Q3 2025 Medallion Financial Corp Earnings Call
Speaker #3: Good day , and welcome to MEDALLION FINANCIAL CORP third quarter of 2025 Earnings Call . All participants will be in a listen only mode for the duration of the call .
Val Ferraro: Welcome to Medallion Financial Corp. third quarter of 2025 earnings call. All participants will be in a listen-only mode for the duration of the call. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw a question, please press star then two. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Val Ferraro, Investor Relations. Please go ahead.
Speaker #3: Should you need any assistance , please signal a conference specialist by pressing the star key , followed by zero . After today's presentation , there will be an opportunity to ask questions , to ask a question , you may press star , then one on your telephone keypad .
Speaker #3: And to withdraw a question , please press star . Then two . Also , please be aware that today's call is being recorded .
Speaker #3: I would now like to turn the call over to Val Ferraro Investor Relations . Please go ahead .
Speaker #4: Thank you and good morning . Welcome to MEDALLION FINANCIAL CORP third quarter earnings call . Joining me today are Andrew Murstein President and chief Operating officer .
Val Ferraro: Thank you and good morning. Welcome to Medallion Financial Corp.'s third quarter earnings call. Joining me today are Andrew Murstein, President and Chief Operating Officer, and Anthony Cutrone, Executive Vice President and Chief Financial Officer. Certain statements made during the call today constitute forward-looking statements. 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 the date of this call and we do not undertake any obligation to update these forward-looking statements. In addition to our earnings press release, you can find our third quarter supplement presentation on our website by visiting Medallion.com and clicking Investor Relations. The presentation is near the top of the page.
Speaker #4: And Anthony Cutrone Executive Vice President and Chief Financial officer . Certain statements made during the call today constitute forward looking statements . 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 .
Speaker #4: 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 the date of this we do not undertake any obligation to update these forward looking statements .
Speaker #4: In addition to our earnings press release , you can find our third quarter supplement presentation on our website by visiting MEDALLION FINANCIAL CORP and clicking Investor Relations .
Speaker #4: The presentation is near the top of the page . With that , I'll turn it over to Andrew .
Val Ferraro: With that, I'll turn it over to Andrew.
Speaker #5: Thank you and good morning , everyone . We are pleased with the strong performance we delivered in the third quarter of 2025 . As compared to the third quarter of last year .
Andrew Murstein: Thank you and good morning everyone. We are pleased with the strong performance we delivered in the third quarter of 2025 as compared to the third quarter of last year. Our net income was $7.8 million, $11.3 million when excluding a non-recurring $3.5 million charge related to the redemption of preferred stock at Medallion Bank, supported by a 6% increase in net interest income to $55.7 million and continued momentum across our core lending verticals. We also saw a further improvement in net interest margin on both gross and net loans, which is reflected in our earnings. During the quarter, we redeemed the Series F preferred stock at Medallion Bank. While that resulted in a one-time $3.5 million charge to earnings, it lowers our ongoing cost of capital at the bank and positions us well going forward.
Speaker #5: Our net income was 7.8 million , 11.3 million when excluding a non-recurring $3.5 million charge related to the redemption of preferred stock at medallion Bank , supported by a 6% increase in net interest income to 55.7 million , and continued momentum across our core lending verticals .
Speaker #5: We also saw further improvement in net interest margin on both gross and net loans , which is reflected in our earnings during the quarter .
Speaker #5: We redeemed the series F preferred stock at medallion Bank . Well , that resulted in a one time , $3.5 million charge to earnings .
Speaker #5: It lowers our ongoing cost of capital at the bank and positions us well going forward . Across the portfolio . We continue to execute effectively with meaningful contributions from our recreation home improvement and commercial lending lines .
