10-Q

MEDALLION FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(Dollars in thousands, except share and per share data)	March 31, 2025			December 31, 2024
Assets
Cash and cash equivalents	$	131,512		$	98,238
Federal funds sold		26,482			71,334
Investment securities		60,424			54,805
Equity investments		8,997			9,198
Loans held for sale, at lower of amortized cost or fair value		124,733			128,226
Loans		2,361,700			2,362,796
Allowance for credit losses		(100,366	)		(97,368	)
Net loans receivable		2,261,334			2,265,428
Goodwill		150,803			150,803
Intangible assets, net		18,785			19,146
Property, equipment, and right-of-use lease asset, net		12,814			13,756
Accrued interest receivable		14,437			15,314
Loan collateral in process of foreclosure		9,183			9,932
Income tax receivable		—			2,131
Other assets		28,234			30,295
Total assets	$	2,847,738		$	2,868,606
Liabilities
Deposits (1)	$	2,022,828		$	2,090,071
Long-term debt (2)		199,665			232,159
Short-term debt		111,750			49,000
Deferred tax liabilities, net (3)		21,538			20,995
Operating lease liabilities		4,528			5,128
Accrued interest payable		6,610			8,231
Income tax payable		4,283			—
Accounts payable and accrued expenses (4)		27,524			24,064
Total liabilities		2,398,726			2,429,648
Commitments and contingencies (5)
Stockholders’ equity
Preferred stock (1,000,000 shares of $0.01 par value stock authorized-none outstanding)		—			—
Common stock (50,000,000 shares of $0.01 par value stock authorized - 29,467,773 shares at March 31, 2025 and 29,308,182 shares at December 31, 2024 issued)		295			293
Additional paid in capital		293,897			293,412
Treasury stock (6,232,743 shares at March 31, 2025 and 6,172,558 shares at December 31, 2024)		(50,675	)		(50,144	)
Accumulated other comprehensive loss		(3,009	)		(3,647	)
Retained earnings		139,716			130,256
Total stockholders’ equity		380,224			370,170
Non-controlling interest in consolidated subsidiaries		68,788			68,788
Total equity		449,012			438,958
Total liabilities and equity	$	2,847,738		$	2,868,606
Number of common shares outstanding		23,235,030			23,135,624
Book value per common share	$	16.36		$	16.00

(1)

Includes $4.5 million and $4.6 million of deferred financing costs as of March 31, 2025 and December 31, 2024. Refer to Note 5 for more details.

(2)

Includes $3.6 million of deferred financing costs as of both March 31, 2025 and December 31, 2024. Refer to Note 5 for more details.

(3)

Includes $42.7 million and $42.8 million of deferred tax liabilities related to goodwill and intangible assets as of March 31, 2025 and December 31, 2024. Refer to Note 7 for more details.

(4)

Includes the short-term portion of lease liabilities of $2.3 million as of both March 31, 2025 and December 31, 2024. Refer to Note 6 for more details.

(5)

Refer to Note 10 for more details.

The accompanying notes should be read in conjunction with these consolidated financial statements.

MEDALLION FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended March 31,
(Dollars in thousands, except share and per share data)	2025		2024
Interest and fees on loans	$	73,737	$	65,221
Non-loan interest and dividend income		1,688		1,849
Total interest income		75,425		67,070
Interest on deposits		19,615		14,752
Interest on long-term debt		3,690		4,255
Interest on short-term borrowings		708		146
Total interest expense		24,013		19,153
Net interest income		51,412		47,917
Provision for credit losses		22,014		17,201
Net interest income after provision for credit losses		29,398		30,716
Other income
Gain on equity investments, net		9,430		4,167
Gain on taxi medallion assets, net		843		629
Strategic partnership fees		685		326
Other income		641		281
Total other income, net		11,599		5,403
Other expenses
Salaries and employee benefits		9,993		9,457
Loan servicing fees		2,817		2,470
Collection costs		1,537		1,467
Regulatory fees		821		977
Professional fee costs, net		1,750		771
Rent expense		675		657
Amortization of intangible assets		361		361
Other expenses		2,804		2,065
Total other expenses		20,758		18,225
Income before income taxes		20,239		17,894
Income tax provision		6,713		6,358
Net income after taxes		13,526		11,536
Less: income attributable to the non-controlling interest		1,512		1,512
Net income attributable to Medallion Financial Corp.	$	12,014	$	10,024
Basic earnings per share	$	0.53	$	0.44
Diluted earnings per share	$	0.50	$	0.42
Weighted average common shares outstanding
Basic		22,570,797		22,641,385
Diluted		23,897,167		23,765,045

The accompanying notes should be read in conjunction with these consolidated financial statements.

MEDALLION FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

(UNAUDITED)


	Three Months Ended March 31,
(Dollars in thousands)	2025		2024
Net income after taxes	$	13,526	$	11,536
Other comprehensive income (loss), net of tax		638		(150	)
Total comprehensive income		14,164		11,386
Less comprehensive income attributable to the non-controlling interest		1,512		1,512
Total comprehensive income attributable to Medallion Financial Corp.	$	12,652	$	9,874

The accompanying notes should be read in conjunction with these consolidated financial statements.

MEDALLION FINANCIAL CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)


(Dollars in thousands)	Common Stock Shares			Common Stock		Capital in Excess of Par			Treasury Stock Shares			Treasury Stock			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Non- controlling Interest			Total Equity
Balance at December 31, 2024		29,308,182		$	293	$	293,412			(6,172,558	)	$	(50,144	)	$	130,256		$	(3,647	)	$	370,170		$	68,788		$	438,958
Net income		—			—		—			—			—			12,014			—			12,014			1,512			13,526
Distributions to non-controlling interest		—			—		—			—			—			—			—			—			(1,512	)		(1,512	)
Stock-based compensation expense		—			2		1,686			—			—			—			—			1,688			—			1,688
Issuance of restricted stock, net		307,059			—		—			—			—			—			—			—			—			—
Withheld restricted stock for employees' tax obligations		(144,360	)		—		(1,202	)		—			—			—			—			(1,202	)		—			(1,202	)
Forfeiture of restricted stock, net		(3,373	)		—		—			—			—			—			—			—			—			—
Exercise of stock options		265			—		1			—			—			—			—			1			—			1
Purchase of common stock		—			—		—			(60,185	)		(531	)		—			—			(531	)		—			(531	)
Dividends paid on common stock		—			—		—			—			—			(2,554	)		—			(2,554	)		—			(2,554	)
Other comprehensive income (loss), net of tax		—			—		—			—			—			—			638			638			—			638
Balance at March 31, 2025		29,467,773		$	295	$	293,897			(6,232,743	)	$	(50,675	)	$	139,716		$	(3,009	)	$	380,224		$	68,788		$	449,012


(Dollars in thousands)	Common Stock Shares			Common Stock		Capital in Excess of Par			Treasury Stock Shares			Treasury Stock			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity			Non- controlling Interest			Total Equity
Balance at December 31, 2023		29,051,800		$	291	$	288,046			(5,602,154	)	$	(45,538	)	$	103,883		$	(3,696	)	$	342,986		$	68,788		$	411,774
Net income		—			—		—			—			—			10,024			—			10,024			1,512			11,536
Distributions to non-controlling interest		—			—		—			—			—			—			—			—			(1,512	)		(1,512	)
Stock-based compensation expense		—			1		1,495			—			—			—			—			1,496			—			1,496
Issuance of restricted stock, net		296,178			—		—			—			—			—			—			—			—			—
Withheld restricted stock for employees' tax obligations		(116,275	)		—		(944	)		—			—			—			—			(944	)		—			(944	)
Forfeiture of restricted stock, net		(1,208	)		—		—			—			—			—			—			—			—			—
Exercise of stock options		13,383			—		88			—			—			—			—			88			—			88
Purchase of common stock		—			—		—			(264,160	)		(2,126	)		—			—			(2,126	)		—			(2,126	)
Dividends paid on common stock		—			—		—			—			—			(2,338	)		—			(2,338	)		—			(2,338	)
Other comprehensive income (loss), net of tax		—			—		—			—			—			—			(150	)		(150	)		—			(150	)
Balance at March 31, 2024		29,243,878		$	292	$	288,685			(5,866,314	)	$	(47,664	)	$	111,569		$	(3,846	)	$	349,036		$	68,788		$	417,824

The accompanying notes should be read in conjunction with these consolidated financial statements.

MEDALLION FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income resulting from operations	$	13,526		$	11,536
Adjustments to reconcile net income resulting from operations to net cash provided by operating activities:
Provision for credit losses		22,014			17,201
Paid-in-kind interest income		(249	)		(608	)
Depreciation and amortization		2,105			1,381
Amortization of origination fees, net		2,336			2,007
Increase in deferred and other tax liabilities, net		6,957			6,290
Net change in value of loan collateral in process of foreclosure		—			3,240
Net gains on investments		(9,430	)		(4,167	)
Stock-based compensation expense		1,688			1,496
Decrease in accrued interest receivable		877			865
Decrease in other assets		1,319			522
Decrease in accounts payable and accrued expenses		(3,263	)		(6,763	)
Decrease in accrued interest payable		(1,621	)		(745	)
Net cash provided by operating activities		36,259			32,255
CASH FLOWS FROM INVESTING ACTIVITIES
Loans originated		(284,146	)		(175,721	)
Proceeds from principal receipts, sales, and maturities of loans		265,210			138,748
Purchases of investments		(3,873	)		(795	)
Proceeds from principal receipts, sales, and maturities of investments		14,943			1,103
Proceeds from the sale and principal payments on loan collateral in process of foreclosure		3,171			3,759
Net cash used for investing activities		(4,695	)		(32,906	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from time deposits and funds borrowed		582,122			212,807
Repayments of time deposits and funds borrowed		(619,161	)		(185,900	)
Cash dividends paid on common stock		(2,859	)		(2,482	)
Distributions to non-controlling interests		(1,512	)		(1,512	)
Payment of withholding taxes on net settlement of vested stock		(1,202	)		(944	)
Treasury stock repurchased		(531	)		(2,126	)
Proceeds from the exercise of stock options		1			88
Net cash (used in) provided by financing activities		(43,142	)		19,931
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(11,578	)		19,280
Cash and cash equivalents, beginning of period (1)		169,572			149,845
Cash and cash equivalents, end of period (1)	$	157,994		$	169,125
SUPPLEMENTAL INFORMATION
Cash paid during the period for interest	$	24,515		$	18,976
Cash paid during the period for income taxes		10			10
NON-CASH INVESTING
Loans transferred to loan collateral in process of foreclosure, net	$	6,483		$	(5,425	)

(1)

Includes federal funds sold.

The accompanying notes should be read in conjunction with these consolidated financial statements.

MEDALLION FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

(1) ORGANIZATION OF MEDALLION FINANCIAL CORP. AND ITS SUBSIDIARIES

Medallion Financial Corp., or the Company, is a specialty finance company organized as a Delaware corporation that reports as a bank holding company, but is not a bank holding company for regulatory purposes. The Company conducts its business through various wholly-owned subsidiaries including its primary operating company, Medallion Bank, or the Bank, a Federal Deposit Insurance Corporation, or FDIC, insured industrial bank that originates consumer loans, raises deposits, and conducts other banking activities. The Bank is subject to competition from other financial institutions and to the regulations of certain federal and state agencies, and undergoes examinations by those agencies. The Bank was formed in May 2002 for the purpose of obtaining an industrial bank charter pursuant to the laws of the State of Utah. The Bank originates consumer loans on a national basis for the purchase of recreational vehicles, or RVs, boats, collector cars, and other consumer recreational equipment and to finance home improvements such as roofs, swimming pools, and windows. Prior to 2015, the Bank originated commercial loans to finance the purchase of taxi medallions, all of which are serviced by the Company. The loans are financed primarily with time certificates of deposit which are originated nationally through a variety of brokered deposit relationships.

The Company also conducts business through its subsidiaries Medallion Capital, Inc., or Medallion Capital, a Small Business Investment Company, or SBIC, which conducts a mezzanine financing business; Medallion Funding LLC, or MFC, an SBIC, which historically was the Company's primary taxi medallion lending company; and Freshstart Venture Capital Corp., or FSVC, which historically originated and serviced taxi medallion and commercial loans and was an SBIC through 2023. Medallion Capital and MFC, as SBICs, are regulated by the Small Business Administration, or SBA. Medallion Capital is financed in part by the SBA.

The Company established a wholly-owned subsidiary, Medallion Financing Trust I, or Fin Trust, for the purpose of issuing unsecured trust preferred securities to investors. Fin Trust is a separate legal and corporate entity with its own creditors who, in any liquidation of Fin Trust, will be entitled to be satisfied out of Fin Trust’s assets prior to any value in Fin Trust becoming available to Fin Trust’s equity holders. The assets of Fin Trust, aggregating $34.0 million at March 31, 2025, are comprised solely of a subordinated note from the Company and are not available to pay obligations of its affiliates or any other party, and the assets of affiliates or any other party are not available to pay obligations of Fin Trust.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S., or GAAP, requires management to make estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes. Accounting estimates and assumptions are those that management considers to be the most critical to an understanding of the consolidated financial statements because they inherently involve significant judgments and uncertainties. All of these estimates reflect management’s best judgment about current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements. If such conditions change, it is reasonably possible that the judgments and estimates could change, which may result in future impairments of goodwill and intangible assets, and allowance for credit losses, among other effects.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and all of its wholly-owned and controlled subsidiaries. All significant intercompany transactions, balances, and profits (losses) have been eliminated in consolidation.

The consolidated financial statements have been prepared in accordance with GAAP. The Company consolidates all entities it controls through a majority voting interest, a controlling interest through other contractual rights, or as being identified as the primary beneficiary of VIEs. The primary beneficiary is the party who has both (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (2) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third-party’s holding is recorded as non-controlling interest.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original purchased maturity of three months or less to be cash equivalents. Cash balances are generally held in accounts at large national or regional banking organizations in amounts that exceed the federally insured limits. Cash also includes $1.3 million of interest-bearing funds deposited in other banks with original terms of 5 to 6 years that cannot be withdrawn but are salable on an active secondary market without penalty.

