Q4 2024 Medallion Financial Corp Earnings Call

Operator: Good morning, and welcome to the Medallion Financial Court 4th Quarter Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.

Good morning, and welcome to the Medallion Financial Corp, fourth quarter earnings Conference call.

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Please note. This event is being recorded I would now.

Ken Cooper: I would now like to turn the conference over to Ken Cooper, Investor Relations. Please go ahead. Thank you, and good morning.

Speaker Change: I'd like to turn the conference over two to 10 Cooper Investor Relations. Please go ahead. Thank you and good morning, welcome to medallion financial Corp's fourth quarter and full year earnings call. Joining me today are Andrew Burstein, President and Chief operating Officer, and Anthony control Executive Vice President and Chief Financial Officer certain statements made during the call today constitute forward looking.

Ken Cooper: Welcome to Medallion Financial Corp.'s fourth quarter and full year earnings call. Joining me today are Andrew Murstein, President and Chief Operating Officer, and Anthony Cutrone, Executive Vice President and Chief Financial Officer.

Ken Cooper: Certain statements made during the call today constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued yesterday and in our filings with the SEC.

Speaker Change: Statements made pursuant to and within the meaning of the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995 as amended.

Speaker Change: Such forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued yesterday and in our filings with the SEC. The forward looking statements made today are as of date of this call and we do not undertake any obligation to update these forward.

Ken Cooper: The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements.

Ken Cooper: In addition to our earnings press release, you can find our fourth quarter supplement presentation on our website by visiting medallion.com and clicking Investor Relations. The presentation is near the top of the page.

Speaker Change: Statements. In addition to our earnings press release, you can find our fourth quarter supplemental presentation on our website by visiting medallion dot com and clicking Investor Relations. The presentation is near the top of the page with that I'll turn it over to Andrew.

Andrew Murstein: With that, I'll turn it over to Andrew. Thank you Ken and good morning everyone. We appreciate you spending some time with us to hear our business updates. We ended the year well, with nice contributions coming from each business. Our fourth quarter net income was our highest quarter of net income in 2024, which topped off another successful year for our company. For the fourth quarter, we delivered $10.1 million of net income and $0.43 of earnings per share for our shareholders. For the full year, we delivered $35.9 million of net income and $1.52 of earnings per share.

Andrew Burstein: Thank you Ken and good morning, everyone. We appreciate you spending some time with Dusty here our business update.

Andrew Burstein: We ended the year well with nice contributions coming from each business. Our fourth quarter net income was our highest quarter of net income in 2024, which topped off another successful year for our company for the fourth quarter, we delivered $10 1 million of net income and 43 cents of earnings per share.

Andrew Burstein: For our shareholders for the full year, we delivered $35 9 million of net income and $1.52 of earnings per share.

Andrew Murstein: help and drive these results for several important achievements. Towards the top of the list was generating over $1 billion of loan originations for the year for the first time in our history. What was especially pleasing about this milestone is that we accomplished this while continuing with our high credit standards and the related credit quality of our borrower. The vast majority of our total loan portfolio is to super prime, prime, and near prime borrowers. which we believe insulates us from significant volatility and strengthens our risk profile. We continue to target an enhanced borrower base and to improve the credit quality of our portfolio.

Andrew Burstein: Helping drive these results were several important achievements towards the top of the list was generating over $1 billion of loan originations for the year for the first time in our history, what was especially pleasing about this milestone is that we accomplished this while continuing with their high credit standards.

Andrew Burstein: The related credit quality of our borrowers.

Andrew Burstein: The vast majority of our total loan portfolio as the Super Prime Prime and near Prime borrowers.

Andrew Burstein: Which we believe insulates us from significant volatility and strengthens our risk profile.

Andrew Burstein: We continue to target an enhanced borrower base and to improve the credit quality of our portfolio.

Andrew Murstein: We are now originating loans to borrowers with an average FICO score of 686 for recreational and an even stronger 781 for home improvement. We have done a wonderful job further improving the overall credit of this segment in just a few short years. Another achievement in the fourth quarter was the exit of a portfolio investment with an armadillo capital segment which resulted in net gains of $3.8 million. For the year, we had $6.9 million of net gains driven by two highly successful ag This transaction is reflective of the type of equity kicker we get within our commercial lending We have proved time and time again that this is a very creative part of our business model.

We are now originating loans to borrowers with an average FICO score of 686 for recreational and uneven stronger 781 for home improvement.

