provisions, charge-offs, and expenses

Cutrone reported a fourth-quarter provision for credit losses of $27.7 million, up from $18.6 million in the third quarter and $20.6 million in the prior-year quarter. He attributed the quarter’s increase in part to a $7.1 million allowance build in the recreation portfolio, reflecting portfolio growth, the reclassification of certain loans from held for sale to held for investment, and higher coverage. The quarter also included $1.6 million of provision on commercial loans and a $0.2 million benefit related to taxi medallion loans; the total net benefit related to taxi medallion assets during the quarter was $1.4 million.

During Q&A, management said moving remaining recreation loans from held for sale to held for investment resulted in about a $2.2 million provision impact, and compared that with a benefit from the prior year when loans were moved to held for sale, describing a swing between periods. Management said it would not expect provision expense to remain at the fourth-quarter level but also noted that growth would require additional allowances.

On asset quality metrics, Cutrone said consumer loans more than 90 days past due were $14.2 million, or 0.6% of total consumer loans, compared with $11.4 million, or 0.5%, a year earlier. Net charge-offs in the fourth quarter were $17.9 million in the recreation portfolio (4.41% of the average recreation portfolio) and $2.2 million in home improvement (1.07% of the average home improvement portfolio). In response to questions about recreation credit performance, Cutrone said the company was evaluating pricing and noted that January recreation originations averaged about 14.5%, down from the portfolio’s 15.16% weighted average coupon at year-end, with the goal of improving credit performance even if it pressures net interest margin.

Operating costs totaled $22.2 million in the fourth quarter, up from $17.2 million in the prior-year quarter. Cutrone said the prior-year quarter included $5.5 million of realized insurance benefits that reduced costs, and he also cited higher employee costs. He said the company anticipates higher non-interest operating costs as it expands, while expecting net interest income growth to outpace expense growth over time.

Net income, capital returns, and 2026 priorities

Net income attributable to shareholders was $12.2 million, or $0.50 per diluted share, in the fourth quarter, up $2.1 million, or $0.07 per share, from the year-ago quarter. For the full year, net income attributable to shareholders was $43.0 million, or $1.78 per share, up from 2024 by $7.2 million, or $0.26 per share.

Book value per share was $17.53 at December 31, up from $17.07 a quarter earlier and $16.00 a year earlier. Adjusted tangible book value per share was $12.12, up from $11.64 a quarter earlier and $10.50 a year earlier.

Murstein said the company paid a quarterly dividend of $0.12 per share and continued to allocate a large portion of earnings to growth. He also discussed his transition into the CEO role, effective January 31, and outlined priorities for 2026, including:

• Targeting sustained growth in the recreation segment
• Expanding home improvement, including adding experienced talent to support increased originations
• Continuing to grow the strategic partnership program, while taking a “methodical” approach
• Remaining disciplined in evaluating adjacent markets and new opportunities

In Q&A, Murstein and Cutrone said the home improvement portfolio had been kept relatively flat due to capital constraints and partner lead times, and that additional capital raised at Medallion Bank enabled the company to commit to higher funding levels. Murstein said the company expects to grow “mid-teens” in 2026 and emphasized the credit profile of the home improvement book.

Asked about acquisitions or a potential sale of the company, Murstein said acquisitions are not top of mind in the near term and that no sale is currently contemplated. He added that industrial loan company (ILC) charters “seem to be more acceptable now,” which he said supports the potential for a change of control, while reiterating that nothing is planned.

About Medallion Financial NASDAQ: MFIN

Medallion Financial Corporation is a specialty finance company that provides asset-based lending solutions to small and mid-sized businesses in the United States. The company's core business activities include secured loans collateralized by business assets such as insurance premiums, commercial real estate, maritime assets and portfolio receivables. Through its insurance premium finance division, Medallion offers short-term loans that allow policyholders to spread insurance costs over multiple payments, while its portfolio financing arm provides funding against a borrower's existing asset portfolios.

Founded in 1998 and headquartered in Minneapolis, Minnesota, Medallion Financial originally established itself in the taxi medallion lending market, extending loans secured by New York City cab medallions.

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