Fair Value of Assets and Liabilities

The Company follows the Financial Accounting Standards Board, or FASB, FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, or FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB ASC 820 defines fair value as an exit price (i.e., a price that would be received to sell, as opposed to acquire, an asset or transfer a liability), and emphasizes that fair value is a market-based measurement. It establishes a fair value hierarchy that distinguishes between assumptions developed based on market data obtained from independent external sources and the reporting entity’s own assumptions. Further, it specifies that fair value measurement should consider adjustment for risk, such as the risk inherent in the valuation technique or its inputs. See also Notes 12 and 13 to the consolidated financial statements.

Equity Investments

The Company follows FASB ASC Topic 321, Investments – Equity Securities, or ASC 321, which requires all applicable investments in equity securities with a readily determinable fair value to be valued as such, and those without a readily determinable fair value, are measured at cost, less any impairment plus or minus any observable price changes. Equity investments of $9.0 million and $9.2 million as of March 31, 2025 and December 31, 2024, which were comprised mainly of nonmarketable stock and stock warrants, are recorded at cost less any impairment plus or minus observable price changes. Substantially all of these equity investments are held by Medallion Capital, our SBIC subsidiary, in connection with its mezzanine lending business. As of March 31, 2025, cumulative impairment of $5.9 million had been recorded with respect to these investments. Gross impairments on equity investments of $0.5 million were recorded during both the three months ended March 31, 2025 and 2024. The Company recognized $9.4 million and $4.2 million of net gains during the three months ended March 31, 2025 and 2024 on equity investments.

During 2021, the Company purchased $2.0 million of equity securities with a readily determinable fair value. As a result, all unrealized gains and losses are included in gain (loss) on equity investments. As of March 31, 2025 and December 31, 2024, the fair value of these securities were $1.8 million and $1.7 million and are included in other assets on the consolidated balance sheet. For the three months ended March 31, 2025 and 2024, the Company realized less than $0.1 million of gains and less than $0.1 million of losses related to equity securities.

Investment Securities

The Company follows FASB ASC Topic 320, Investments – Debt Securities, or ASC 320, which requires that all applicable investments in debt securities be classified as trading securities, available-for-sale securities, or held-to-maturity securities. Investment securities are purchased from time-to-time in the open market at prices that are greater or lesser than the par value of the investment. The resulting premium or discount is deferred and recognized using the interest method. ASC 320 further requires that held-to-maturity securities be reported at amortized cost and available-for-sale securities be reported at fair value, with unrealized gains and losses excluded from earnings at the date of the consolidated financial statements, and reported in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity, net of the effect of income taxes, until they are sold. At the time of sale, any gains or losses, calculated by the specific identification method, will be recognized as a component of operating results and any amounts previously included in stockholders’ equity, which were recorded net of the income tax effect, will be reversed. In accordance with ASC 326, the Company does not maintain an allowance for credit losses for accrued interest receivable.

For available-for-sale debt securities in an unrealized loss position, the Company first determines if it intends to sell the security, or if it is more likely than not that it will be required to sell it before recovering its amortized cost basis. If either condition is met, the security’s amortized cost basis is written down to its fair value through earnings. If neither condition is met, the Company assesses whether the decline in fair value is the result of credit losses or other factors. This assessment includes reviewing changes in the rating of the security by a rating agency, increases in defaults on the underlying collateral, and the extent to which the securities are issued by the federal government or its agencies, including the amount of the guarantee issued by those agencies, among other factors. If a credit loss exists, the Company compares the present value of expected cash flows from the security to its amortized cost basis. If the present value is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded through earnings, but limited to the amount that the fair value of the security is less than its amortized cost basis. Any impairment not recorded through an allowance for credit losses is recognized in other comprehensive income, net of taxes.

Changes in the allowance for credit losses are recorded as a provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management confirms the uncollectibility of an available-for-sale debt security or when either of the criteria regarding intent or requirement to sell is met. There were no investment securities allowance for credit losses as of March 31, 2025 and December 31, 2024.

Loans

The Company’s loans, classified as held for investment, are currently reported at amortized cost, which is the principal amount outstanding, inclusive of loan origination costs, which primarily includes deferred costs paid to loan originators, and which are amortized to interest income over the life of the loan. Loans which the Company has classified as held for sale are reported at lower of amortized cost or fair value.

Loan origination fees and certain direct origination costs are deferred and recognized as an adjustment to the yield of the related loans. As of March 31, 2025 and December 31, 2024, net loan origination costs were $46.8 million and $46.6 million. Net amortization was $2.3 million and $2.0 million for the three months ended March 31, 2025 and 2024.

Interest income is recorded on the accrual basis. The consumer loan portfolio is typified by a larger number of smaller dollar loans that have similar characteristics. A loan is nonperforming when based on current information and events, it is unlikely the Company will be able to collect all amounts due according to the contractual terms of the original loan agreement. Management considers loans that are in bankruptcy status, but have not been charged-off, to be nonperforming. Loans are considered past due when a borrower fails to make a full payment by the payment due date or maturity date. Consumer loans are placed on nonaccrual when they become 90 days past due, or earlier if they enter bankruptcy, and are charged-off in their entirety when deemed uncollectible, or when they become 120 days past due, whichever occurs first, at which time appropriate recovery efforts against both the borrower and the underlying collateral are initiated. For the recreation loan portfolio, the process to repossess the collateral is started at 60 days past due. If the collateral is not located and the account reaches 120 days delinquent, the account is charged-off. If the collateral is repossessed, a loss is recorded by writing the collateral down to its fair value less selling costs, and the collateral is sent to auction. When the collateral is sold, the net auction proceeds are applied to the account, and any remaining balance is written off. Proceeds collected on charged-off accounts are recorded as recoveries. Commercial loans and taxi medallion loans are placed on nonaccrual status, and all uncollected accrued interest is reversed, when there is doubt as to the collectability of interest or principal, or if loans are 90 days or more past due, unless management has determined that they are both well-secured and in the process of collection. Interest income on nonaccrual loans is generally recognized when cash is received, unless a determination has been made to apply all cash receipts to principal.

The Company may modify the contractual cash flow of loans in situations where borrowers are experiencing financial difficulties. The Company strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before they reach nonaccrual status. These modified terms may include interest rate reductions, principal forgiveness, term extensions, payment forbearance and other actions intended to minimize the economic loss to the Company and to avoid foreclosure or repossession of the collateral. For modifications where the Company forgives principal, the entire amount of such principal forgiveness is immediately charged off.

Loan collateral in process of foreclosure primarily includes taxi medallion loans that have reached 120 days past due and have been charged down to the net realizable value of the underlying collateral, in addition to consumer repossessed collateral in the process of being sold. For New York City taxi medallion loans in the process of foreclosure, the Company continued to utilize a net value of $79,500 when assessing net realizable value for these taxi medallion loans, despite fluctuating current transfer prices which may exceed that level from time to time. The "loan collateral in the process of foreclosure" designation reflects that the collection activities on these loans have transitioned from working with the borrower to the liquidation of the collateral securing the loans.

Loans Held For Sale

Loans held for sale consist of recreation loans and strategic partnership loans intended to be sold in the secondary market. Loans held for sale are recorded at the lower of amortized cost or fair value. Changes in fair value are recognized in non-interest income. For loans transferred into the held for sale classification from the held for investment classification, any allowance for credit losses previously recorded is reversed at the transfer date, and the loans are transferred at their amortized cost basis (which is reduced by any previous charge-offs, but excludes any allowance for credit losses). As of March 31, 2025 and December 31, 2024, the Company did not recognize any fair value adjustments related to loans held for sale. Changes in fair value are recognized in non-interest income.

Allowance for Credit Losses

The Company follows Accounting Standards Update 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", or ASC 326, which requires recognition of lifetime expected losses using "reasonable and supportable" expectations about the future, referred to as the current expected credit loss, or CECL, methodology. For consumer loans, the Company uses historical delinquent loan performance and actual loss rates modified by quantitative adjustments based on macroeconomic factors over a twelve-month reasonable and supportable forecast period followed by a six month reversion period. For commercial loans, the Company assesses the historical impact that macroeconomic indicators have had on the loan portfolio, to determine an approximate allowance for credit loss. Unlike consumer loans, where loans may have similar performing characteristics, each commercial loan is unique. The Company evaluates each commercial loan for specific impairment with additional allowance for credit losses recognized as necessary. For taxi medallion loans, the Company individually evaluates each loan and establishes a reserve based on fair value of collateral less cost to sell.

The allowance is evaluated on a quarterly basis by management based on the collectability of the loans in light of historical experience, the nature and size of the loan portfolio, adverse situations that may affect the borrowers' ability to repay, estimated value of any underlying collateral, prevailing economic conditions, and excess concentration risks. This evaluation is inherently subjective, as it requires estimates, including those based on changes in economic conditions, that are susceptible to significant revision as more information becomes available. Credit losses are deducted from the allowance, and subsequent recoveries are added back to the allowance. The Company has elected to exclude accrued interest from its measurement of the allowance for credit losses.

Goodwill and Intangible Assets

Goodwill is evaluated for impairment on an annual basis at December 31 of each year or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Other intangible assets with finite useful lives are amortized either on an accelerated or straight-line basis over their estimated useful lives. Other intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

As of March 31, 2025 and December 31, 2024, the Company had goodwill of $150.8 million, all of which related to the recreation and home improvement lending segments. As of March 31, 2025 and December 31, 2024, the Company had intangible assets of $18.8 million and $19.1 million. The Company recognized $0.4 million of amortization expense on the intangible assets for the three months ended March 31, 2025 and 2024.

Management engaged an independent third-party expert to perform a quantitative assessment of goodwill for impairment at December 31, 2024. The third-party expert’s assessment determined that it was more likely than not that the fair value of both the recreation lending and home improvement lending segments individually were not less than the carrying value of each of these segments. Based upon inputs and analysis deemed appropriate by the third-party expert, the third-party expert concluded that a fair value premium existed in excess of carrying value with respect to the recreation and home improvement lending segments.

The table below presents the intangible assets as of March 31, 2025 and December 31, 2024:


(Dollars in thousands)	March 31, 2025		December 31, 2024
Brand-related intellectual property	$	14,300	$	14,575
Home improvement contractor relationships		4,485		4,571
Total intangible assets	$	18,785	$	19,146

Fixed Assets

Fixed assets are carried at cost less accumulated depreciation and amortization, and are depreciated on a straight-line basis over their estimated useful lives of 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated economic useful life of the improvement. Depreciation and amortization expense was $0.6 million and $0.1 million for the three months ended March 31, 2025 and 2024.

Deferred Costs

Deferred financing costs represent costs associated with obtaining the Company’s borrowing facilities, and are amortized on a straight-line basis over the lives of the related financing agreements and life of the respective pool. Amortization expense, included as interest expense in the consolidated statements of operations, was $1.1 million and $0.8 million for the three months ended March 31, 2025 and 2024. In addition, the Company capitalizes certain costs for transactions in the process of completion (other than business combinations), including those for potential investments, and the sourcing of other financing alternatives. Upon completion or termination of the transaction, any accumulated amounts are amortized against income over an appropriate period, or written off. The amount on the Company’s consolidated balance sheets related to deposits and borrowing facilities were $8.1 million and $8.2 million as of March 31, 2025 and December 31, 2024, and there were no capitalized transaction costs as of March 31, 2025 and December 31, 2024.

Income Taxes

Income taxes are accounted for using the asset and liability approach in accordance with FASB ASC Topic 740, Income Taxes, or ASC 740. Deferred tax assets and liabilities reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at the enacted tax rates expected to apply in the year when taxes are actually paid or recovered. Deferred tax assets are also recorded for net operating losses, capital losses and any tax credit carryforwards. A valuation allowance is provided against a deferred tax asset when it is more likely than not that some or all of the deferred tax assets will not be realized. All available evidence, both positive and negative, is considered to determine whether a valuation allowance for deferred tax assets is needed. Items considered in determining the Company’s valuation allowance include expectations of future earnings of the appropriate tax character, recent historical financial results, tax planning strategies, the length of statutory carryforward periods and the expected timing of the reversal of temporary differences. The Company recognizes tax benefits of uncertain tax positions only when the position is more likely than not to be sustained assuming examination by tax authorities. The Company records income tax related interest and penalties, if applicable, within current income tax expense.

Earnings Per Share (EPS)

Basic earnings per share are computed by dividing net income resulting from operations available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if option contracts to issue common stock were exercised, or if restricted stock vests, and has been computed after considering the weighted average dilutive effect of the Company’s stock options and restricted stock. The Company uses the treasury stock method to calculate diluted EPS, which is a method of recognizing the use of proceeds that could be obtained upon exercise of options and warrants, including unvested compensation expense related to the shares, in computing diluted EPS. It assumes that any proceeds would be used to purchase common stock at the average market price during the period. The table below presents the calculation of basic and diluted EPS.


	Three Months Ended March 31,
(Dollars in thousands, except share and per share data)	2025		2024
Net income attributable to common stockholders	$	12,014	$	10,024
Weighted average common shares outstanding applicable to basic EPS		22,570,797		22,641,385
Effect of restricted stock grants		576,251		610,334
Effect of dilutive stock options		234,474		254,793
Effect of performance stock unit grants		515,645		258,534
Adjusted weighted average common shares outstanding applicable to diluted EPS		23,897,167		23,765,045
Basic earnings per share	$	0.53	$	0.44
Diluted earnings per share		0.50		0.42

Potentially dilutive common shares excluded from the above calculations aggregated to 59,082 shares as of March 31, 2025 and 9,000 shares as of March 31, 2024.

Stock Compensation

The Company follows FASB ASC Topic 718, or ASC 718, Compensation – Stock Compensation, for its equity incentive, stock option, and restricted stock plans, and accordingly, the Company recognizes the expense of these grants as required. Stock-based employee compensation costs pertaining to stock options are reflected in net income resulting from operations for any new grants using the fair values established by usage of the Black-Scholes option pricing model, expensed over the vesting period of the underlying option. Stock-based employee compensation costs pertaining to restricted stock and performance stock units are reflected in net income resulting from operations for any new grants using the grant date fair value of the shares and units granted, expensed over the vesting period of the underlying stock.

Regulatory Capital

The Bank subsidiary is subject to various regulatory capital requirements administered by the FDIC and the Utah Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the bank regulators about components, risk weightings, and other factors.