Andrew Murstein: Across the portfolio, we continue to execute effectively with meaningful contributions from our recreation, home improvement, and commercial lending lines. Total loans reached $2.559 billion and loan originations came in at $427 million for the period, an increase from both the previous quarter and year over year. This improved performance reflects the continued strength across our lending segments driven by disciplined execution and strategic positioning, which I will now walk through in further detail. I'll start with consumer lending, our largest and most profitable business line, which continues to anchor our performance. With interest income of $74.1 million for the quarter, growing 5% as compared to the same period of last year, despite consumer lending originations being $201.4 million as compared to $235.6 million a year ago. Within the consumer lending segment, the recreational loan book grew 3% to $1.603 billion at September 30, 2025, representing 63% of our total.
Speaker #5: Total loans reached 2.559 billion and loan originations came in at 427 million for the period , an increase from both the previous quarter and year over year .
Speaker #5: This improved performance reflects the continued strength across our lending segments , driven by disciplined execution and strategic positioning , which I will now walk through in further detail .
Speaker #5: I'll start with consumer lending or largest and most profitable business line , which continues to anchor our performance with interest income of 74.1 million for the quarter , growing 5% as compared to the same period of last year .
Speaker #5: Despite consumer lending originations being 201.4 million as compared to 235.6 million a year ago . Within the consumer lending segment , the recreational loan book grew 3% to 1.63 billion at September 30th , 2025 , representing 63% of our total loans .
Andrew Murstein: Loan originations also grew slightly to $141.7 million compared to $139.1 million a year ago, and interest income rose 4% to $53.6 million. Delinquencies of 90 plus days were just 0.57% of gross recreational loans, and the allowance for credit losses was 5.1% to reflect expected seasonal and economic dynamics as compared to 4.53% a year ago. The home improvement loan book decreased modestly to $804 million at September 30, 2025, representing 31% of our total. Loan originations were $59.7 million versus $96.5 million last year. Delinquencies of 90 plus days were just 0.16% of gross home improvement loans. The allowance for credit losses was 2.55% compared to 2.42% a year ago. Importantly, we are originating loans to individuals in these niches that have strong credit quality, with average FICOs on new originations now 688 for REC and 779 for home improvement.
Speaker #5: Originations also grew slightly to 141.7 million , compared to 139.1 million a year ago . And interest income rose 4% to 53.6 million .
Speaker #5: Delinquencies of 90 plus days were just 0.57% of gross recreational loans , and the allowance for credit losses was 5.1% . To reflect expected seasonal and economic dynamics as compared to 4.53% a year ago .
Speaker #5: The Home Improvement Loan book decreased modestly to 804 million at September 30th , 2025 , representing 31% of our total loans . Originations were 59.7 million versus 96.5 million last year .
Speaker #5: Delinquencies of 90 plus days were just 0.16% of gross home improvement loans , and the allowance for credit losses was 2.55% , compared to 2.42% a year ago .
Speaker #5: Importantly , we are originating loans to individuals in these niches that have strong credit quality , with average Fico on new originations . Now , 688 for Rec and 779 for home improvement .
Speaker #5: The vast majority of our book falls within super prime to near prime , which has moved up over the years . Moving on to our commercial segment , which continues to deliver meaningful equity gains , we had new originations of 17.5 million during the quarter , and the portfolio grew to 135.1 million , with an average interest rate of 13.71% .
Andrew Murstein: The vast majority of our book falls within super prime to near prime, which has moved up over the years. Moving on to our commercial segment, which continues to deliver meaningful equity gains, we had new originations of $17.5 million during the quarter, and the portfolio grew to $135.1 million with an average interest rate of 13.71%. Additionally, as of September 30, we had nearly three dozen equity investments with the book value of just $9.3 million on our balance sheet. These equity components are a result of our long-term strategic investments, and while the timing of exits is inherently unpredictable, we remain confident in our pipeline. During the quarter, gains from equity investments were modest, generating $300,000 of income, but have generated $15.8 million year to date, and we do expect more realizations in the coming quarters.
Speaker #5: Additionally , as of September 30th , we had nearly three dozen equity investments with the book value of just 9.3 million . On our balance sheet .
Speaker #5: These equity components are a result of our long term strategic investments , and while the timing of exits is inherently unpredictable , we remain confident in our pipeline .
Speaker #5: During the quarter , gains from equity investments were modest , generating 300,000 of income . But have generated 15.8 million year to date .