Andrew Burstein: You've done a wonderful job further improving the overall credit of this segment in just a few short years.

Another achievement in the fourth quarter was the exit of a portfolio investment with a lot of medallion capital segment, which resulted in net gains of $3 $8 million.

Andrew Burstein: For the year, we had $6 9 million of net gains driven by two highly successful exits.

Andrew Burstein: This transaction is reflective of the type of equity kicker we get within our commercial lending group.

Andrew Burstein: We have proved time and time again that this is a very accretive part of our business model.

Andrew Murstein: As a reminder, we currently hold around $9 million of other equity investments on our balance sheet. Although the timing of exits is not predictable, this division has generated nearly 15 million of net gains over the past three years. Over the past 10 years, on a pre-tax basis, this division has returned, on average, in excess of 17% annually.

Andrew Burstein: As a reminder, we currently hold around $9 million of other equity investments on our balance sheet.

Andrew Burstein: Although the timing of exits is not predictable. This division has generated nearly $15 million of net gains over the past three years.

Andrew Burstein: Over the past 10 years on a pretax basis. This division has returned on average in excess of 17% annually.

Andrew Murstein: Moving to our segments, Rett Lending had a good quarter, which included $72 million of new loan originations, as compared to $63 million in the 2023 fourth quarter. Just four short years ago, our REC loans were just under $800 million, which shows the great growth we have had recently. Total outstanding rec loans of $1.5 billion were down $11 million from the prior quarter and up $207 million from a year ago. The drop in total outstandings from Q3 is a function of seasonality for our business with the fourth quarter typically being our slowest of the year. Importantly, these loans carry our highest interest rate across our loan book.

Andrew Burstein: Moving to our segments Rec lending had a good quarter, which included $72 million in new loan originations as compared to $63 million in the 2023 or fourth quarter.

Andrew Burstein: Just four short years ago, our rec loans were just under 800 million, which shows the great growth we have had recently.

Andrew Burstein: Total outstanding Rec loans of $1 5 billion were down 11 million from the prior quarter and up $207 million from a year ago.

Andrew Burstein: The drop in total Outstandings from Q3 is a function of seasonality for our business with a fourth quarter typically being our slowest of the year.

Andrew Burstein: Importantly, these loans carry our highest interest rate across our loan books are average interest rate as of the end of the year was 15.17% up 28 basis points from a year ago and up 15 basis points from just one quarter ago.

Andrew Murstein: Our average interest rate as of the end of the year was 15.07% of 28 basis points from a year ago and of 15 basis points from just one quarter ago. Our home improvement lending segment originated $83 million of loans during the quarter, which led to our loan book being up 9% from a year ago to $827 million. The growth of this segment has been even more robust than WREC over the last four years. This growth rate comes with good interest rates. Current average interest rate of 9.81% is 30 basis points higher than a year ago and 5 basis points above the most recent prior quarter.

Andrew Burstein: Our home improvement lending segment originated $83 million of loans during the quarter, which led to our loan book being up 9% from year ago to 827 million.

Andrew Burstein: The growth of this segment has been even more robust than rec over the last four years.

Andrew Burstein: This growth rate commerce with great interest rates.

Andrew Burstein: Current average interest rate of 9.81% is 30 basis points higher than a year ago and five basis points above the most recent prior quarter.

Andrew Murstein: Our commercial lending segment ended the year with $111 million of loans, which was just below the loan balance of the portfolio at the beginning of the year. The average interest rate was up 10 basis points to 12.97%. We like this segment because of the strong yields we earn, and as I mentioned earlier, we have a long track record of realizing gains on the equity investments we typically make as part of these loans.

Andrew Burstein: Our commercial lending segment ended the year with $111 million of loans, which was just below the loan balance of the portfolio at the beginning of the year.

Andrew Burstein: The average interest rate was up 10 basis points to 12 nine 7%.

Andrew Burstein: We like this segment because of the strong yields we earn and as I mentioned earlier, we have a long track record of realizing gains on the equity investments, we typically make as part of these loans.

Andrew Murstein: Protect your Medallion business continues to be in a normal run rate zone. We collected $2.6 million of cash in the fourth quarter and $12.1 million of cash for the full year of 2024. We believe this level of performance is sustainable in the near term.

Andrew Burstein: Our taxi medallion business continues to be in a normal run rate zone.