FDIC-insured banks, including the Bank, are subject to certain federal laws, which impose various legal limitations on the extent to which banks may finance or otherwise supply funds to certain of their affiliates. In particular, the Bank is subject to certain restrictions on any extensions of credit to, or other covered transactions with, such as certain purchases of assets, the Company or its affiliates.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios as defined in the regulations (presented in the table below). Additionally, as conditions of granting the Bank’s application for federal deposit insurance, the FDIC ordered that the Tier 1 leverage capital to total assets ratio, as defined, be not less than 15%, a level which could affect the Bank's ability to pay dividends to the Company, and that an adequate allowance for credit losses be maintained. As of March 31, 2025 and December 31, 2024, the Bank’s Tier 1 leverage ratio was considered well-capitalized. The Bank had excess Tier 1 leverage capital of $23.8 million over the 15% minimum required, which was $373.3 million based on our total assets as of March 31, 2025. The Bank’s actual capital amounts and ratios and the regulatory minimum ratios are presented in the following table.


	Regulatory
(Dollars in thousands)	Adequately Capitalized			Well- Capitalized			March 31, 2025			December 31, 2024
Common equity tier 1 capital							$	328,277		$	322,229
Tier 1 capital								397,064			391,016
Total capital								428,007			422,139
Average assets								2,488,507			2,493,857
Risk-weighted assets								2,414,538			2,429,349
Leverage ratio (1)		4.0	%		5.0	%		16.0	%		15.7	%
Common equity tier 1 capital ratio (2)		4.5			6.5			13.6			13.3
Tier 1 capital ratio (3)		6.0			8.0			16.4			16.1
Total capital ratio (3)		8.0			10.0			17.7			17.4

(1)

Calculated by dividing Tier 1 capital by average assets.

(2)

Calculated by subtracting preferred stock or non-controlling interest from Tier 1 capital and dividing by risk-weighted assets.

(3)

Calculated by dividing Tier 1 or total capital by risk-weighted assets.

In the table above, the minimum risk-based ratios as of March 31, 2025 and December 31, 2024 reflect the capital conservation buffer of 2.5%. The minimum regulatory requirements, inclusive of the capital conservation buffer, were the binding requirements for the risk-based requirements, and the “well-capitalized” requirements were the binding requirements for Tier 1 leverage capital as of both March 31, 2025 and December 31, 2024.

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes, or Topic 740: Improvements to Income Tax Disclosures. The main objective of this update is to provide transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update are effective for the annual periods beginning after December 15, 2024. The Company does not expect this update to have a material impact on the financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income - Expense Disaggregation of Income Statement Expenses. This update requires additional disaggregation of specific types of expenses within the notes to consolidated financial statements on an annual and interim basis. In January 2025, the FASB issued ASU 2025-01 to clarify that all public business entities are required to adopt ASU 2024-03 beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is assessing the impact of the update on the accompanying financial statements.

Reclassifications

Certain reclassifications have been made to prior year balances to conform with the current year presentation. These reclassifications have no effect on the previously reported results of operations.

(3) INVESTMENT SECURITIES

The following tables present details of fixed maturity securities available for sale as of March 31, 2025 and December 31, 2024:


March 31, 2025 (Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Mortgage-backed securities, principally obligations of U.S. federal agencies	$	48,816	$	33	$	(4,246	)	$	44,603
State and municipalities		16,766		13		(1,124	)		15,655
Agency bonds		179		—		(13	)		166
Total	$	65,761	$	46	$	(5,383	)	$	60,424

December 31, 2024 (Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Mortgage-backed securities, principally obligations of U.S. federal agencies	$	41,475	$	28	$	(4,802	)	$	36,701
State and municipalities		17,373		81		(1,516	)		15,938
Agency bonds		2,179		2		(15	)		2,166
Total	$	61,027	$	111	$	(6,333	)	$	54,805

The amortized cost and estimated fair market value of investment securities at March 31, 2025 by contractual maturity are presented below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


March 31, 2025 (Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	1,339	$	1,338
Due after one year through five years		9,724		9,367
Due after five years through ten years		8,237		7,561
Due after ten years		46,461		42,158
Total	$	65,761	$	60,424

The following tables present information pertaining to securities with gross unrealized losses at March 31, 2025 and December 31, 2024, aggregated by investment category and length of time that individual securities have been in a continuous loss position.


	Less than Twelve Months					Twelve Months and Over
March 31, 2025 (Dollars in thousands)	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Mortgage-backed securities, principally obligations of U.S. federal agencies	$	(49	)	$	5,379	$	(4,197	)	$	28,103
State and municipalities		(134	)		5,894		(990	)		9,718
Agency bonds		—			—		(13	)		166
Total	$	(183	)	$	11,273	$	(5,200	)	$	37,987

	Less than Twelve Months					Twelve Months and Over
December 31, 2024 (Dollars in thousands)	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Mortgage-backed securities, principally obligations of U.S. federal agencies	$	(106	)	$	5,423	$	(4,696	)	$	29,619
State and municipalities		(269	)		4,884		(1,247	)		9,939
Agency bonds		—			—		(15	)		166
Total	$	(375	)	$	10,307	$	(5,958	)	$	39,724

As of March 31, 2025 and December 31, 2024, the Company had 57 and 58 securities with unrealized losses that have not been recognized in income. The investments are mortgage-backed securities and similar instruments with lower risk characteristics. The Company regularly reviews investment securities for impairment resulting from credit loss using both qualitative and quantitative criteria, as necessary based on the composition of the portfolio at period end. Based on the Company's assessment, no material impairments for credit losses were recognized during the period. The Company does not intend to sell its investment securities that are in an unrealized loss position and believes that it is unlikely that it will be required to sell these securities before recovery of the amortized cost. As of March 31, 2025 and December 31, 2024, the Company did not hold investments in any single issuer with an aggregate book value that exceeded 10% of the Company's equity, other than U.S. Government agency residential mortgage-backed securities issued by the Federal National Mortgage Association.

(4) LOANS AND ALLOWANCE FOR CREDIT LOSSES

The following table presents the major classification of loans, inclusive of capitalized loan origination costs, as of March 31, 2025 and December 31, 2024.


	March 31, 2025					December 31, 2024
(Dollars in thousands)	Amount		As a Percent of Total Loans			Amount		As a Percent of Total Loans
Loans held for investment:
Recreation	$	1,431,610		58	%	$	1,422,403		57	%
Home improvement		812,381		33			827,211		33
Commercial		116,059		5			111,273		4
Taxi medallion		1,650	*				1,909	*
Total loans		2,361,700		95			2,362,796		95
Loans held for sale, at lower of amortized cost or fair value:
Recreation		114,234		5			120,840		5
Strategic partnership		10,499	*				7,386	*
Total loans held for sale, at lower of amortized cost or fair value		124,733		5			128,226		5
Total loans and loans held for sale	$	2,486,433		100	%	$	2,491,022		100	%

(*) Less than 1%.

The following tables present the activity of the gross loans and loans held for sale for the three months ended March 31, 2025 and 2024.


Three Months Ended March 31, 2025 (Dollars in thousands)	Recreation			Home Improvement			Commercial			Taxi Medallion			Strategic Partnership			Total
Gross loans – December 31, 2024 (1)	$	1,543,243		$	827,211		$	111,273		$	1,909		$	7,386		$	2,491,022
Loan originations		86,833			48,796			9,707			72			136,240			281,648
Principal receipts, sales, and maturities		(61,507	)		(59,611	)		(5,052	)		(316	)		(133,127	)		(259,613	)
Charge-offs		(20,274	)		(4,227	)		(130	)		(15	)		—			(24,646	)
Transfer to loan collateral in process of foreclosure, net		(2,389	)		—			—			—			—			(2,389	)
Amortization of origination fees and costs, net		(3,481	)		1,133			12			—			—			(2,336	)
Origination fees and costs, net		3,419			(921	)		—			—			—			2,498
Paid-in-kind interest		—			—			249			—			—			249
Gross loans – March 31, 2025 (1)	$	1,545,844		$	812,381		$	116,059		$	1,650		$	10,499		$	2,486,433

(1)

Includes loans held for sale and loans held for investment.


Three Months Ended March 31, 2024 (Dollars in thousands)	Recreation			Home Improvement			Commercial			Taxi Medallion			Strategic Partnership			Total
Gross loans – December 31, 2023	$	1,336,226		$	760,617		$	114,827		$	3,663		$	553		$	2,215,886
Loan originations		105,765			51,576			—			—			15,746			173,087
Principal receipts, sales, and maturities		(64,886	)		(54,917	)		(8,872	)		(103	)		(15,430	)		(144,208	)
Charge-offs		(18,101	)		(4,898	)		—			—			—			(22,999	)
Transfer to loan collateral in process of foreclosure, net		5,425			—			—			—			—			5,425
Amortization of origination fees and costs, net		(2,952	)		938			7			—			—			(2,007	)
Origination fees and costs, net		3,688			(1,054	)		—			—			—			2,634
Paid-in-kind interest		—			—			608			—			—			608
Gross loans – March 31, 2024	$	1,365,165		$	752,262		$	106,570		$	3,560		$	869		$	2,228,426

The following tables present the activity in the allowance for credit losses for the three months ended March 31, 2025 and 2024.


(Dollars in thousands)	Recreation			Home Improvement			Commercial			Taxi Medallion (1)			Total
Balance at December 31, 2024	$	71,102		$	20,536		$	5,190		$	540		$	97,368
Charge-offs		(20,274	)		(4,227	)		(130	)		(15	)		(24,646	)
Recoveries		3,860			1,095			—			675			5,630
Provision (benefit) for credit losses		16,870			2,845			3,114			(815	)		22,014
Balance at March 31, 2025	$	71,558		$	20,249		$	8,174		$	385		$	100,366

(1)

As of March 31, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $161.7 million, including $95.2 million related to loans secured by New York taxi medallions, some of which may represent collection opportunities for the Company.


(Dollars in thousands)	Recreation			Home Improvement			Commercial		Taxi Medallion			Total
Balance at December 31, 2023	$	57,532		$	21,019		$	4,148	$	1,536		$	84,235
Charge-offs		(18,101	)		(4,898	)		—		—			(22,999	)
Recoveries		3,548			911			20		911			5,390
Provision (benefit) for credit losses		17,030			898			216		(943	)		17,201
Balance at March 31, 2024	$	60,009		$	17,930		$	4,384	$	1,504		$	83,827

The following table presents the gross charge-offs for the three months ended March 31, 2025, by the year of origination:


Three Months Ended March 31, 2025 (Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Total
Recreation	$	—	$	2,728	$	3,707	$	4,506	$	1,933	$	7,400	$	20,274
Home improvement		—		823		1,503		1,133		428		340		4,227
Commercial		—		—		—		130		—		—		130
Taxi medallion		—		—		—		—		—		15		15
Total	$	—	$	3,551	$	5,210	$	5,769	$	2,361	$	7,755	$	24,646

The following table presents the gross charge-offs for the three months ended March 31, 2024, by the year of origination:


Three Months Ended March 31, 2024 (Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Total
Recreation	$	—	$	3,763	$	6,818	$	3,497	$	1,289	$	2,734	$	18,101
Home improvement		—		1,524		1,680		1,163		287		244		4,898
Commercial		—		—		—		—		—		—		—
Taxi medallion		—		—		—		—		—		—		—
Total	$	—	$	5,287	$	8,498	$	4,660	$	1,576	$	2,978	$	22,999

The following tables present the allowance for credit losses by type as of March 31, 2025 and December 31, 2024.


March 31, 2025 (Dollars in thousands)	Amount		Percentage of Allowance			Allowance as a Percent of Loan Category (1)
Recreation	$	71,558		71	%		5.00	%
Home improvement		20,249		20			2.49
Commercial		8,174		8			7.04
Taxi medallion		385		1			23.32
Total (2)	$	100,366		100	%

(1)

Does not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.

(2)

As of March 31, 2025, total allowance for credit losses as a percent of nonaccrual loans was 293.37%.


December 31, 2024 (Dollars in thousands)	Amount		Percentage of Allowance			Allowance as a Percent of Loan Category (1)
Recreation	$	71,102		73	%		5.00	%
Home improvement		20,536		21			2.48
Commercial		5,190		5			4.66
Taxi medallion		540		1			28.29
Total (2)	$	97,368		100	%

(1)

Does not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.

(2)

As of December 31, 2024, total allowance for credit losses as a percent of nonaccrual loans was 291.93%

The following tables present the performance status of loans and loans held for sale as of March 31, 2025 and December 31, 2024.


March 31, 2025 (Dollars in thousands)	Performing		Nonperforming		Total		Percentage of Nonperforming to Total
Recreation	$	1,538,119	$	7,725	$	1,545,844		0.50	%
Home improvement		810,874		1,507		812,381		0.19
Commercial		92,730		23,329		116,059		20.10
Taxi medallion		—		1,650		1,650		100.00
Strategic partnership		10,499		—		10,499		—
Total	$	2,452,222	$	34,211	$	2,486,433		1.38	%

December 31, 2024 (Dollars in thousands)	Performing		Nonperforming		Total		Percentage of Nonperforming to Total
Recreation	$	1,532,448	$	10,795	$	1,543,243		0.70	%
Home improvement		825,825		1,386		827,211		0.17
Commercial		92,010		19,263		111,273		17.31
Taxi medallion		—		1,909		1,909		100.00
Strategic partnership		7,386		—		7,386		—
Total	$	2,457,669	$	33,353	$	2,491,022		1.34	%

For those loans aged under 90 days past due, there is a possibility that their delinquency status will continue to deteriorate and they will subsequently be placed on nonaccrual status and be reserved for, and as such, deemed nonperforming.

The following tables present the aging of loans and loans held for sale as of March 31, 2025 and December 31, 2024.


March 31, 2025	Days Past Due												Recorded Investment 90 Days and
(Dollars in thousands)	30-59		60-89		90 +		Total		Current		Total (1)		Accruing
Recreation	$	46,880	$	14,148	$	7,140	$	68,168	$	1,427,037	$	1,495,205	$	—
Home improvement		4,644		2,117		1,519		8,280		807,755		816,035		—
Commercial		—		—		20,497		20,497		95,742		116,239		—
Taxi medallion		46		67		—		113		1,537		1,650		—
Strategic partnership		—		—		—		—		10,499		10,499		—
Total	$	51,570	$	16,332	$	29,156	$	97,058	$	2,342,570	$	2,439,628	$	—

(1)

Excludes $46.8 million of capitalized loan origination costs.