Speaker #5: And we do expect more realizations in the coming quarters . Our strategic partnership program , whereby we earn an origination fee and about 3 to 5 days of interest on holding loans before selling them back to the partner at his fourth straight quarter of over 120 million of originations , reaching a record level of 208.4 million this quarter .
Andrew Murstein: Our Strategic Partnership Program, whereby we earn an origination fee and about three to five days of interest on holding loans before selling them back to the partner, had its fourth straight quarter of over $120 million of originations, reaching a record level of $208.4 million this quarter. Total loans held as of quarter end under the Strategic Partnership Program were $15.3 million. Most of these loans are outside of REC and home improvement and are mostly offered as employee benefits by large employers and loans for unplanned or elective medical procedures. Although this program represents a small part of fees and interest generated from Medallion Financial Corp., approximately $1.5 million in total this quarter, it has nearly tripled from a year ago and continues to expand each quarter and represents a further diversification of our income sources.
Speaker #5: Total loans held as of quarter end under the strategic Partnership Program were 15.3 million . Most of these loans are outside of Rec and home improvement and are mostly offered as employee benefits by large employers and loans for unplanned or elective medical procedures .
Speaker #5: Although this program represents a small part of fees and interest generated from MEDALLION FINANCIAL CORP , approximately 1.5 million in total this quarter , it is nearly tripled from a year ago and continues to expand each quarter and represents a further diversification of our income sources .
Speaker #5: We continue to do work on our growing pipeline of new partner prospects , and expect to add new partners over time . Furthermore , we are taking a very methodical approach to growth to ensure we continue to do it the right way .
Andrew Murstein: We continue to do work on our growing pipeline of new partner prospects and expect to add new partners over time. Furthermore, we are taking a very methodical approach to growth to ensure we continue to do it the right way. Turning to our taxi medallion assets, we collected $6.1 million of cash during the quarter, which resulted in net recoveries and gains of $3.4 million. Net taxi medallion assets declined to just $5.1 million and now represent less than 0.2% of our total assets. Despite the small size, these assets continue to generate cash, and with more than $150 million of charge-off medallion loans, a majority in New York City, we believe there continues to be recovery opportunities. From a capital allocation perspective, we remain committed to returning capital to shareholders.
Speaker #5: Turning to our taxi medallion assets , we collected 6.1 million of cash during the quarter , which resulted in net recoveries and gains of 3.4 million net taxi medallion assets declined to just 5.1 million and now represents less than 0.2% of our total assets .
Speaker #5: Despite the small size , these assets continue to generate cash and with more than 150 million of charge off medallion loans , a majority of New York City , we believe there continues to be recovery opportunities from a capital allocation perspective .
Speaker #5: We remain committed to returning capital to shareholders . During the quarter , we paid a quarterly dividend of $0.12 per share , and although we did not repurchase any shares this quarter with 14.4 million remaining under our $40 million repurchase program , we would expect to see additional purchases in the quarters to come , enhancing the return we provide to shareholders from a credit perspective , we continue to benefit from a diversified portfolio , prudent underwriting standards and attractive returns on our lending activities .
Andrew Murstein: During the quarter, we paid a quarterly dividend of $0.12 per share, and although we did not repurchase any shares this quarter, with $14.4 million remaining under our $40 million repurchase program, we would expect to see additional purchases in the quarters to come, enhancing the return we provide to shareholders. From a credit perspective, we continue to benefit from a diversified portfolio, prudent underwriting standards, and attractive returns on our lending activities. Our approach is highly analytical and data-driven, supported by advanced digital tools that help optimize underwriting, origination, servicing, and overall portfolio visibility. These capabilities allow us to assess risk with precision and maintain consistently strong performance across operating environments. With solid execution across our businesses, a disciplined approach to credit, and strong demand for our loan products, we believe we're well positioned to deliver sustainable growth and attractive shareholder returns over the long term.
Speaker #5: Our approach is highly analytical and data driven , supported by advanced digital tools that help optimize underwriting , origination , servicing , and overall portfolio visibility .