Andrew Burstein: We collected $2 6 million of cash in the fourth quarter of $12 1 million of cash for the full year of 2024.

Andrew Burstein: We believe this level of performance is sustainable in the near term.

Andrew Murstein: One quick update on our strategic partnership program. You likely saw the significant growth in our loan volumes for this segment of the fourth quarter. We went from $40 million in the third quarter to $124 million in the fourth quarter. This is mostly attributed to the addition of our most recent partner, which started in the fourth quarter. These trends have continued so far in 2025. As of now, we only hold these loans for a few days, therefore right now it is not as impactful to Net Interest Income, or EPS, as it is to our loan origination levels, but we certainly took a nice step this year on that business line.

Andrew Burstein: One quick update on our strategic partnership program, you likely saw the significant growth in our loan volumes, but this segment in the fourth quarter.

Andrew Burstein: We went from $40 million in the third quarter to $124 million in the fourth quarter.

Andrew Burstein: This is mostly attributed to the addition of our most recent partner which started in the fourth quarter.

Andrew Burstein: These trends have continued so far in 2020 five.

Andrew Burstein: As of now we only hold these loans for a few days the ear for right now what is not as impactful to net interest income with E. P. S. As it is to our loan origination levels, but we certainly took a nice step this year on that business line.

Andrew Murstein: As the capital allocation, our board recently approved an increase of our quarterly dividend by 10% to 11 cents, beginning with the dividend that was paid in the fourth quarter. As has always been the case, our goal with every dollar of our capital is to provide a tangible return to our shareholders that is sustainable long term.

Andrew Burstein: As to capital allocation, our board recently approved an increase of our quarterly dividend by 10% to 11 cents beginning with the dividend that was paid in the fourth quarter.

Andrew Burstein: As has always been the case our goal with every dollar of our capital is to provide a tangible return to our shareholders that is sustainable long term.

Andrew Murstein: We have increased our dividend for a second time since its reinstatement back in 2022, which underscores our confidence in the company's future and commitment to shareholder value. During the year, we repurchased over 570,000 shares of our common stock at an average per share price of $8.07. We still have over $15 million remaining on our current authorized $40 million share buyback plan and will continue to be opportunistic when it makes sense.

Andrew Burstein: We have increased our dividend for a second time since its reinstatement at back in 2022, which underscores our confidence in the company's future and commitment to shareholder value.

Andrew Burstein: During the year, we repurchased over 570000 shares of our common stock at an average per share price of $8.07.

Andrew Burstein: We still have over $15 million remaining on our current authorized $40 million share buyback plan and we will continue to be opportunistic when it makes sense.

Anthony Cutrone: With that, I will now turn the call over to Anthony, who will provide some additional insight into our quarter. Thank you, Andrew. Good morning, everyone. For the quarter, net interest income grew 6% to $52 million from a year ago and was down 1% from the prior quarter. For the year, net interest income increased 8% to $202.5 million from $188.1 million in 2020. Our net interest margin on gross loans was 7.84% for the quarter, down 27 basis points from the prior quarter, and down 36 basis points from a year ago. In addition to a seven basis point rise in our cost of funds, during the quarter we placed two commercial loans on non-accrual and reversed $427,000 of interest income which pressured our yield.

Andrew Burstein: With that I will now turn the call over to Anthony who will provide some additional insight into our quarter.

Anthony control: Thank you Andrew good morning, everyone.

Anthony: For the quarter net interest income grew 6% to $52 million from a year ago and was down 1% from the prior quarter.

Anthony: For the year net interest income increased 8% to 202.5 million from $188 1 million in 2023.

Anthony: Our net interest margin on gross loans was 7.84% for the quarter down 27 basis points from the prior quarter and down 36 basis points from a year ago and.

Anthony: In addition to a seven basis point rise in our cost of funds during the quarter. We placed two commercial loans on nonaccrual and reversed 427000 of interest income, which pressured out would yield.

Anthony Cutrone: This reduced our net interest margin by approximately 13 basis points during the For the year, our net interest margin was 8.05% on gross loans. to 8.38% in 2020. During the fourth quarter, we originated recreation loans at an average rate of 16.02 percent and home improvement loans at an average rate of 10.9 percent. continue to originate both consumer loan products at rates above the current weighted average coupon in these portfolios. Importantly, the average rates charged on new originations in January were above 16% for recreation loans and above 11% for home improvement. We anticipate that our average coupon and yield will continue to increase well after our cost of funds plateau.