December 31, 2024	Days Past Due												Recorded Investment 90 Days and
(Dollars in thousands)	30-59		60-89		90 +		Total		Current		Total (1)		Accruing
Recreation	$	54,169	$	20,376	$	10,018	$	84,563	$	1,407,977	$	1,492,540	$	—
Home improvement		5,407		2,432		1,386		9,225		821,852		831,077		—
Commercial		—		—		16,337		16,337		95,127		111,464		—
Taxi medallion		49		69		—		118		1,791		1,909		—
Strategic partnership		—		—		—		—		7,386		7,386		—
Total	$	59,625	$	22,877	$	27,741	$	110,243	$	2,334,133	$	2,444,376	$	—

(1)

Excludes $46.6 million of capitalized loan origination costs.

(5) FUNDS BORROWED

The following table presents outstanding balances of funds borrowed.


	Payments Due for the Twelve Months Ending March 31,
(Dollars in thousands)	2026		2027		2028		2029		2030		Thereafter		March 31, 2025 (1)		December 31, 2024 (1)		Interest Rate (2)
Deposits (3)	$	807,514	$	466,604	$	389,848	$	173,104	$	186,054	$	—	$	2,023,124	$	2,091,663		3.75	%
Privately placed notes		31,250		—		53,750		39,000		—		22,500		146,500		146,500		8.12
SBA debentures and borrowings		15,500		4,500		—		2,500		—		48,000		70,500		70,250		3.84
Trust preferred securities		—		—		—		—		—		33,000		33,000		33,000		6.69
Federal reserve and other borrowings		65,000		—		—		—		—		—		65,000		35,000		4.50
Total	$	919,264	$	471,104	$	443,598	$	214,604	$	186,054	$	103,500	$	2,338,124	$	2,376,413		4.09	%

(1)

Excludes deferred financing costs of $8.1 million and $8.2 million as of March 31, 2025 and December 31, 2024.

(2)

Weighted average contractual rate as of March 31, 2025.

(3)

Balance excludes $4.3 million and $3.0 million of strategic partner reserve deposits and includes $5.2 million and $6.0 million in retail savings deposit balances as of March 31, 2025 and December 31, 2024.

(A) DEPOSITS

Most deposits are raised through the use of investment brokerage firms that package time deposits in denominations of less than $250,000 qualifying for FDIC insurance into larger pools that are sold to the Bank. The rates paid on the deposits are highly competitive with market rates paid by other financial institutions. Additionally, a brokerage fee is paid, depending on the maturity of the deposits, the annual expense of which averages less than 0.15%. Interest on the deposits is accrued daily and paid monthly, quarterly, semiannually, or at maturity. Additionally, the Bank raises deposits through listing services and, as of March 31, 2025 and December 31, 2024, the Bank had $10.4 million in listing service deposit balances from other financial institutions. As of March 31, 2025 and December 31, 2024, the Bank had $5.2 million and $6.0 million in retail savings deposit balances. The following table presents the maturity of the deposit pools and retail savings deposits, which includes strategic partner reserve deposits, as of March 31, 2025.


(Dollars in thousands)	March 31, 2025
Three months or less	$	382,152
Over three months through six months		219,337
Over six months through one year		206,025
Over one year		1,215,610
Deposits		2,023,124
Strategic partner collateral deposits		4,250
Total deposits	$	2,027,374

(B) FEDERAL RESERVE DISCOUNT WINDOW AND OTHER BORROWINGS

As of March 31, 2025, the Bank had $213.4 million in home improvement loans pledged as collateral to the Federal Reserve. The current advance rate on the pledged securities is approximately 46% of book value, for a total of approximately $97.4 million in secured borrowing capacity, of which $65.0 million was utilized as of March 31, 2025.

The Bank has borrowing arrangements with several correspondent banks. These agreements are accommodations that can be terminated at any time, for any reason and allow the Bank to borrow up to $75.0 million. As of March 31, 2025, there were no outstanding amounts with respect to these arrangements.

The Company has entered into various private placements with certain institutional investors over time. The following table presents the private placement notes outstanding as of March 31, 2025 and December 31, 2024.


(Dollars in thousands)
Date of Notes	Maturity	Interest Rate			Interest Payable	March 31, 2025		December 31, 2024
December 2020	December 2027		7.500	%	Semi-annually	$	53,750	$	53,750
February 2021	February 2026		7.250	%	Semi-annually		31,250		31,250
September 2023	September 2028		9.250	%	Semi-annually		39,000		39,000
June 2024	June 2039		8.875	%	Semi-annually		17,500		17,500
August 2024	August 2039		8.625	%	Semi-annually		5,000		5,000
						$	146,500	$	146,500

(D) SBA DEBENTURES AND BORROWINGS

Over the years, the SBA has approved commitments for Medallion Capital and FSVC, typically for a four and a half year term and a 1% fee. On February 28, 2024, Medallion Capital accepted a commitment from the SBA for $18.5 million in debenture financing. Medallion Capital can draw funds under the commitment, in whole or in part, until September 30, 2028. In connection with the commitment, Medallion Capital paid the SBA a leverage fee of $0.2 million, with the remaining $0.4 million of the fee to be paid pro rata as Medallion Capital draws under the commitment. As of March 31, 2025, none of the commitment had been drawn, $10.3 million was drawable, with the balance of $8.2 million drawable upon the infusion of $4.1 million of capital from a capital infusion into Medallion Capital from the Company or the capitalization of retained earnings of which Medallion Capital had $25.7 million as of March 31, 2025.

The following table presents the SBA debentures and borrowings as of March 31, 2025 and December 31, 2024.


(Dollars in thousands)
Date of Notes	Maturity	Interest Rate			Interest Payable	March 31, 2025		December 31, 2024
March 2015	March 2025		2.87	%	Semi-annually	$	—	$	10,000
September 2015	September 2025		3.57	%	Semi-annually		4,000		4,000
March 2016	March 2026		3.25	%	Semi-annually		1,500		1,500
March 2016	March 2026		3.18	%	Semi-annually		10,000		10,000
May 2016	September 2026		2.72	%	Semi-annually		2,500		2,500
March 2017	March 2027		3.52	%	Semi-annually		2,000		2,000
September 2018	September 2028		4.22	%	Semi-annually		1,250		1,250
March 2019	March 2029		3.79	%	Semi-annually		1,250		1,250
September 2020	September 2030		1.71	%	Semi-annually		3,000		3,000
June 2021	September 2031		1.58	%	Semi-annually		8,500		8,500
October 2021	March 2032		3.21	%	Semi-annually		7,000		7,000
October 2022	March 2033		5.44	%	Semi-annually		4,750		4,750
April 2023	September 2033		5.96	%	Semi-annually		4,750		4,750
September 2023	March 2034		5.08	%	Semi-annually		4,750		4,750
November 2023	March 2034		5.08	%	Semi-annually		5,000		5,000
March 2025	September 2035	*			Semi-annually		10,250		—
						$	70,500	$	70,250

(*) Interest rate will price in September 2025 and will accrue interest at a rate which approximates 5% until that time.

(E) TRUST PREFERRED SECURITIES

In June 2007, the Company issued and sold $36.1 million aggregate principal amount of unsecured junior subordinated notes to Fin Trust which, in turn, sold $35.0 million of trust preferred securities to Merrill Lynch International and issued 1,083 shares of common stock to the Company. Interest is calculated using the Secured Overnight Financing Rate, or SOFR, adjusted by a relevant spread adjustment of approximately 26 basis points, plus 2.13%. The notes mature in September 2037 and are prepayable at par. Interest is payable quarterly in arrears. The terms of the trust preferred securities and the notes are substantially identical. In December 2007, $2.0 million of the trust preferred securities were repurchased from a third-party investor. As of March 31, 2025, $33.0 million was outstanding on the trust preferred securities.

(F) COVENANT COMPLIANCE

Certain of the Company's debt agreements contain financial covenants that require the Company to maintain certain financial ratios and minimum tangible net worth. As of March 31, 2025, the Company was in compliance with all such covenants.

(6) LEASES

The Company has leased premises that expire at various dates through February 28, 2031 subject to various operating leases.

The following table presents the operating lease costs and additional information for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Operating lease costs	$	588		$	604
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases		675			657
Right-of-use asset obtained in exchange for lease liability		(63	)		(59	)

The following table presents the breakout of the operating leases as of March 31, 2025 and December 31, 2024.


(Dollars in thousands)	March 31, 2025			December 31, 2024
Operating lease right-of-use assets	$	6,435		$	6,922
Other current liabilities		2,349			2,294
Operating lease liabilities		4,528			5,128
Total operating lease liabilities		6,877			7,422
Weighted average remaining lease term	3.6 years			4.1 years
Weighted average discount rate		5.55	%	5.56%

At March 31, 2025, maturities of the lease liabilities were as follows:


(Dollars in thousands)
Remainder of 2025	$	1,911
2026		2,567
2027		1,342
2028		575
2029		589
Thereafter		548
Total lease payments		7,532
Less imputed interest		655
Total operating lease liabilities	$	6,877

(7) INCOME TAXES

The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C of the Internal Revenue Code, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries in which it holds 80% or more of the outstanding equity interest measured by both vote and fair value.

The following table presents the significant components of the Company's deferred tax assets and liabilities as of March 31, 2025 and December 31, 2024.


(Dollars in thousands)	March 31, 2025			December 31, 2024
Deferred tax assets:
Provision for credit losses	$	15,477		$	14,530
Accrued expenses, compensation, and other assets		4,022			5,612
Net operating loss carryforwards (1)		3,168			3,168
Other investments and investment securities		2,704			2,885
Valuation allowance		(4,228	)		(4,418	)
Total deferred tax assets		21,143			21,777
Deferred tax liabilities:
Goodwill and other intangibles		42,681			42,772
Total deferred tax liabilities		42,681			42,772
Deferred tax liability, net	$	21,538		$	20,995

(1)

As of March 31, 2025, the Company had an estimated $11.1 million of net operating loss carryforwards, $1.7 million of which expires at various dates between December 31, 2026 and December 31, 2035, which had a net carrying value of $0.5 million as of March 31, 2025.

The following table presents the components of the Company's tax provision for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(Dollars in thousands)	2025		2024
Current
Federal	$	4,661	$	1,729
State		1,522		643
Deferred
Federal		261		3,116
State		269		870
Net provision for income taxes	$	6,713	$	6,358

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision reported for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Statutory Federal income tax provision at 21%	$	4,250		$	3,758
State and local income taxes, net of federal income tax benefit		923			735
Non-deductible expenses		1,572			1,780
Valuation allowance against deferred tax assets		(190	)		—
Other		158			85
Total income tax provision	$	6,713		$	6,358

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. The Company has determined that a valuation allowance is necessary for net operating losses which the Company does not believe will be utilized as well as for deferred compensation in excess of statutory limits. Based upon these considerations, the Company determined the necessary valuation allowance as of March 31, 2025.

The Company has filed tax returns in many states. Federal, New York State, New York City, and Utah State tax filings of the Company for the tax years 2021 through the present are the more significant filings that are open for examination.

(8) STOCK OPTIONS AND RESTRICTED STOCK

The Company’s Board of Directors approved the 2018 Equity Incentive Plan, or the 2018 Plan, which was approved by the Company’s stockholders on June 15, 2018. The terms of 2018 Plan provide for grants of a variety of different type of stock awards to the Company’s employees and non-employee directors, including options, restricted stock, restricted stock units, performance stock units, and stock appreciation rights, etc. On April 22, 2020, the Company’s Board of Directors approved an amendment to the 2018 Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 19, 2020, and subsequently on April 26, 2022, the Company’s Board of Directors approved an additional amendment to the 2018 Plan to further increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 14, 2022. A total of 5,710,968 shares of the Company’s common stock are issuable under the 2018 Plan, and 399,439 shares remained issuable as of March 31, 2025. Awards under the 2018 Plan are subject to certain limitations as set forth in the 2018 Plan, which will terminate when all shares of common stock authorized for delivery have been delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the 2018 Plan, whichever occurs first.

The Company’s Board of Directors approved the 2015 Non-Employee Director Stock Option Plan, or the 2015 Director Plan, on March 12, 2015, which was approved by the Company’s shareholders on June 5, 2015, and on which exemptive relief to implement the 2015 Director Plan was received from the SEC on February 29, 2016. A total of 300,000 shares of the Company’s common stock were issuable under the 2015 Director Plan, and 258,334 remained issuable as of June 15, 2018. Effective June 15, 2018, the 2018 Plan was approved, and these remaining shares were rolled into the 2018 Plan. Under the 2015 Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the 2015 Director Plan, the Company granted options to purchase 12,000 shares of the Company’s common stock to a non-employee director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the 2015 Director Plan vested annually, as defined in the 2015 Director Plan. The term of the options could not exceed ten years.

The Company’s Board of Directors approved the First Amended and Restated 2006 Director Plan, or the Amended Director Plan, on April 16, 2009, which was approved by the Company’s shareholders on June 5, 2009, and on which exemptive relief to implement the Amended Director Plan was received from the SEC on July 17, 2012. A total of 200,000 shares of the Company’s common stock were issuable under the Amended Director Plan. No additional shares are available for issuance under the Amended Director Plan. Under the Amended Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the Amended Director Plan, the Company would grant options to purchase 9,000 shares of the Company’s common stock to an Eligible Director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the Amended Director Plan vested annually, as defined in the Amended Director Plan. The term of the options could not exceed ten years.

Additional shares are only available for future issuance under the 2018 Plan. As of March 31, 2025, 889,928 options on the Company’s common stock were outstanding under the Company’s plans, all of which have previously vested and are exercisable. Additionally, as of March 31, 2025, there were 727,891 unvested shares of restricted stock, 823,854 unvested performance stock units, 95,766 unvested restricted stock units, and 242,991 vested, unissued restricted stock units outstanding under the 2018 Plan. As of March 31, 2025, the total remaining unrecognized compensation cost related to unvested restricted stock, restricted stock units, and performance stock units was $9.0 million, which is expected to be recognized over the next 12 quarters. Total stock-based compensation expense was $1.7 million, or $0.07 per diluted common share, for the three months ended March 31, 2025 and $1.5 million, or $0.06 per diluted common share, for the three months ended March 31, 2024.