Speaker #5: These capabilities allow us to assess risk with precision and maintain consistently strong performance across operating environments . With solid execution across our businesses .
Speaker #5: At a disciplined approach to credit, a strong demand for our loan products, we believe we're well-positioned to deliver sustainable growth and attractive shareholder returns over the long term.
Speaker #5: With that , I'll now turn it over to Anthony , who will provide some additional insight into our quarter . Thank you Andrew .
Andrew Murstein: With that, I'll now turn it over to Anthony, who will provide some additional insight into our quarter.
Anthony Cutrone: Thank you, Andrew. Good morning, everyone. For the third quarter, net interest income grew 6% to $55.7 million from the same quarter a year ago. Our net interest margin was 8.21%, up 10 basis points from a year ago. Our total interest yield increased 17 basis points from a year ago to 11.92%, and the average interest rate on our deposits was 3.82% at the end of September, up just 1 basis point from the prior quarter. During the third quarter, we originated $141.7 million of recreation loans at an average rate of 15.77% and $59.7 million of home improvement loans at an average rate of 10.9%. We continue to originate both recreation and home improvement loans at rates above our current weighted average coupon in these portfolios, with new originations in October at rates averaging around 15.5% for recreation loans and averaging around 10.5% for home improvement loans.
Speaker #6: Good morning everyone . For the third quarter , net interest income grew 6% to $55.7 million from the same quarter a year ago .
Speaker #6: Our net interest margin was 8.21% , up ten basis points from a year ago . Our total interest yield increased 17 basis points from a year ago to 11.92% , and the average interest rate on our deposits was 3.82% .
Speaker #6: At the end of September , up just one basis point from the prior quarter . During the third quarter , we originated 141.7 million of recreation loans at an average rate of 15.77% and 59.7 million of home improvement loans , and an average rate of 10.9% .
Speaker #6: We continue to originate both recreation and home improvement loans at rates above our current weighted average coupon. In these portfolios, new originations in October are at rates averaging around 15.5% for recreation loans and averaging around 10.5% for home improvement loans.
Speaker #6: Our loan portfolio reached a value of 2.559 billion at September 30th , up 3% from a year ago , and included both loans held for investment .
Anthony Cutrone: Our loan portfolio reached a value of $2.559 billion at September 30, up 3% from a year ago, and included both loans held for investment and those loans held for sale. Total loans included $1.6 billion of recreation loans, $804 million of home improvement loans, $135 million of commercial loans, and $15.3 million of strategic partnership loans. For the quarter, the average yield on our total loan portfolio increased 27 basis points from a year ago to 12.39%. Consumer loans more than 90 days past due were $10.2 million, or 0.43% of total consumer loans, as compared to $9 million or 0.39% a year ago. Our provision for credit loss was $18.6 million for the quarter, a decrease from $21.6 million in the second quarter and a decrease from $20.2 million in the prior year quarter.
Speaker #6: And those loans held for sale . Total loans included 1.6 billion of recreation loans , 804 million of home improvement loans , 135 million of commercial loans , and 15.3 million of strategic partnership loans .
Speaker #6: For the quarter . The average yield on our total loan portfolio increased 27 basis points from a year ago to 12.39% . Consumer loans more than 90 days past due were 10.2 million , or 0.43% of total consumer loans .
Speaker #6: As compared to 9 million , or 0.39% , a year ago . How provision for credit loss was 18.6 million for the quarter , a decrease from 21.6 million in the second quarter and a decrease from 20.2 million in the prior year quarter .
Speaker #6: During the quarter , we increased the allowance for credit loss in the commercial loan portfolio by $300,000 , as well as increasing the allowance for credit loss on our consumer loans .