Anthony: This reduced our net interest margin by approximately 13 basis points during the quarter.

Anthony: For the year, our net interest margin was 8.05% on gross loans compared to 8.38% in 2023.

Anthony: During the fourth quarter, we originated recreation loans at an average rate of 16.02% and home improvement loans at an average rate of 10.94%.

Anthony: We continue to originate both consumer loan products at rates above the current weighted average coupons in these portfolios.

Anthony: Importantly, the average rates charged on new originations in January were above 16% for recreation loans and above 11% for home improvement loans.

Anthony: We anticipate that our average coupon didn't yield will continue to increase well after all cost of funds plateaus, how average cost of funds was $4 one 2% during the quarter up 60 basis points from a year ago and was three point, 93% for the full year up 77 basis points from the year ago.

Anthony Cutrone: Our average cost of funds was 4.12% during the quarter, up 60 basis points from a year ago, and was 3.93% for the full year, up 77 basis points from the year The average interest rate on our deposits was 3.71% as of the end of the month. Total loans outstanding were $2.5 billion, increasing 12% from a year ago, and included both loans held for investment and those held. It's comprised of 1.5 billion of recreation loans, 827 million of home improvement loans, and 111 million of For the year, the average yield on our loan portfolio increased 32 basis points from a year ago to 12.01%.

Anthony: Yeah.

Anthony: The average interest rate on our deposits was $3 seven 1% as at the end of December.

Anthony: Total loans outstanding were 2.5 billion, increasing 12% from a year ago and included both loans held for investment and those held for sale.

Anthony: This is comprised of $1 5 billion of recreation loans $827 million of home improvement loans and $111 million of commercial loans.

Anthony: For the year the average yield on our loan portfolio increased 32 basis points from a year ago to 12.01%.

Anthony Cutrone: Consumer loans more than 90 days past due were $11.4 million, or 0.49% of the total consumer loan. compared to 10.6 million or 0.52% a year ago. Our provision for credit loss was $20.6 million for the quarter, an increase from both the $20.1 million in the third quarter and the $10.8 million in the prior year quarter and reflected the release of $3.9 million of allowance for credit loss associated with $121 million of recreation loans being moved to held for sale. In addition, the current quarter included $1.7 million of net benefits related to taxi medallion loans, which compared to $12.1 million of benefits in the prior year quarter.

Anthony: Consumer loans more than 90 days past due were 11 4 million or 0.49% of the total consumer loans as compared to $10 6 million or 0.52% a year ago.

Anthony: Our provision for credit loss was $20 6 million for the quarter, an increase from both the $20 1 million in the third quarter and the $10 8 million in the prior year quarter and reflected the release of $3 9 million of allowance for credit loss associated with a $121 million of recreation loans being moved to <unk>.

Anthony: <unk> for sale.

Anthony: In addition, the current quarter included $1 7 million of net benefits related to taxi medallion loans, which compared to $12 $1 million of benefits in the prior year quarter net.

Anthony Cutrone: Net charge-offs in the recreation portfolio during the quarter were $16.9 million or 4.35% of the average portfolio. And for the home improvement portfolio were $3.6 million or 1.75% of the average portfolio. Operating expenses were $17.2 million during the quarter, down from $19 million experienced in the prior quarter and $19.1 million incurred in the prior year. Included in operating expenses for the quarter were a couple of items related to moving closer to a resolution of the SEC mandate. First, we booked a $3 million charge in connection with entering into an agreement in principle on terms of settlement with the SEC's Division of Enforcement, which still remains subject to approval of the Commissioners of the SEC and the Court.

Anthony: Net charge offs in the recreation portfolio during the quarter were $16 9 million or $4, 35% of the average portfolio and for the home improvement portfolio were $3 6 million or $1, 75% of the average portfolio.

Anthony: Operating expenses were $17 2 million during the quarter down from 19 million experienced in the prior quarter and $19 1 million incurred in the prior year quarter included in operating expenses for the quarter were a couple of items related to moving closer to a resolution of the SEC matter.

Anthony: First we booked a 3 million dollar charge in connection with entering into an agreement in principle on terms of settlement with the Sec's division of enforcement, which still remains subject to approval of the commissioners of the SEC and the court.