The fair value of each restricted stock grant, each restricted stock unit, and each performance stock unit is determined on the date of grant by the closing market price of the Company’s common stock on the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. There were no options granted during the three months ended March 31, 2025 and 2024.

During 2023, the Company’s Compensation Committee of the Board of Directors began granting performance stock units, or PSUs, to certain officers and employees of the Company. Granted PSUs are subject to specified performance criteria for a particular performance period. The number of PSUs that vest can range from zero to 200% of the grant amount. In addition, dividends that accrue during the vesting period are reinvested in dividend equivalent PSUs. PSUs and the related dividend equivalent PSUs are converted into shares of common stock after vesting. Once the PSUs and dividend equivalent PSUs have vested, shares of common stock are delivered.

The following table presents the PSU activity for the three months ended March 31, 2025 and the year ended December 31, 2024. The PSUs have vesting conditions based upon certain levels of total pre-tax income as well as return on common equity attained over a three-year period. The PSUs cliff vest after three years based upon the performance of the Company. Dividend equivalent PSUs accumulate and convert to additional shares for the benefit of the grantee at the vesting date or are forfeited if the performance conditions are not met.


	Number of Shares			Grant Price Per Share		Weighted Average Grant Price
Outstanding at December 31, 2023		296,444	$		6.08	$	6.08
Granted		215,687			8.97		8.97
Cancelled		—			—		—
Vested		—			—		—
Outstanding at December 31, 2024		512,131		6.08 - 8.97		$	7.30
Granted		311,723			8.47		8.47
Cancelled		—			—		—
Vested		—			—		—
Outstanding at March 31, 2025		823,854	$	6.08 - 8.97		$	7.74

The following table presents the activity for the restricted stock programs for the three months ended March 31, 2025 and the year ended December 31, 2024.


	Number of Shares				Grant Price Per Share		Weighted Average Grant Price
Outstanding at December 31, 2023		995,376		$	4.89 - 9.37		$	7.74
Granted		347,158			8.97 - 10.32			9.17
Cancelled		(32,521	)		4.89 - 10.32			8.07
Vested (1)		(400,985	)		4.89 - 8.40			7.69
Outstanding at December 31, 2024		909,028			4.89 - 10.32			8.30
Granted		307,059				8.47		8.47
Cancelled		(3,373	)		4.89 - 10.32			8.86
Vested (1)		(484,823	)		4.89 - 8.97			7.70
Outstanding at March 31, 2025 (2)		727,891		$	8.08 - 10.32		$	8.77

(1)

The aggregate fair value of the restricted stock vested was $4.2 million for the three months ended March 31, 2025 and $2.7 million for the year ended December 31, 2024.

(2)

The aggregate fair value of the restricted stock was $6.3 million as of March 31, 2025. The remaining vesting period was 2.9 years at March 31, 2025.

The following table presents the activity for the stock option programs for the three months ended March 31, 2025 and the year ended December 31, 2024.


	Number of Options				Exercise Price Per Share		Weighted Average Exercise Price
Outstanding at December 31, 2023		959,522		$	2.14 - 9.38		$	6.51
Granted		—				—		—
Cancelled		(4,748	)		4.89 - 7.25			6.15
Exercised		(40,865	)		4.89 - 7.25			6.35
Outstanding at December 31, 2024		913,909			2.14 - 9.38		$	6.52
Granted		—				—		—
Cancelled		(23,716	)		4.89 - 7.25			6.67
Exercised (1)		(265	)			4.89		4.89
Outstanding at March 31, 2025 (2)		889,928		$	2.14 - 9.38		$	6.51
Options exercisable at:
December 31, 2024		829,286			2.14 - 9.38		$	6.53
March 31, 2025 (2)		889,928		$	2.14 - 9.38		$	6.51

(1)

The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was less than $0.1 million for both the three months ended March 31, 2025 and the year ended December 31, 2024.

(2)

The aggregate intrinsic value of outstanding options, which represents the difference between the price of the Company’s common stock at March 31, 2025 and the related exercise price of the underlying options, was $1.9 million for outstanding options, all of which had previously vested. The remaining contractual life was 4.9 years for outstanding options at March 31, 2025.

The following table presents the activity for the unvested options outstanding under the plans described above for the three months ended March 31, 2025 and the year ended December 31, 2024.


	Number of Options				Exercise Price Per Share		Weighted Average Exercise Price
Outstanding at December 31, 2023		261,875		$	4.89 - 7.25		$	6.49
Granted		—				—		—
Cancelled		(3,822	)		4.89 - 7.25			6.22
Vested		(173,430	)		4.89 - 7.25			6.56
Outstanding at December 31, 2024		84,623			4.89 - 6.79		$	6.37
Granted		—				—		—
Cancelled		(119	)			4.89		4.89
Vested		(84,504	)		4.89 - 6.79			6.37
Outstanding at March 31, 2025		—		$		—	$	—

The intrinsic value of the options vested was $0.1 million for the three months ended March 31, 2025.

During the three months ended March 31, 2025, the Company did not grant any restricted stock units, or RSUs, and during the year ended December 31, 2024, granted 92,350 RSUs with a vesting date of June 11, 2025 at a grant price of $8.23. For the RSUs granted in 2024, unitholders had the option of deferring settlement until a future date if the recipient makes a formal election under the guidelines of IRC Section 409A. As of March 31, 2025, there were 338,757 RSUs outstanding, including 242,991 which had previously vested.

(9) SEGMENT REPORTING

The Company has five business segments, which include four lending segments and one non-operating segment, which are reflective of how Company management makes decisions about its business and operations.

The four lending segments reflect the main types of lending performed at the Company, which are recreation, home improvement, commercial, and taxi medallion lending. The recreation and home improvement lending segments are operated by the Bank and loans are made to borrowers residing nationwide. The recreation lending segment is a consumer finance business that works with third-party dealers and financial service providers to finance RVs, boats, collector cars, and other consumer recreational equipment, of which RVs, boats, and collector cars make up 55%, 19%, and 11% of the segment portfolio, with no other product lines at or above 10%, as of March 31, 2025. The highest concentrations of recreation loans are in Texas and Florida at 16% and 10% of loans outstanding and with no other states at or above 10% as of March 31, 2025. The home improvement lending segment works with contractors and financial service providers to finance residential home improvement with the largest product lines being roofs, swimming pools, and windows at 35%, 29%, and 13% of total home improvement loans outstanding, and with no other product lines at or above 10% as of March 31, 2025. The highest concentrations of home improvement loans are in Florida and Texas at 13% and 11% of loans outstanding, with no other states at or above 10% as of March 31, 2025. The commercial lending segment focuses on serving a wide variety of industries, with concentrations in manufacturing, construction, and wholesale trade making up 58%, 13%, and 12% of the loans outstanding as of March 31, 2025, with no other product lines exceeding 10% as of March 31, 2025. The commercial lending segment invests across the United States with concentrations in California and Illinois having 31% and 10% of the segment portfolio, with no other states having a concentration at or above 10% as of March 31, 2025. The taxi medallion lending segment arose in connection with the financing of taxi medallions, taxis, and related assets, primarily all of which are located in the New York City metropolitan area as of March 31, 2025.

The Company's corporate and other investments segment is a non-operating segment that includes items not allocated to the Company's operating segments such as investment securities, equity investments, intercompany eliminations, goodwill, and other corporate elements. The Company allocates portions of centrally incurred costs inclusive of overhead and interest expense formulaically based upon overall capital allocated to the lending segments.

As part of segment reporting, capital ratios for all operating segments have been normalized as a percent of consolidated total equity divided by total assets, with the net adjustment applied to corporate and other investments. In addition, the commercial segment primarily represents the mezzanine lending business, with certain legacy commercial loans (immaterial to total) allocated to corporate and other investments.

The Company's chief operating decision maker (CODM) is a group comprised of the Chief Executive Officer, Chief Financial Officer, President, Chief Operating Officer, and other senior members of management. The CODM primarily uses segment information to identify areas to improve efficiency of resources allocation, determine where to reinvest profits, and minimize unnecessary expenses. The CODM assesses segment performance mainly through selected financial ratios such as returns on average assets and net interest margin, which identifies areas requiring action.

The following table presents segment data as of and for the three months ended March 31, 2025.


Three Months Ended March 31, 2025	Consumer Lending
(Dollars in thousands)	Recreation			Home Improvement			Commercial Lending			Taxi Medallion Lending			Corporate and Other Investments			Consolidated
Total interest income	$	50,466		$	19,771		$	3,343		$	80		$	1,765		$	75,425
Total interest expense		12,041			6,964			1,053			12			3,943			24,013
Net interest income (loss)		38,425			12,807			2,290			68			(2,178	)		51,412
Provision (benefit) for credit losses		16,870			2,845			3,114			(815	)		—			22,014
Net interest income (loss) after credit loss provision		21,555			9,962			(824	)		883			(2,178	)		29,398
Other income, net		400			2			9,642			844			711			11,599
Operating expenses		(9,964	)		(4,984	)		(1,473	)		(983	)		(3,354	)		(20,758	)
Net income (loss) before taxes		11,991			4,980			7,345			744			(4,821	)		20,239
Income tax (provision) benefit		(3,977	)		(1,652	)		(2,436	)		(247	)		1,599			(6,713	)
Net income (loss) after taxes	$	8,014		$	3,328		$	4,909		$	497		$	(3,222	)	$	13,526
Income attributable to the non-controlling interest																	1,512
Total net income attributable to Medallion Financial Corp.																$	12,014
Balance Sheet Data
Total loans, gross (1)	$	1,545,844		$	812,381		$	116,059		$	1,650		$	10,499		$	2,486,433
Total assets		1,495,150			795,868			109,565			6,855			440,300			2,847,738
Total funds borrowed		1,229,818			654,632			90,121			5,638			362,164			2,342,373
Selected Financial Ratios
Return on average assets		2.17	%		1.68	%		18.45	%		30.14	%		(2.94	)%		1.93	%
Return on average stockholders' equity	*			*			*			*			*				12.96
Return on average equity		13.37			10.33			113.46			185.45			(18.04	)		12.32
Interest yield		13.27			9.78			12.05			19.12		NM				11.65
Net interest margin, gross		10.10			6.33			8.25			16.25		NM				7.94
Net interest margin, net of allowance		10.59			6.50			8.71			21.87		NM				8.25
Reserve coverage (2)		5.00			2.49			7.04			23.32		NM				4.25
Delinquency status (3)		0.48			0.19			17.63			—		NM				1.20
Charge-off (recovery) ratio (4)		4.67			1.55			0.47			(157.97	)	NM				3.10

(1) Inclusive of recreation and strategic partnership loans held for sale, at lower of amortized cost or fair value.

(2) Allowance for credit loss as a percent of gross loans held for investment and excludes loans held for sale.

(3) Loans 90 days or more past due as a percent of total loans.

(4) Charge-off ratio in the recreation lending segment was 4.32% when including loans held for sale.

(NM) Not meaningful.

(*) Line item is not applicable to segments.

The following table presents segment data as of and for the three months ended March 31, 2024.


Three Months Ended March 31, 2024	Consumer Lending
(Dollars in thousands)	Recreation			Home Improvement			Commercial Lending			Taxi Medallion Lending			Corporate and Other Investments			Consolidated
Total interest income	$	43,927		$	17,447		$	3,645		$	140		$	1,911		$	67,070
Total interest expense		9,645			5,634			1,098			28			2,748			19,153
Net interest income (loss)		34,282			11,813			2,547			112			(837	)		47,917
Provision (benefit) for credit losses		17,030			898			216			(944	)		1			17,201
Net interest income (loss) after credit loss provision		17,252			10,915			2,331			1,056			(838	)		30,716
Other income, net		250			2			4,202			639			310			5,403
Operating expenses		(8,287	)		(4,114	)		(985	)		(743	)		(4,096	)		(18,225	)
Net income (loss) before taxes		9,215			6,803			5,548			952			(4,624	)		17,894
Income tax (provision) benefit		(3,274	)		(2,417	)		(1,971	)		(338	)		1,642			(6,358	)
Net income (loss) after taxes	$	5,941		$	4,386		$	3,577		$	614		$	(2,982	)	$	11,536
Income attributable to the non-controlling interest																	1,512
Total net income attributable to Medallion Financial Corp.																$	10,024
Balance Sheet Data
Total loans, gross	$	1,365,165		$	752,262		$	106,570		$	3,560		$	869		$	2,228,426
Total assets		1,322,761			738,551			102,331			8,611			446,508			2,618,762
Total funds borrowed		1,083,760			605,107			83,842			7,055			365,832			2,145,596
Selected Financial Ratios
Return on average assets		1.82	%		2.38	%		13.50	%		23.68	%		(2.78	)%		1.80	%
Return on average stockholders' equity	*			*			*			*			*				11.65
Return on average equity		11.44			14.93			84.71			148.65			(17.47	)		11.18
Interest yield		13.17			9.28			12.99			15.59		NM				11.34
Net interest margin, gross		10.28			6.28			9.08			12.47		NM				8.10
Net interest margin, net of allowance		10.75			6.45			9.43			21.57		NM				8.39
Reserve coverage (1)		4.40			2.38			4.11			42.19		NM				3.76
Delinquency status (2)		0.48			0.18			7.80			—		NM				0.74
Charge-off (recovery) ratio (3)		4.36			2.12			(0.07	)		(101.47	)	NM				3.20

(1) Allowance for credit loss as a percent of gross loans held for investment and excludes loans held for sale.

(2) Loans 90 days or more past due as a percent of total loans.

(3) Net charge-offs as a percent of annual average total gross loans.

(NM) Not meaningful.

(*) Line item is not applicable to segments.

(10) COMMITMENTS AND CONTINGENCIES

(A) EMPLOYMENT AGREEMENTS

The Company has employment agreements with certain key officers, including Mr. Alvin Murstein and Mr. Andrew Murstein, for either a one-, two-, or three-year term. Typically, the contracts with a one- or two-year term will renew for new one- or two-year terms unless prior to the term either the Company or the executive provides notice to the other party of its intention not to extend the employment period beyond the current one or two-year term (as applicable); however, in addition to Mr. Andrew Murstein's employment agreement, as further described below, there is currently one agreement that renews after two years for additional one-year terms and one agreement with a three-year term that does not have a renewal period. In the event of a change in control, as defined, during the employment period, the agreements provide for severance compensation to the executive in an amount equal to the balance of the salary, bonus, and value of fringe benefits which the executive would be entitled to receive for the remainder of the employment period.