Anthony Cutrone: During the quarter, we increased the allowance for credit loss in the commercial loan portfolio by $300,000 as well as increasing the allowance for credit loss on our consumer loans given both seasonality and economic uncertainties, which resulted in an additional provision of $3.9 million, $3.8 million of which was related to recreation loans, with the remainder tied to home improvement loans. Additionally, the current quarter provision included $1.7 million of benefits related to taxi medallion loans. Total net benefits related to taxi medallion during the quarter were $3.4 million. Net charge-offs in the recreation portfolio during the quarter were $12.9 million or 3.36% of the average portfolio and were $2.1 million or 1.03% of the average home improvement portfolio. Turning to expenses, operating costs totaled $20.7 million during the quarter, up from $19 million in the prior year quarter.
Speaker #6: Given both seasonality and economic uncertainties , which resulted in additional provision of 3.9 million , 3.8 million of which was related to recreation loans , with the remainder tied to home improvement loans .
Speaker #6: Additionally , the current quarter provision included 1.7 million of benefits related to Taxi medallion loans . Total net benefits related to tax medallion during the quarter were 3.4 million .
Speaker #6: Net charge offs in the Recreation portfolio during the quarter were 12.9 million , or 3.36% of the average portfolio , and were 2.1 million , or 1.3% of the average home improvement portfolio .
Speaker #6: Turning to expenses , operating costs totaled 20.7 million during the quarter , up from 19 million in the prior year quarter . The $1.7 million increase over the prior year included costs associated with technological initiatives surrounding our servicing platform and capabilities , resulting in higher third party professional services and higher depreciation expense .
Anthony Cutrone: The $1.7 million increase over the prior year included costs associated with technological initiatives surrounding our servicing platform and capabilities, resulting in higher third-party professional services and higher depreciation expense. As we've said in the past, the upgraded platform allows for greater flexibility in the servicing of our consumer loans with a fair amount of self-service tools, which we believe will add to an improved customer experience and greater efficiencies long term. As previously disclosed, these costs are expected to remain elevated in comparison to prior years as we continue to expand our capabilities and incur the cost of the customized platform. Employee costs increased roughly $700,000 from a year ago, both as a function of retaining talent as well as enhancing our talent pool. For the quarter, net income attributable to shareholders was $7.8 million or $0.32 per diluted share.
Speaker #6: As we've said in the past , the upgraded platform allows for greater flexibility in the servicing of our consumer loans with a fair amount of self-service tools , which we believe will add to an improved customer experience and greater efficiencies long term .
Speaker #6: Again , as previously disclosed , these costs are expected to remain elevated in comparison to prior years . As we continue to expand our capabilities and incur the cost of the customized platform , employee costs increased roughly $700,000 from a year ago , both as a function of retaining talent as well as enhancing our talent pool .
Speaker #6: For the quarter , net income attributable to shareholders was 7.8 million , or $0.32 per diluted share . Net income to shareholders included a non-recurring charge of 3.5 million , an impact of $0.14 related to the redemption of Medallion Bank's Series F preferred stock .
Anthony Cutrone: Net income to shareholders included a non-recurring charge of $3.5 million, an impact of $0.14 related to the redemption of Medallion Bank Series F preferred stock. Excluding this non-recurring charge, earnings would have been $11.3 million compared to $8.6 million or $0.37 per share earned in the prior year quarter. Our net book value per share as of September 30 was $17.07, up from $16.77 a quarter ago and $15.70 a year ago. Our adjusted tangible book value, which excludes the value of goodwill, intangible assets, and the correlated deferred tax liability associated with both, was $11.64 at the end of the quarter, up from $11.32 a quarter ago and $10.17 a year ago. That covers our third quarter results. Andrew and I are now happy to take your questions.
Speaker #6: Excluding this non-recurring charge , earnings would have been 11.3 million , compared to 8.6 million , or $0.37 per share earned in the prior year quarter .
Speaker #6: Our net book value per share as of September 30th was $17.07 , up from $16.77 a quarter ago , and $15.70 a year ago .
Speaker #6: Our adjusted tangible book value , which excludes the value of goodwill , intangible assets and the related deferred tax liability associated with both , was $11.64 at the end of the quarter .
Speaker #6: Up from $11.32 a quarter ago and $10.17 a year ago . That covers our third quarter results . Andrew and I are now happy to take your questions .
Speaker #3: We will now begin the question and answer session again to ask a question . You may press star , then one on your telephone keypad .