Anthony Cutrone: Additionally, we recognized $5.5 million of a benefit in connection with previously received insurance coverage related to legal costs associated with this matter. For the quarter, net income attributable to our shareholders was $10.1 million or 43 cents per share. Our net book value per share as of December 31st was $16, up from $15.70. prior quarter and $14.63 a year ago. Our just intangible book value per share, which excludes the value of goodwill, intangible assets and the correlated deferred tax liability associated with those assets. $10.50. as of December 31st, up from $10.17 a quarter ago and $9.15 a year.

Anthony: Additionally, we recognized $5 $5 million of a benefit in connection with previously received insurance coverage related to legal costs associated with this matter.

Anthony: For the quarter net income attributable to our shareholders was $10 $1 million or <unk> 43 per share our net book value per share as of December 31 was $16 up from 15 70 in the prior quarter and $14.63 a year ago.

Anthony: Our adjusted tangible book value per share, which excludes the value of goodwill intangible assets and the correlated deferred tax liability associated with those assets was $10.50 as of December 31 up from $10.17 a quarter ago and $9 15 a year.

Anthony: Joe.

Andrew Murstein: That covers our fourth quarter and full year results. Andrew and I are now happy to take your questions. We will now begin the question and answer session.

Anthony: That covers our fourth quarter and full year results.

Anthony: Andrew and I are now happy to take your questions.

Anthony: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Operator: To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then 2.

Anthony: Youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Operator: At this time, we will pause momentarily to assemble our roster.

Anthony: At this time, we will pause momentarily to assemble our roster.

Operator: And the first question will come from Mike Grondahl with Northland Capital Markets. Please go ahead.

Speaker Change: And the first question will come from Mike Grondahl with Northland Capital markets. Please go ahead.

Logan: Hey guys, this is Logan for Mike. First off, just congrats on the quarter. And we kind of want to dig into, can you provide some color around why you are selling the $121 million of the REC loans and when you expect that to close? Thank you.

Logan: Hey, guys. This is Logan on for Mike first off just congrats on the quarter.

Speaker Change: You kind of want to dig into can you provide some color around why you are selling $121 million of direct loans and when do you expect that to close thank you.

Andrew Murstein: Hi, Logan, thanks for the question. We are selling it because the volume was stronger than anticipated during the year. We continue to grow both those lines very well, the RV Marine and home improvement. And it just gives us another good funding option. It's good to have a lot of options at our disposal. So if we continue to have... Better than expected growth in 2025, and we could always revisit that again. And in terms of when it could close, my guess it would be sometime in the next 30 to 60 days. Perfect. Yeah, thank you for the color.

Speaker Change: Hi, Logan Thanks for the question.

Speaker Change: We are selling it because the volume was stronger than anticipated during the year. We continued to grow both those lines very well the RV Marina and home improvement.

Speaker Change: And it just gives us another good funding option, it's good to have a lot of.

Speaker Change: Options at our disposal. So if we continue to have.

Speaker Change: Better than expected growth in 2025, then we can always revisit that again and in terms of when it could close my guess it would be sometime in the next <unk>.

Speaker Change: 30 to 60 days.

Speaker Change: Perfect Yeah. Thank you for the color and then.

Logan: Then one last one from us.

Speaker Change: And then one last one from US can you talk about how you guys are feeling all credit quality going forward.

Andrew Murstein: Can you talk about how you guys are feeling about credit quality going forward and delinquency levels and any sense that they are peaking currently? Hey, Logan. Yeah, so so annually, Q4 is when we see delinquencies and charge offs, you know, hit that seasonal high. And then they start to settle in towards the end of Q1, you know, ramping up to, you know, our lower seasons in Q2 and Q3. So I think it's hard to say, you know, we're not quite sure how everything plays out with what's going on in DC right now. But we, we do see and we have been seeing better performance in our more recent vintages.

Speaker Change: Delinquency levels and any thoughts there, peaking currently.

Logan: Hey, Logan.

Logan: So annually Q4 is when we see delinquencies and charge offs hit that seasonal high and then they start to settle in towards the end of Q1, you know ramping up to our lower seasons in Q2 and Q3.

Logan: So I think it's hard to say.

Logan: We're not quite sure how everything plays out with what's going on in D. C right now.

Logan: But we do see and we have been seeing better performance in our more recent vintages. So those loans that we've issued over the past.

Andrew Murstein: So those loans that we've issued over the past, you know, 12 to 24 months, those seem to be performing better. And that tracks with when we actually started tightening and increasing our credit standards, you know, halfway through 2023. Yeah.