On April 25, 2023, Mr. Alvin Murstein, the Company’s Chairman of the Board and Chief Executive Officer, notified the Company of his election not to renew the term of his employment pursuant to the First Amended and Restated Employment Agreement, dated May 29, 1998, as amended, between him and the Company. Accordingly, the term of his employment as Chief Executive Officer of the Company will expire on May 28, 2027, unless sooner terminated in accordance with the provisions thereof.

In addition, on April 27, 2023, Mr. Andrew Murstein, the Company’s President and Chief Operating Officer, entered into an amendment to the First Amended and Restated Employment Agreement, dated May 29, 1998, as amended, between him and the Company. Pursuant to such amendment, effective as of May 29, 2023, (i) the expiration of his then current term of employment shall be revised to end on May 28, 2027, and (ii) on May 29, 2024, and on each May 29 thereafter, such term of employment shall automatically renew each year for a three-year term unless, prior to the end of the first year of the then-applicable three-year term, either Mr. Murstein or the Company provides at least 30 days’ advance notice to the other party of its intention not to renew the then-applicable term of employment for a new three-year term, in each case unless such employment term is otherwise terminated pursuant to the terms thereof.

As of March 31, 2025, employment agreements expire at various dates through 2027, with future minimum payments under these agreements of approximately $7.8 million.

(B) OTHER COMMITMENTS

As of March 31, 2025, the Company had no other commitments. Generally, any commitments would be on the same terms as loans to or investments in existing borrowers or investees, and generally have fixed expiration dates. Since some commitments would be expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

On December 29, 2021, the SEC filed a civil complaint in the U.S. District Court for the Southern District of New York against the Company and its President and Chief Operating Officer alleging certain violations of the anti-fraud, books and records, internal controls and anti-touting provisions of the federal securities laws. The litigation relates to certain issues that occurred during the period 2015 to 2017, including (i) the Company’s retention of third parties in 2015 and 2016 concerning posting information about the Company on certain financial websites and (ii) the Company’s financial reporting and disclosures concerning certain assets, including Medallion Bank, in 2016 and 2017, a period when the Company had previously reported as a business development company (BDC) under the Investment Company Act of 1940. In December 2024, the Company and its President and Chief Operating Officer reached an agreement in principle with the Division of Enforcement of the SEC, that if approved by the Commissioners of the SEC and the Court, would resolve this litigation.

Depending on the outcome of the litigation, and/or in the event that the Commissioners of the SEC or the Court were to decline to approve the settlement in principle, the Company could incur a loss and other penalties that could be material to the Company, its results of operations and/or financial condition, as well as a bar against its President and Chief Operating Officer. In addition, the Company has and may further incur significant legal fees and expenses in defending against such charges by the SEC and the Company may be subject to shareholder litigation relating to these SEC matters.

(D) OTHER LITIGATION AND REGULATORY MATTERS

The Company and its subsidiaries are subject to inquiries from certain regulators and are currently involved in various legal proceedings incident to the normal course of business, including collection matters with respect to certain loans. The Company intends to vigorously defend any outstanding claims and pursue its legal rights. In the opinion of management, based on the advice of legal counsel, except for the pending SEC litigation, as described above, there is no proceeding pending, or to the knowledge of management threatened, which in the event of an adverse decision could result in a material adverse impact on the financial condition or results of operations of the Company.

(11) RELATED PARTY TRANSACTIONS

Certain directors, officers, and stockholders of the Company are also directors and officers of its main consolidated subsidiaries, MFC, Medallion Capital, FSVC, and the Bank, as well as other subsidiaries. Officer salaries are set by the Board of Directors of the Company.

Jeffrey Rudnick, the son of one of the Company’s directors, serves as the Company’s Senior Vice President at a salary of $269,000 per year, an increase from $260,988 per year in 2024. Mr. Rudnick received an annual cash bonus of $75,000 and $95,000 as well as an equity bonus in the amount of $50,000 and $52,000, during the three months ended March 31, 2025 and 2024.

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC Topic 825, “Financial Instruments,” requires disclosure of fair value information about certain financial instruments, whether assets, liabilities, or off-balance-sheet commitments, if practicable. The following methods and assumptions were used to estimate the fair value of each class of financial instrument. Fair value estimates that were derived from broker quotes cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.

(a) Cash and cash equivalents – Book value equals fair value.

(b) Investment securities – The Company’s investments are recorded at the estimated fair value of such investments.

(c) Loans receivable – A discounted cash flow method under the income approach is utilized to estimate the market value of the loan portfolio. The discounted cash flow method relies upon assumptions about the amount and timing of scheduled principal and interest payments, principal prepayments, and current market rates. The loan portfolio is aggregated into categories based on loan type and credit quality. For each loan category, weighted average statistics, such as coupon rate, age, and remaining term are calculated. These are Level 3 valuations. Prior to the second quarter of 2024, fair value was reported as approximating book value.

(d) Loans held for sale – Loans held for sale consist of recreation loans and strategic partnership loans intended to be sold on the secondary market. Loans held for sale are recorded at the lower of amortized cost or fair value.

(e) Accrued interest receivable – Book value equals market value.

(f) Floating rate borrowings – Due to the short-term nature of these instruments, the carrying amount approximates fair value.

(g) Fixed rate borrowings – The fair value for certificates of deposit is estimated by using discounted cash flow analyses, based on market spreads to benchmark rates, and are considered Level 2 valuations. Prior to the second quarter of 2024, fair value was reported as approximating book value.

(h) Accrued interest payable – Due to the short-term nature of these instruments, the carrying amount approximates fair value.

(i) Commitments to extend credit – The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and present creditworthiness of the counter parties. For fixed rate loan commitments, fair value also includes a consideration of the difference between the current levels of interest rates and the committed rates. As of March 31, 2025 and December 31, 2024, the estimated fair value of these off-balance-sheet instruments was not material.

The following tables present the carrying amounts and fair values of the Company’s financial instruments as of March 31, 2025 and December 31, 2024.


	March 31, 2025
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash, cash equivalents, and federal funds sold (1)	$	157,994	$	157,994	$	156,744	$	1,250	$	—
Investment securities		60,424		60,424		—		60,424		—
Loans held for investment, net of allowance		2,261,334		2,215,944		—		—		2,215,944
Loans held for sale, at lower of amortized cost or fair value		124,733		130,659		—		—		130,659
Accrued interest receivable (2)		14,437		14,437		14,437		—		—
Equity securities		1,758		1,758		1,758		—		—
Financial liabilities
Funds borrowed (3)		2,342,374		2,347,445		—		2,347,445		—
Accrued interest payable		6,610		6,610		6,610		—		—

(1)

Includes federal funds sold and interest bearing deposits in other banks.

(2)

Included within other assets on the balance sheet.

(3)

Excludes deferred financing costs of $8.1 million as of March 31, 2025.


	December 31, 2024
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets
Cash, cash equivalents, and federal funds sold (1)	$	169,572	$	169,572	$	168,322	$	1,250	$	—
Investment securities		54,805		54,805		—		54,805		—
Loans held for investment, net of allowance		2,265,428		2,238,645		—		—		2,238,645
Loans held for sale, at lower of amortized cost or fair value		128,226		133,244		—		—		133,244
Accrued interest receivable (2)		15,314		15,314		15,314		—		—
Equity securities		1,732		1,732		1,732		—		—
Financial liabilities
Funds borrowed (3)		2,379,413		2,371,434		—		2,371,434		—
Accrued interest payable		8,231		8,231		8,231		—		—

(1)

Includes federal funds sold and interest bearing deposits in other banks.

(2)

Included within other assets on the balance sheet.

(3)

Excludes deferred financing costs of $8.2 million as of December 31, 2024.

(13) FAIR VALUE OF ASSETS AND LIABILITIES

The Company follows the provisions of FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements.

In accordance with FASB ASC 820, the Company has categorized its assets and liabilities measured at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The Company's assessment and classification of an investment within a level can change over time based upon maturity or liquidity of the investment and would be reflected at the beginning of the quarter in which the change occurred.

As required by FASB ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a level 3 fair value measurement may include inputs that are observable (levels 1 and 2) and unobservable (level 3). Therefore, gains and losses for such assets and liabilities categorized within the level 3 table below may include changes in fair value that are attributable to both observable inputs (levels 1 and 2) and unobservable inputs (level 3).

Assets and liabilities measured at fair value, recorded on the consolidated balance sheets, are categorized based on the inputs to the valuation techniques as follows:

Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, most U.S. Government and agency securities, and certain other sovereign government obligations).

Level 2. Assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

Quoted prices for similar assets or liabilities in active markets (for example, restricted stock);

Quoted price for identical or similar assets or liabilities in non-active markets (for example, corporate and municipal bonds, which trade infrequently);

Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and

Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability (examples include certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).

Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the assets or liability (examples include certain private equity investments, and certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).

A review of fair value hierarchy classification is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain assets or liabilities. Reclassifications impacting level 3 of the fair value hierarchy are reported as transfers in/out of the level 3 category as of the beginning of the quarter in which the reclassifications occur.

Equity investments were recorded at cost less impairment plus or minus observable price changes. Commencing in 2020, the Company elected to measure equity investments at fair value on a non-recurring basis.

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024.


March 31, 2025 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Investment securities (1)	$	—	$	60,424	$	—	$	60,424
Equity securities		1,758		—		—		1,758
Total	$	1,758	$	60,424	$	—	$	62,182

(1)

Total unrealized losses of $0.1 million, net of tax, related to these assets was included in comprehensive loss for the three months ended March 31, 2025.


December 31, 2024 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Investment securities (1)	$	—	$	54,805	$	—	$	54,805
Equity securities		1,732		—		—		1,732
Total	$	1,732	$	54,805	$	—	$	56,537

(1)

Total unrealized losses of less than $0.1 million, net of tax, related to these assets was included in other comprehensive loss for the year ended December 31, 2024.

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of March 31, 2025 and December 31, 2024.


March 31, 2025 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Equity investments	$	—	$	—	$	650	$	650
Total	$	—	$	—	$	650	$	650


December 31, 2024 (Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets
Equity investments	$	—	$	—	$	1,374	$	1,374
Total	$	—	$	—	$	1,374	$	1,374

Significant Unobservable Inputs

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as level 3 within the fair value hierarchy. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

The valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of March 31, 2025 and December 31, 2024.


(Dollars in thousands)	Fair Value at March 31, 2025		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
Equity investments	$	650	Investee financial analysis	Financial condition and operating performance of the borrower (1)	N/A

(1)

Includes projections based on revenue, EBITDA, leverage and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.


(Dollars in thousands)	Fair Value at December 31, 2024		Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
Equity investments	$	1,374	Investee financial analysis	Financial condition and operating performance of the borrower (1)	N/A

(1)

(14) MEDALLION BANK PREFERRED STOCK (Non-controlling interest)

On December 17, 2019, the Bank closed an initial public offering of 1,840,000 shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F ("Series F") with a $46.0 million aggregate liquidation amount, or $25 per share, yielding net proceeds of $42.5 million, which were recorded in the Bank’s shareholders’ equity. Dividends are payable quarterly from the date of issuance to, but excluding, April 1, 2025, at a rate of 8% per annum, and from and including April 1, 2025, at a floating rate equal to three-month Term 90 day SOFR plus a spread of 6.46% per annum.

On July 21, 2011, the Bank issued, and the U.S. Treasury purchased, 26,303 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series E for an aggregate purchase price of $26.3 million under the Small Business Lending Fund Program, or SBLF, with a liquidation amount of $1,000 per share. The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified smaller banks at favorable rates. The Bank pays a dividend rate of 9% on the Series E.

(15) SUBSEQUENT EVENTS

On April 30, 2025, the Bank closed a sale of $52.8 million in Recreation loans held for sale. The total proceeds received, which reflected a sales price at a premium and accrued but unpaid interest, were $55.9 million. The sale was structured as a 90/10 loan participation on a pool of $58.6 million in loans, $5.9 million of which were retained by the Bank. Loan servicing was also retained by the Bank.

The Company has evaluated the effects of events that have occurred subsequent to March 31, 2025 through the date of financial statement issuance for potential recognition or disclosure. As of such date there were no additional subsequent events that required recognition or disclosure.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the three months ended March 31, 2025 and the year ended December 31, 2024. This section is intended to provide management’s perspective of our financial condition and results of operations. In addition, this section contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are described in the Risk Factors section in our Annual Report on Form 10-K.

COMPANY BACKGROUND

We are a specialty finance company whose focus and growth has been our consumer finance and commercial lending businesses operated by Medallion Bank, or the Bank, and Medallion Capital, Inc., or Medallion Capital. The Bank is a wholly-owned subsidiary that originates consumer loans for the purchase of recreational vehicles, boats, collector cars, and home improvements, and provides loan origination and other services to fintech partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of March 31, 2025, our consumer loans represented 95% of our gross loan portfolio, inclusive of loans held for sale, and commercial loans represented 5%. Total assets were $2.85 billion and $2.87 billion as of March 31, 2025 and December 31, 2024.

Our loan-related earnings depend primarily on our level of net interest income. Net interest income is the difference between the total yield on our loan portfolio and the average cost of borrowed funds. We fund our operations through a wide variety of interest-bearing sources, including bank certificates of deposit issued to consumers, debentures issued to and guaranteed by the SBA, privately placed notes, trust preferred securities, and preferred stock of the Bank. Net interest income fluctuates with changes in the yield on our loan portfolios and changes in the cost of borrowed funds, as well as changes in the amount of interest-earning assets and interest-bearing liabilities held by us.

Net interest income is also affected by economic, regulatory, and competitive factors that influence interest rates, loan demand, and the availability of funding to finance our lending activities. We, like other financial institutions, are subject to interest rate risk to the degree that our interest-earning assets reprice, either due to inflation or other factors, on a different basis than our interest-bearing liabilities. We continue to monitor global supply chain disruptions, the impact of tariffs, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation, the risk of recession and economic health, as well as other factors which contribute to competition and changes in the demand for our loan products. We have been, and continue to take, steps in the event of a potential economic downturn and in light of the current uncertainties and inflationary environment to moderate the pace of our recent growth.