Val Ferraro: We will now begin the question and answer session again. 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 keys, and if you'd like to withdraw a question, please press Star then two. At this time, we will pause just momentarily to assemble our roster, and our first question here will come from Christopher Nolan with Lundberg Feldman. Please go ahead.
Speaker #3: If you're using a speakerphone, please pick up your handset before pressing the keys. And if you'd like to withdraw a question, please press star, then two.
Speaker #3: At this time , we will pause just momentarily to assemble our roster . And our first question will come from Christopher Nolan with Lundberg , Feldman .
Speaker #3: Please go ahead .
Speaker #7: Hey , guys . Anthony was the operating EPs $0.46 a share .
Operator: Hey guys, Anthony, was the operating EPS $0.46 a share.
Speaker #6: Yeah . So $0.32 and $0.14 $3.5 million charge on the on the redemption of the bank's series F that would get you to 46 .
Anthony Cutrone: Yeah.
Anthony Cutrone: $0.32 and $0.14 on that $3.5 million charge on the redemption of the bank's Series F preferred stock, that would get you to $0.46.
Speaker #7: Okay . And then were and were there any loans sold in the quarter ?
Operator: Okay. Were there any loans sold in the quarter?
Speaker #6: No , no . We still have , you know , other than , you know , with within the strategic partnership program , we still have , you know , a fair amount of recreation loans that we do anticipate selling .
Anthony Cutrone: No, we still have, other than within the Strategic Partnership Program, a fair amount of recreation loans that we do anticipate selling. I don't know if it'll happen in Q4, but we are targeting sometime in the next couple of quarters. What we're seeing is with the capital levels we have at the bank, that might not be necessary. As something comes together, we'll determine whether or not we want to bring those back and hold them or if we want to continue to sell them.
Speaker #6: I don't know if it'll happen in Q4 , but we are targeting , you know , sometime in the next couple of quarters .
Speaker #6: What we're seeing is , you know , with the with the capital levels we have at the bank , that might not be necessary .
Speaker #6: So we'll , you know , as something comes together , we'll determine whether or not we want to bring those back and hold them , or if , you know , we want to continue to sell them , okay .
Speaker #7: And then I noticed that on the income statement , non income increased quarter over quarter . And on the balance sheet noncontrolling interest decreased .
Operator: Okay. I noticed that on the income statement, non-controlling income increased quarter over quarter, and on the balance sheet, non-controlling interest decreased. Does that relate to the Series F redemption?
Speaker #7: That relate to the series F redemption .
Speaker #6: Yes . So so the decrease in the on the balance sheet is the the redemption of the series F . That's correct . And on the income statement we broke it out .
Anthony Cutrone: The decrease on the balance sheet is the redemption of the Series F. That's correct. On the income statement, we broke it out, so you've got the $3.5 million on the redemption of the Series F and also the interest or the dividend, the preferred dividend on those, on the SPLF and the Series G. That's going to be recurring, that's 9% of that non-controlling interest. That's what we would expect to see going forward.
Speaker #6: So you've got the $3.5 million on the redemption of the series F . And also the interest . Or the the dividend , the preferred dividend on those on the SB and the series G .
Speaker #6: That's going to be recurring . That's 9% of that noncontrolling interest . That's what we would expect to see going forward .
Speaker #7: So we should see what should be the noncontrolling income quarterly going forward on a runway .
Operator: We should see what should be the non-controlling income quarterly going forward on a runway.
Speaker #6: It's the . The 2.33 million .
Anthony Cutrone: It's the $2.33 million.
Speaker #7: Versus 1.5 , which was roughly the runway earlier . Correct .
Operator: Versus 1.5, which was roughly the runway earlier. Correct?
Speaker #6: Right . Right . So so in the you know our noncontrolling interest , the the preferred stock of the bank has increased over the last year .
Anthony Cutrone: Right. In our non-controlling interest, the preferred stock at the bank has increased over the last year. It's gone up, and the Series F a year ago had an 8% coupon. The Series G has a 9%, which is higher than last year but lower than what the Series F stepped up to in Q2.