Logan: 12 to 24 months.

Logan: Those seem to be performing better and that tracks with when we actually started tightening and increasing our credit standards halfway through 2023.

Logan: Yes.

Logan: Thank you. Thank you, guys. Congrats on getting on the quarter, and I'll hop back in the queue. Thanks, Will.

Speaker Change: Yeah. Thank you. Thank you guys. Congrats again on the quarter and I'll hop back in the queue.

Logan: Thanks, a lot.

Operator: With no further questions, this concludes our question and answer session.

Logan: With no further questions. This concludes our question and answer session I would like to turn the conference back over to Andrew <unk> for any closing remarks.

Andrew Murstein: I would like to turn the conference back over to Andrew Murstein for any closing remarks. I think Logan may have had some additional questions perhaps, maybe we could revert to him for a second. See if you had anything else.

Speaker Change: I think look Logan may have had some additional questions, perhaps maybe we could revert theme for a second.

Logan: So you have you had anything else.

Operator: Just one moment. Logan, if you have any questions, please hop in the queue. You can press star, then 1.

Speaker Change: Just one moment.

Speaker Change: Yeah.

Speaker Change: Logan if you have any questions. Please hop in the queue you can star then one.

Mike Grondahl: We'll have another question from Mike Grondahl again. Please go ahead.

Speaker Change: We'll have another question from Mike Rhino again. Please go ahead.

Andrew Murstein: Could you guys, sorry about that, can you provide some additional color about margins and how you guys see those bottoming, and if you see those bottoming in 2025? Sure, I think for a while now we've been hesitant to call a bottom, and I think what we're seeing with our cost of borrowings is that it's somewhat decoupled from, you know, you know, the Fed decisions, you know, the cost of RCDs currently are at rates, you know, near or above what we were seeing, you know, six months ago. So I think until we see further clarity on where the Fed goes with, you know, additional interest rate cuts, you know, we're not sure exactly where we end.

Mike Rhino: Could you guys sorry about that can you provide some additional color about margins and how you guys see those bottoming and if you see the bottoming in 2025.

Speaker Change: Sure.

Speaker Change: I think for a while now we've been hesitant to call a bottom and I think what we're seeing with our cost of borrowings is that it's somewhat decoupled from for me.

Speaker Change: Fed decision.

Speaker Change: The cost of our Cds currently alright rates, you know near or above what we were seeing six months ago.

Speaker Change: So I think until we see further clarity on where the fed goes with additional interest rate cuts.

Speaker Change: We're not sure exactly where we and we don't think we get significantly lower from where we are now, but we will bounce around a little.

Andrew Murstein: We don't think we get significantly lower from where we are now, but we will bounce around a little. I will say that, you know, in Q4, we originated loans, as I said before, we originated loans at levels higher than our average coupon. And in January and February, we were originating loans at levels above that. So we, our loan book is fixed, the rates, but, you know, we do have the option of and the ability to increase rates on new originations. And that's what we're doing. So we think that counteracts any additional cost of funds increase we experience.

Speaker Change: I will say that in Q4, we originated loans as I said before we originated loans at levels higher than our average coupon.

Speaker Change: And in January and.

Speaker Change: In February we were originating loans at levels above that so we have our loan book is fixed the rates, but we do have the option of and the ability to increase rates on new originations and that's what we're doing so we think that counteract any additional cost of funds increase we experienced.

Andrew Murstein: Thank you.

Speaker Change: Okay. Okay. Thank you then can you provide some additional color about.

Andrew Murstein: Then can you provide some additional color about loan growth that you're seeing currently and then throughout 2025? Sure. Yeah, I mean, we're seeing, you know, you know, a fair amount of demand for both products, the home improvement and the recreation loans. And we haven't, we haven't loosened credit, we have no intentions of loosening credit anytime soon. But there's still a fair amount of, you know, volume to be had out there. You know, in terms of, you know, growth of the portfolio, we probably see, you know, 2025 growing anywhere from, you know, mid to, you know, high single digits, which, which is a little bit lower than what we've done in past years.

Speaker Change: Loan growth that Youre seeing currently and then throughout 2025.

Speaker Change: Sure Yes.

Speaker Change: We are seeing.

Speaker Change: A fair amount of demand for both products home improvement and our recreation loans.

Speaker Change: And we haven't we haven't loosened credit we have no intentions of loosening credit anytime soon.