We also provide debt, mezzanine, and equity investment capital to companies in a variety of commercial industries. These investments may be venture capital style investments which may not be fully collateralized. Our investments are typically in the form of secured debt instruments with fixed interest rates accompanied by an equity stake or warrants to purchase an equity interest for a nominal exercise price (such warrants are included in equity investments on the consolidated balance sheets). Interest income is earned on the debt instruments.

The Bank is an industrial bank regulated by the FDIC and the Utah Department of Financial Institutions that originates consumer loans, raises deposits, and conducts other banking activities. The Bank generally provides us with our lowest cost of funds which it raises through bank certificates of deposit. To take advantage of this low cost of funds, historically we referred a portion of our taxi medallion and commercial loans to the Bank, which originated these loans, and have since been serviced by Medallion Servicing Corp., or MSC. However, other than in connection with dispositions of existing taxi medallion assets, the Bank has not originated any new taxi medallion loans since 2014 (and Medallion Financial Corp. has not originated any new taxi medallion loans since 2015) and is working with MSC to service its remaining portfolio, as it winds down. MSC earns referral and servicing fees for these activities.

In 2019, the Bank launched a strategic partnership program to provide lending and other services to financial technology, or fintech, companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans. The Bank continues to evaluate and launch additional partnership programs with fintech companies.

We continue to consider various alternatives for the Bank, which may include an initial public offering of its common stock, the sale of all or part of the Bank, a spin-off or other potential transaction. We do not have a deadline for its consideration of these alternatives, and there can be no assurance that this process will result in any transaction being announced or consummated.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are fundamental to understanding management's discussion and analysis of its financial condition and results of operations. At March 31, 2025, we identified our policies for the allowance for credit losses and goodwill and intangible assets to be critical accounting policies because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Our critical accounting policies are described in detail in Part I, Item 7 in Medallion Financial Corp.'s Annual Report on Form 10-K for the year ended December 31, 2024, and there have been no material changes in such policies and estimates since the date of such report.

RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

In December 2023, the FASB issued ASU 2023-09, Income Taxes, or Topic 740: Improvements to Income Tax Disclosures. The main objective of this update is to improve financial reporting disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this update are effective for the annual periods beginning after December 15, 2024. We do not expect this update to have a material impact on the financial statements.

CONTROL STATUTES AND REGULATIONS

Because the Bank is an “insured depository institution” within the meaning of the Federal Deposit Insurance Act and the Change in Bank Control Act as well as Medallion Financial Corp. being a “financial institution holding company” within the meaning of the Utah Financial Institutions Act, federal and Utah law and regulations prohibit any person or company from acquiring control of the Bank or Medallion Financial Corp., without, in most cases, prior written approval of the FDIC or the Commissioner of the Utah Department of Financial Institutions, as applicable. Under the Change in Bank Control Act, control is conclusively presumed if, among other things, a person or company acquires 25% or more of any class of the Bank’s voting stock. A rebuttable presumption of control arises if a person or company acquires 10% or more of any class of voting stock and is subject to a number of specified “control factors” as set forth in the applicable regulations. Although the Bank is an “insured depository institution” within the meaning of the Federal Deposit Insurance Act and the Change in Bank Control Act, your investment in the Company is not insured or guaranteed by the FDIC, or any other agency, and is subject to loss.

Under the Utah Financial Institutions Act, control is defined as the power, directly or indirectly, or through or in concert with one or more persons to: (a) direct or exercise a controlling influence over (i) the management or policies of a financial institution or (ii) the election of a majority of the directors or trustees of an institution; or (b) to vote 25% or more of any class of voting securities of a financial institution. In addition, under Utah law, there is a rebuttable presumption that a person has control of a Utah financial institution if the person has the power, directly or indirectly, or through or in concert with one or more persons, to vote more than 10% but less than 25% of any class of voting securities of a financial institution. If any holder of any series of the Bank’s preferred stock is or becomes entitled to vote for the election of the Bank’s directors, such series will be deemed a class of voting stock, and any other person will be required to obtain the non-objection of the FDIC under the Change in Bank Control Act to acquire or maintain 10% or more of that series. Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of our common stock in excess of the amount which can be acquired without regulatory approval.

In addition to the regulations detailed above, our operations are subject to supervision and regulation by other federal, state, and local laws and regulations. Additionally, our operations may be subject to various laws and judicial and administrative decisions. This oversight may serve to:

•

regulate credit granting activities, including establishing licensing requirements, if any, in various jurisdictions;

•

establish maximum interest rates, finance charges and other charges;

•

require disclosures to customers;

•

govern secured transactions;

•

set collection, foreclosure, repossession, and claims handling procedures and other trade practices;

•

prohibit discrimination in the extension of credit and administration of loans; and

•

regulate the use and reporting of information related to a borrower’s credit experience and other data collection.

Changes to laws of states in which we do business could affect the operating environment in substantial and unpredictable ways. We cannot predict whether such changes will occur or, if they occur, the ultimate effect they would have upon our financial condition or results of operations.

AVERAGE BALANCES AND RATES

The following table presents our consolidated average balance sheets, interest income and expense, and the average interest earning/bearing assets and liabilities, and which reflect the average yield on assets and average costs on liabilities as of and for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
	2025								2024
(Dollars in thousands)	Average Balance			Interest		Average Yield/Cost			Average Balance			Interest		Average Yield/Cost
Interest-earning assets
Interest earning cash equivalents	$	37,291		$	352		3.83	%	$	28,246		$	329		4.68	%
Federal funds sold		46,665			817		7.10			82,255			1,053		5.15
Investment securities		57,960			519		3.63			53,660			467		3.50
Loans
Recreation		1,542,323			50,466		13.25			1,341,450			43,927		13.17
Home improvement		820,012			19,771		9.78			756,205			17,447		9.28
Commercial		112,557			3,098		11.16			112,841			3,663		13.06
Taxi medallion		1,697			80		19.12			3,611			139		15.48
Strategic partnerships		8,050			322		16.22			734			45		24.66
Total loans		2,484,639			73,737		12.04			2,214,841			65,221		11.84
Total interest-earning assets, before allowance		2,626,555					11.65			2,379,002					11.34
Allowance for credit losses		(98,261	)							(83,559	)
Total interest-earning assets, net of allowance	$	2,528,294		$	75,425		12.10	%	$	2,295,443		$	67,070		11.75	%
Non-interest-earning assets
Cash		65,941								25,024
Equity investments		9,117								13,064
Loan collateral in process of foreclosure		9,547								11,013
Goodwill and intangible assets		169,770								171,215
Other assets		56,616								54,477
Total non-interest-earning assets		310,991								274,793
Total assets	$	2,839,285							$	2,570,236
Interest-bearing liabilities
Deposits	$	2,093,173		$	19,617		3.80	%	$	1,855,205		$	14,753		3.20	%
Privately placed notes		146,500			3,175		8.79			138,750			3,007		8.72
SBA debentures and borrowings		67,813			660		3.95			74,000			745		4.05
Trust preferred securities		33,000			561		6.89			33,000			648		7.90
Total interest-bearing liabilities		2,340,486			24,013		4.16			2,100,955			19,153		3.67
Non-interest-bearing liabilities
Deferred tax liability		20,510								21,830
Other liabilities (1)		33,036								32,270
Total non-interest-bearing liabilities		53,546								54,100
Total liabilities		2,394,032								2,155,055
Non-controlling interest		69,166								69,166
Total stockholders’ equity		376,087								346,015
Total liabilities and stockholders’ equity	$	2,839,285							$	2,570,236
Net interest income				$	51,412							$	47,917
Net interest margin, gross							7.94								8.10
Net interest margin, net of allowance							8.25	%							8.39	%

(1)

Includes deferred financing costs of $8.1 million and $8.2 million as of March 31, 2025 and 2024.

For the three months ended March 31, 2025, our total loans yielded 12.04%, as compared to 11.84% for the three months ended March 31, 2024. The 20 basis point increase reflects a higher yield on our loan portfolios, as we have increased the rates charged on new consumer originations over the past year as prevailing market interest rates have remained high. We have continued to use the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, as well as seek to increase the credit quality of our new issuances, particularly in our recreation segment, with the weighted average FICO scores, measured at origination, of our outstanding recreation loans being 685 (683 exclusive of loans held for sale) as of March 31, 2025 compared to 684 as of March 31, 2024. We use weighted average FICO scores as an indicator of portfolio risk.

Our debt, with certificates of deposits being our largest source, funds our growing lending business. Our average interest cost for the three months ended March 31, 2025 of 4.16% increased 49 basis points from the three months ended March 31, 2024, attributable to the current higher interest rate environment, particularly the higher cost associated with our deposits. To the extent that prevailing market interest rates remain at current levels, we expect our cost of funds to continue to increase as we issue new certificates of deposit to replace maturing certificates of deposit and fund our growth. During the three months ended March 31, 2025, we issued deposits at rates up to 4.45% and 4.33% for three and five year certificates of deposit, with the most recent three and five year issuances being at rates of 4.15%. As described above, we have taken, and continue to take, steps to pass along a portion of the interest rate increases on newly originated loans, the process for which is slower than the pace of funding cost increases, thereby compressing our net interest margins.

RATE/VOLUME ANALYSIS

The following table presents the change in interest income and expense due to changes in the average balances (volume) and average rates, calculated for the periods indicated.


	Three Months Ended March 31,
	2025									2024
(Dollars in thousands)	Increase (Decrease) In Volume			Increase (Decrease) In Rate			Net Change			Increase (Decrease) In Volume			Increase (Decrease) In Rate			Net Change
Interest-earning assets
Interest earning cash and cash equivalents	$	(370	)	$	157		$	(213	)	$	90		$	433		$	523
Investment securities		39			13			52			47			54			101
Loans
Recreation		6,573			(34	)		6,539			4,833			1,194			6,027
Home improvement		1,538			786			2,324			2,501			1,297			3,798
Commercial		(8	)		(557	)		(565	)		582			398			980
Taxi medallion		(90	)		31			(59	)		(273	)		103			(170	)
Strategic partnerships		293			(16	)		277			(36	)		4			(32	)
Total loans	$	8,306		$	210		$	8,516		$	7,607		$	2,996		$	10,603
Total interest-earning assets	$	7,975		$	380		$	8,355		$	7,744		$	3,483		$	11,227
Interest-bearing liabilities
Deposits		2,230			2,633			4,863			1,712			4,441			6,153
Privately placed notes		168			—			168			386			121			507
SBA debentures and borrowings		(60	)		(24	)		(84	)		82			102			184
Trust preferred securities		—			(87	)		(87	)		—			69			69
Total interest-bearing liabilities	$	2,338		$	2,522		$	4,860		$	2,180		$	4,733		$	6,913
Net	$	5,637		$	(2,142	)	$	3,495		$	5,564		$	(1,250	)	$	4,314

During the three months ended March 31, 2025, the increase in interest income was mainly driven by the increase in the size of the consumer loan portfolios, as well as an increase in overall yield on interest-earning assets as we issue new loans at interest rates greater than the weighted average rates of our current portfolio. The increase in interest expense was driven by an increase in borrowing costs, primarily due to the increases in deposits as older deposits mature and are replaced at current market rates, as well as an overall increase in borrowings.

Our interest expense is driven by the interest rates payable on our bank certificates of deposit, privately placed notes, fixed-rate, long-term debentures issued to the SBA, trust preferred securities, and has historically included credit facilities with banks and other short-term notes payable. The Bank issues brokered time certificates of deposit, which are, on average, our lowest borrowing costs. The Bank is able to bid on these deposits at a variety of maturity options, which allows for more flexible interest rate management strategies. In September 2023, we issued and sold $39.0 million aggregate principal amount of 9.25% senior notes due in September 2028, in June 2024, we amended our senior notes previously issued in December 2023, increasing the aggregate principal amount from $12.5 million to $17.5 million, reducing the interest rate to 8.875% from 9.0%, and extending the maturity date from December 2033 to June 2039, and in August 2024, we issued and sold $5.0 million aggregate principal amount of 8.625% senior notes due in August 2039. The net proceeds were used, in large part, to repurchase and settle, in full, $36.0 million aggregate principal amount of our 8.25% senior notes issued in 2019 and which matured in March 2024, as well as for general corporate purposes.

Our cost of funds is primarily driven by the rates paid on our various borrowings and changes in the levels of average borrowings outstanding. See Note 5 to the consolidated financial statements for details on the terms of our outstanding debt. Our debentures issued to the SBA typically have terms of ten years.

We measure our borrowing costs as our aggregate interest expense for all of our interest-bearing liabilities divided by the average amount of such liabilities outstanding during the period. The above table presents the average borrowings and related borrowing costs for the three months ended March 31, 2025 and 2024. We expect our borrowing costs to further increase as we take deposits and borrow other funds at the currently higher prevailing rates.

We continue to seek SBA funding through Medallion Capital to the extent it offers attractive rates. SBA financing subjects recipients to limits on the amount of secured bank debt they may incur. We use SBA funding to fund loans that qualify under the Small Business Investment Act of 1985, as amended, or the SBIA, and SBA regulations. In July 2023, we obtained a $20.0 million commitment from the SBA, all of which has been utilized as of March 31, 2025. In February 2024, we obtained an $18.5 million commitment from the SBA, with $10.3 million currently drawable, and the balance of $8.2 million drawable upon the infusion of $4.1 million of capital.

At March 31, 2025 and 2024, adjustable rate debt constituted less than 2% of total debt, and was comprised solely of our trust preferred securities borrowings.

LOANS

Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three months ended March 31, 2025, there was continued growth in the recreation and home improvement lending segments as compared to the prior year quarter. The tables below present the activity of the loan portfolio, inclusive of loans held for sale and loans held for investment.