Speaker #6: So it's gone up . And the series F a year ago had an 8% coupon . The series G has a 9% , which is higher than last year but lower than what the series F stepped up to in in Q2 .
Speaker #7: Got it . Final question , and I guess for Andrew , given the government shutdown , do you guys have exposure to government employees ?
Operator: Got it. Final question, and I guess for Andrew, given the government shutdown, do you guys have exposure to government employees?
Speaker #7: No .
Andrew Murstein: No, nothing that would affect this at all.
Speaker #8: Yeah . Nothing that would affect us at all .
Speaker #7: Okay , great . All right . Nice corps . Thanks , guys .
Operator: Okay, great. All right. Nice, of course. Thanks, guys.
Speaker #8: Thanks , Chris . Thanks , Chris .
Andrew Murstein: Thanks, Chris.
Speaker #3: And our next question will come from Mike Grondahl with Northland Securities . Please go ahead . Hey , this .
Val Ferraro: Our next question will come from Mike Grundaugh with Northland Capital Markets. Please go ahead.
[Analyst]: Hey, this is Logan on for Mike. Thanks for taking our question. First, congrats on the growth of the Strategic Partnership Program loans. Could you give us some color on how you guys are viewing strategic originations and fees in 2026? Thank you.
Speaker #9: Is Logan . On for Mike . Thanks for taking our question . First . Congrats on the continued growth of the strategic partnership loans .
Speaker #9: Could you give us some color on how you guys are viewing strategic originations and fees in 2026 ? Thank you .
Speaker #8: That's been growing for quite some time now . We're pleased with the way it's been performing the last several quarters . We're going to try to bring on 1 or 2 new partners in the next 1 to 2 quarters , and therefore I think you're going to see a continued increase in performance .
Andrew Murstein: That's been growing for quite some time now. We're pleased with the way it's been performing the last several quarters. We're going to try to bring on one or two new partners in the next one to two quarters, and therefore I think you're going to see a continued increase in performance there. The volume should go up significantly, probably, if we're able to contract with those firms. Even if we don't, I think the volume is just ramping up nicely on its own.
Speaker #8: There . The volume should go up significantly , probably if we're able to contract with those firms . And even if we don't , I think the volume is just ramping up nicely on its own .
Speaker #9: Great , then can you provide some color on why recreation originations were flat year over year , and what your outlook is for that segment ?
[Analyst]: Can you provide some color on why recreation originations were flat year over year and what your outlook is for that segment?
Speaker #8: Part of it is just the capital . You know , we were we raised our credit standards the last several quarters . We didn't complete our offering .
Andrew Murstein: Part of it is just the capital. We raised our credit standards the last several quarters. We didn't complete our offering. I think it was May or so. We were just cautious. We didn't know if we were going to be able to successfully close the transaction. We thought we would, but until you know, senior money's in the bank, you never know for sure. Now that we're able to use that money and leverage it up with low cost deposits, I think you're going to see accelerated growth the next several quarters.
Speaker #8: I think it was May or so . So we were we were just cautious . We didn't know if we were going to be able to successfully close the transaction .
Speaker #8: We thought we would . But until you know , it's in your money's in the bank , so to speak , you never know for sure .
Speaker #8: But now that we're able to use that money and leverage it up with low cost deposits , I think you're going to see accelerated growth the next several quarters .
Speaker #9: Got it . And then with the fed cutting rates yesterday for the second time , how should we be thinking about margins going forward ?
[Analyst]: Got it. With the Fed cutting rates yesterday for the second time, how should we be thinking about margins going forward?
Speaker #6: Yeah , I think , you know , I think the trend we saw in Q3 with margin expansion is something we would think continues .
Anthony Cutrone: Yeah, I think the trend we saw in Q3 with margin expansion is something we would pick continues. We're currently writing loans at rates above where our WACC sits, so we would expect our yield to continue. We should start to see some drop in cost of funds over the next couple of quarters. It might take another quarter or two, so I wouldn't expect any additional compression. We should start to see some expansion, further expansion in the coming quarters.