Speaker Change: But there is still a fair amount of volume to be had out there.

In terms of growth of the portfolio, we probably see you know 2025 growing anywhere from mid to high single digits.

Speaker Change: Which which is a little bit lower than what we've done in past years, but with a $2 5 billion loan book, we think its appropriate given where earnings are and.

Andrew Murstein: But you know, with a two and a half billion dollar loan book, we think it's appropriate given, you know, where earnings are, and, and, you know, where we're deploying capital. Perfect.

Speaker Change: Where we're deploying capital.

Andrew Murstein: Yeah, then one final modeling questions from us. How should we think about operating expense going forward? Is $20 million kind of the right number to sit around? Or just any insight there? I think it's probably closer to 21 or 21 and a half a quarter, you know, it's which is which is higher than what we've experienced. You know, putting Q4 aside, it's a little bit higher. But you know, as we grow, we, you know, and as a as an insured deposit institution, we've got to make sure that we've got the right people and the right staffing levels to handle our growth.

Speaker Change: Perfect Yep.

Speaker Change: One final modeling question from US how should we think about operating expense going forward.

Speaker Change: <unk> 20, now in kind of the right number to sit around or just any insight there.

Speaker Change: I think it's probably closer to 'twenty, one or 'twenty, one and a half a quarter.

Speaker Change: Which is which is higher than what we've experienced.

Speaker Change: Putting Q4 sides a little bit higher.

Speaker Change: But as we grow.

Speaker Change: And as a.

Speaker Change: As an insured deposit institution.

Speaker Change: Got to make sure that we've got the right people and the right staffing levels to handle our growth.

Andrew Murstein: So there's additional costs there. Additionally, we've got a fair amount of initiatives that we've been undertaking related to our loan system, analytics departments, within the bank specifically, that are going to require capital. So we expect costs to increase, but again, these increases in costs are going to be covered by the increases in income that we expect to generate.

Speaker Change: So there is additional cost there. Additionally, we've got a fair amount of initiatives that we've been undertaking related to a loan system analytics departments within the bank, specifically that we're going to require capital. So we expect cost to increase but again you know these these increases in costs.

Speaker Change: We.

Speaker Change: We're going to be covered by the increases in income that we expect to generate.

Speaker Change: Okay.

Andrew Murstein: Perfect. Thank you.

Logan: Those are all the questions I have for now. I appreciate you guys.

Speaker Change: Perfect. Thank you those are all the questions I asked and Al I. Appreciate you guys. Let me ask the initial months. Thank you.

Operator: Let me ask some additional ones. Thank you. Again, if you have a question, please press star, then 1. We'll pause momentarily to assemble our roster. And again... with no further questions.

al: Thanks Logan.

Speaker Change: Again, if you have a question. Please press Star then one we'll pause momentarily to assemble our roster.

al: Yeah.

al: And again.

al: With no further questions.

Operator: I think this will conclude our question and answer session.

al: I think this will conclude our question and answer session.

Andrew Murstein: I would like to turn the conference back over to Andrew Murstein for any closing remarks. Thank you. For 2025, we expect to continue executing a similar strategy as we have for the past several years, that being prudent growth of our lending businesses. We anticipate keeping our credit standards at the current levels, which have served our businesses so well. Over the past several years, we've strengthened, optimized, and transformed our company into a highly efficient business that generates strong profitability and cash flow. Our commitment to our shareholders remains as strong as ever, evidenced by our growth, dividend, and opportunistic buybacks, and we eagerly anticipate maintaining the path we have established.

Andrew Burstein: I'd like to turn the conference back over to Andrew <unk> for any closing remarks.

Speaker Change: Thank you for 2025, we expect to continue executing a similar strategy as we have for the past several years that being prudent growth of our lending businesses, we anticipate keeping our credit standards at the current levels, which have served our businesses so well.

Speaker Change: Over the past several years, we've strengthened optimize and transformed our company into a highly efficient business that generate strong profitability and cash flow.

Our commitment to our shareholders remains as strong as ever evidenced by our growth dividend and opportunistic buybacks.

Speaker Change: Do you really anticipate maintaining the path we have established.

Operator: Thank you again for your investment and interest in Medallion Financial Corp. Have a great rest of your day.

Speaker Change: Thank you again for your investment and interest in medallion financial Corp have a great rest of your day.

Speaker Change: Okay.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. © BF-WATCH TV 2021

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].