Speaker #6: You know , we're currently writing loans at rates above where where our WACC sits . So we would expect our yield to continue .
Speaker #6: We should start to see some drop in cost of funds over the next couple of quarters . But but it might take , you know , another quarter or two .
Speaker #6: So I wouldn't expect any any additional compression . But we should start to see some expansion , you know , further expansion . You know , in the coming quarters .
Speaker #9: Got it . And then one last one from us . How do you feel about overall loan growth going forward ?
[Analyst]: Got it. One last one from us. How do you feel about overall loan growth going forward?
Speaker #8: I think we all feel pretty positive about it . It should grow closer to what it was several years ago when we had the excess capital .
Andrew Murstein: I think we all feel pretty positive about it. It should grow closer to what it was several years ago when we had the excess capital, and again we have it now. We also brought in a significant group that was doing home improvement lending, and they just started with us a couple of weeks ago. I'm hearing great things about their names and reputations, and we may put out a release about it in the next few weeks. That should really be supercharged for us. I think if they can perform like we believe they can, I think that's going to really accelerate the home improvement lending.
Speaker #8: And again , we have it now . We also brought in significant group that was doing home improvement , lending , and they just started with us a couple of weeks ago .
Speaker #8: And I'm hearing great things about their names and reputations , and we may put out a release about it in the next few weeks , but that should really be supercharged for us .
Speaker #8: I think if they can perform like we believe they can , I think that's going to really accelerate the home improvement lending .
Speaker #9: Got it . Thanks , guys . Congrats on the quarter .
[Analyst]: Got it. Thanks, guys. Congrats on the quarter.
Speaker #8: Thank you .
Andrew Murstein: Thank you.
Speaker #10: Thank you .
Anthony Cutrone: Thank you.
Speaker #3: And with that we will conclude our question and answer session . I'd like to turn the conference back over to Andrew for any closing remarks .
Val Ferraro: With that, we will conclude our question and answer session. I'd like to turn the conference back over to Andrew Murstein for any closing remarks.
Speaker #8: Thank you . Before closing the call , as many of you know , the board of directors appointed me into an expanded role as CEO , starting January 31st , 2026 .
Andrew Murstein: Thank you. Before closing the call, as many of you know, the Board of Directors appointed me into an expanded role as CEO starting January 31, 2026, and I'm truly excited about this opportunity to build on our momentum and continue driving the company forward. I'm going to continue to work closely with our leadership team to assess performance across all of our business lines, identify new opportunities, and ensure we remain agile in a rapidly evolving market environment. Over the past quarters, our focus has been on executing our strategic priorities, strengthening our operational foundation, and positioning the company for sustainable long term growth. As we approach the end of the year, we're proud of the strong performance we've achieved so far in 2025 and remain confident that we will continue to deliver solid results in the final quarter of this year.
Speaker #8: And I'm truly excited about this opportunity to build on our momentum and continue driving the company forward . I'm going to continue to work closely with our leadership team to assess performance across all of our business lines , identify new opportunities , and ensure we remain agile in a rapidly evolving market environment .
Speaker #8: Over the past quarters , our focus has been on executing our strategic priorities , strengthening our operational foundation and positioning the company for sustainable long term growth .
Speaker #8: As we approach the end of the year , we're proud of the strong performance we've achieved so far in 2025 and remain confident that we will continue to deliver solid results in the final quarter of this year .
Speaker #8: Moving forward , we plan to maintain the growth strategy that has guided our lending business successfully over the past several years . Our commitment to our shareholders remains strong , evidenced by our consistent earnings , our strategic buyback and our dividend .
Andrew Murstein: Moving forward, we plan to maintain the growth strategy that has guided our lending business successfully over the past several years. Our commitment to our shareholders remains strong, evidenced by our consistent earnings, our strategic buyback, and our dividend. Thank you again for your investment and interest in Medallion Financial Corp. and have a great rest of your day.
Speaker #8: Thank you again for your investment and interest in medallion and have a great rest of your day .
Val Ferraro: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.