Three Months Ended March 31, 2025 (Dollars in thousands)	Recreation			Home Improvement			Commercial			Taxi Medallion			Strategic Partnership			Total
Gross loans – December 31, 2024 (1)	$	1,543,243		$	827,211		$	111,273		$	1,909		$	7,386		$	2,491,022
Loan originations		86,833			48,796			9,707			72			136,240			281,648
Principal receipts, sales, and maturities		(61,507	)		(59,611	)		(5,052	)		(316	)		(133,127	)		(259,613	)
Charge-offs		(20,274	)		(4,227	)		(130	)		(15	)		—			(24,646	)
Transfer to loan collateral in process of foreclosure, net		(2,389	)		—			—			—			—			(2,389	)
Amortization of origination fees and costs, net		(3,481	)		1,133			12			—			—			(2,336	)
Origination fees and costs, net		3,419			(921	)		—			—			—			2,498
Paid-in-kind interest		—			—			249			—			—			249
Gross loans – March 31, 2025 (1)	$	1,545,844		$	812,381		$	116,059		$	1,650		$	10,499		$	2,486,433

(1)

Includes loans held for sale and loans held for investment.


Three Months Ended March 31, 2024 (Dollars in thousands)	Recreation			Home Improvement			Commercial			Taxi Medallion			Strategic Partnership			Total
Gross loans – December 31, 2023	$	1,336,226		$	760,617		$	114,827		$	3,663		$	553		$	2,215,886
Loan originations		105,765			51,576			—			—			15,746			173,087
Principal receipts, sales, and maturities		(64,886	)		(54,917	)		(8,872	)		(103	)		(15,430	)		(144,208	)
Charge-offs		(18,101	)		(4,898	)		—			—			—			(22,999	)
Transfer to loan collateral in process of foreclosure, net		5,425			—			—			—			—			5,425
Amortization of origination fees and costs, net		(2,952	)		938			7			—			—			(2,007	)
Origination fees and costs, net		3,688			(1,054	)		—			—			—			2,634
Paid-in-kind interest		—			—			608			—			—			608
Gross loans – March 31, 2024	$	1,365,165		$	752,262		$	106,570		$	3,560		$	869		$	2,228,426

The following table presents the approximate maturities and sensitivity to change in interest rates for our loans as of March 31, 2025.


	Loan Maturity
(Dollars in thousands)	Within 1 year		After 1 to 5 years		After 5 to 15 years		After 15 years		Total
Fixed-rate	$	31,403	$	236,065	$	1,929,561	$	242,064	$	2,439,093
Recreation		2,327		114,892		1,323,351		54,100		1,494,670
Home improvement		6,320		27,021		594,730		187,964		816,035
Commercial		11,281		93,478		11,480		—		116,239
Taxi medallion		976		674		—		—		1,650
Strategic partnerships		10,499		—		—		—		10,499
Adjustable-rate	$	535	$	—	$	—	$	—	$	535
Recreation		535		—		—		—		535
Home improvement		—		—		—		—		—
Commercial		—		—		—		—		—
Taxi medallion		—		—		—		—		—
Total loans	$	31,938	$	236,065	$	1,929,561	$	242,064	$	2,439,628

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of March 31, 2025 and December 31, 2024, the allowance totaled $100.4 million and $97.4 million, which represented 4.25% and 4.12% of total loans held for investment, respectively. The increase in allowance for credit losses were $22.0 million for the three months ended March 31, 2025 compared to $17.2 million for the three months ended March 31, 2024 as a result of rising loss rates, elevated delinquencies, and expected losses in our recreation loans, partially offset by a decrease in expected losses in our home improvement loans.

The following tables present the activity in the allowance for credit losses for the three months ended March 31, 2025 and 2024.


(Dollars in thousands)	Recreation			Home Improvement			Commercial			Taxi Medallion (1)			Total
Balance at December 31, 2024	$	71,102		$	20,536		$	5,190		$	540		$	97,368
Charge-offs		(20,274	)		(4,227	)		(130	)		(15	)		(24,646	)
Recoveries		3,860			1,095			—			675			5,630
Provision (benefit) for credit losses		16,870			2,845			3,114			(815	)		22,014
Balance at March 31, 2025	$	71,558		$	20,249		$	8,174		$	385		$	100,366

(1)

As of March 31, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $161.7 million, including $95.2 million related to loans secured by New York City taxi medallions, some of which may represent collection opportunities for the Company.


(Dollars in thousands)	Recreation			Home Improvement			Commercial		Taxi Medallion			Total
Balance at December 31, 2023	$	57,532		$	21,019		$	4,148	$	1,536		$	84,235
Charge-offs		(18,101	)		(4,898	)		—		—			(22,999	)
Recoveries		3,548			911			20		911			5,390
Provision (benefit) for credit losses		17,030			898			216		(943	)		17,201
Balance at March 31, 2024	$	60,009		$	17,930		$	4,384	$	1,504		$	83,827

The following tables present the gross charge-offs for the three months ended March 31, 2025 and 2024, by the year of origination:


Three Months Ended March 31, 2025 (Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Total
Recreation	$	—	$	2,728	$	3,707	$	4,506	$	1,933	$	7,400	$	20,274
Home improvement		—		823		1,503		1,133		428		340		4,227
Commercial		—		—		—		130		—		—		130
Taxi medallion		—		—		—		—		—		15		15
Total	$	—	$	3,551	$	5,210	$	5,769	$	2,361	$	7,755	$	24,646


Three Months Ended March 31, 2024 (Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Total
Recreation	$	—	$	3,763	$	6,818	$	3,497	$	1,289	$	2,734	$	18,101
Home improvement		—		1,524		1,680		1,163		287		244		4,898
Commercial		—		—		—		—		—		—		—
Taxi medallion		—		—		—		—		—		—		—
Total	$	—	$	5,287	$	8,498	$	4,660	$	1,576	$	2,978	$	22,999

The following tables present the allowance for credit losses by type as of March 31, 2025 and December 31, 2024.


March 31, 2025 (Dollars in thousands)	Amount		Percentage of Allowance			Allowance as a Percent of Loan Category (1)
Recreation	$	71,558		71	%		5.00	%
Home improvement		20,249		20			2.49
Commercial		8,174		8			7.04
Taxi medallion		385		1			23.32
Total	$	100,366		100	%

(1)

Does not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.

(2)

As of March 31, 2025, total allowance for credit losses as a percent of nonaccrual loans was 293.37%.


December 31, 2024 (Dollars in thousands)	Amount		Percentage of Allowance (1)			Allowance as a Percent of Loan Category (1)
Recreation	$	71,102		73	%		5.00	%
Home improvement		20,536		21			2.48
Commercial		5,190		5			4.66
Taxi medallion		540		1			28.29
Total	$	97,368		100	%

(1)

Does not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.

(2)

As of December 31, 2024, total allowance for credit losses as a percent of nonaccrual loans was 291.93%.

As of March 31, 2025, the total allowance for credit losses as a percent of loans increased 13 basis points from December 31, 2024.

The following table presents the trend in loans 90 days or more past due as of the dates indicated.


	March 31, 2025					December 31, 2024
(Dollars in thousands)	Amount		% (1)			Amount		% (1)
Recreation	$	7,140		0.3	%	$	10,018		0.4	%
Home improvement		1,519		0.1			1,386		0.1	%
Commercial		20,497		0.8			16,337		0.7	%
Total loans 90 days or more past due	$	29,156		1.2	%	$	27,741		1.1	%

(1)

Percentages are calculated against the total loan portfolio.

As of March 31, 2025, taxi medallion loans in the process of foreclosure included 307 taxi medallions in the New York City market, 187 taxi medallions in the Chicago market, 24 taxi medallions in the Newark market, and 31 taxi medallions in various other markets.

SEGMENT RESULTS

We manage our financial results under four operating segments; recreation lending, home improvement lending, commercial lending, and taxi medallion lending. We also present results for a non-operating segment, corporate and other investments.

Recreation Lending

Recreation lending is a return-oriented business focused on originating prime and non-prime recreation loans which is a significant source of income for us, accounting for 67% of our interest income for the three months ended March 31, 2025 and 65% for the three months ended March 31, 2024.

We maintain relationships with approximately 3,300 dealers and financial service providers, or FSPs, not all of which are active at any one time. FSPs are entities that provide finance and insurance, or F&I, services to small dealers that do not have the desire or ability to provide F&I services themselves. The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable to us. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten dealer and FSP relationships were responsible for 39% of recreation lending’s new loan originations for the three months ended March 31, 2025 and 46% for the three months ended March 31, 2024. The percentage of new loan originations by the top ten dealer and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

The recreation loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $21,000 as of March 31, 2025. The loans are fixed rate with an average term at origination of approximately 15 years. The weighted average maturity of our loans outstanding as of March 31, 2025 is approximately 11 years.

The loans are secured primarily by RVs, boats, collector cars, and trailers, with RV loans making up 55% of the portfolio, boat loans making up 19%, and collector cars making up 11% of the portfolio as of March 31, 2025, compared to 54%, 19%, and 10% as of March 31, 2024. Recreation loans are made to borrowers residing nationwide, with the highest concentrations in Texas and Florida at 16% and 10% of loans outstanding, compared to 16% and 10% as of March 31, 2024, and with no other states at or above 10%. As of March 31, 2025 and 2024, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 685 (683 exclusive of loans held for sale) and 684. The weighted average FICO scores at the time of origination for the loans funded in the three months ended March 31, 2025 and 2024 were 683 and 692.

As of March 31, 2025, the recreation loan portfolio was $1.5 billion, with the average interest rate increasing 21 basis points to 15.01% from a year ago. Additionally, the allowance for credit losses increased 19% from March 31, 2024, reflecting the 13% growth in the portfolio as well as rising loss rates and various economic factors.

During the three months ended March 31, 2025, we originated $86.8 million in recreation loans, compared to $105.8 million in the prior year quarter. The lower origination volumes reflect our restrictive underwriting standards and management's efforts to mitigate concentration risks. The following table presents quarterly originations for 2025, 2024, and 2023.


(Dollars in thousands)	2025		2024		2023
First Quarter	$	86,833	$	105,765	$	101,681
Second Quarter		—		209,563		190,007
Third Quarter		—		139,105		92,603
Fourth Quarter		—		72,201		62,748
Year Ended	$	86,833	$	526,634	$	447,039

As of March 31, 2025, 37.0% of the recreation loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the three months ended March 31, 2025 and years ended December 31, 2024 and 2023.


(Dollars in thousands)	Total Originations		Non-prime Originations		Non-prime Originations (%)
March 31, 2025	$	86,833	$	32,583		38	%
December 31, 2024		526,634		185,334		35
December 31, 2023		447,039		152,045		34

The following table presents selected financial data and ratios as of and for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Selected Earnings Data
Total interest income	$	50,466		$	43,927
Total interest expense		12,041			9,645
Net interest income		38,425			34,282
Provision for credit losses		16,870			17,030
Net interest income after credit loss provision		21,555			17,252
Other income		400			250
Operating expenses:
Salaries		(3,642	)		(3,151	)
Loan servicing fees and collection costs		(3,004	)		(2,950	)
Other costs		(3,318	)		(2,186	)
Net income before taxes		11,991			9,215
Income tax provision		(3,977	)		(3,274	)
Net income after taxes	$	8,014		$	5,941
Balance Sheet Data
Total loans, gross (1)	$	1,545,844		$	1,365,165
Allowance for credit losses		71,558			60,011
Total loans, net		1,474,286			1,305,154
Total assets		1,495,150			1,322,761
Total segment borrowings		1,229,818			1,083,760
Selected Financial Ratios
Return on average assets		2.17	%		1.82	%
Return on average equity		13.37			11.44
Interest yield		13.27			13.17
Net interest margin, gross		10.10			10.28
Net interest margin, net of allowance		10.59			10.75
Reserve coverage (2)		5.00			4.40
Delinquency status (3)		0.48			0.48
Charge-off ratio (4)		4.67			4.36

(1)

Inclusive of both loans held for investment and loans held for sale.

(2)

Allowance for credit loss as a percent of gross loans held for investment and excludes loans held for sale.

(3)

Loans 90 days or more past due as a percent of total loans.

(4)

The charge-off ratio in the recreation lending segment was 4.32% when including loans held for sale.

Home Improvement Lending

The home improvement lending segment works with contractors and FSPs to finance home improvements and is concentrated in roofs, swimming pools, and windows at 35%, 29%, and 13% of total home improvement loans outstanding as of March 31, 2025, as compared to 40%, 20%, and 13% as of March 31, 2024, with no other collateral types at or above 10%. Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas representing 13% and 11% of loans outstanding as of March 31, 2025, with each state representing 10% as of March 31, 2024 and no other states at or above 10%. As of March 31, 2025 and 2024, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, measured at origination, were 767 and 764. The weighted average FICO scores at the time of origination for the loans funded in the three months ended March 31, 2025 and 2024 were 783 and 776.

A large proportion of our home improvement-financed sales are facilitated by contractor salespeople with limited financing backgrounds rather than by contractor employees who provide F&I services. The result is contractor demand for financing services that facilitate an in-home transaction (e.g., digital tools, including mobile applications for phone or tablet, support for E-SIGN compliant electronic signatures, and extended operating hours), and additional resources for the salesperson throughout the financing process. We currently maintain relationships with approximately 900 contractors and FSPs. Our top ten contractors and FSP relationships were responsible for 57% of home improvement lending’s new loan originations for the three months ended March 31, 2025. The percentage of new loan originations by the top ten contractor and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

The home improvement loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $22,000 as of March 31, 2025. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 15 years. The weighted average maturity of our loans outstanding as of March 31, 2025 is approximately 13 years.

As of March 31, 2025, the home improvement portfolio totaled $812.4 million, with allowance for credit losses increasing 11 basis points to 2.49% from a year ago reflecting higher delinquency and potential losses. The average interest rate charged on our loans increased 23 basis points to 9.83% at March 31, 2025 from a year ago.

During the three months ended March 31, 2025, we originated $48.8 million in home improvement loans, compared to $51.6 million in the prior year quarter. Origination volumes were somewhat lower due in part to ongoing restrictive underwriting standards and management's continued efforts to mitigate concentration risks. The following table presents quarterly originations for 2025, 2024, and 2023.


(Dollars in thousands)	2025		2024		2023
First Quarter	$	48,796	$	51,576	$	94,981
Second Quarter		—		67,990		117,035
Third Quarter		—		96,545		79,333
Fourth Quarter		—		82,531		66,045
Year Ended	$	48,796	$	298,642	$	357,394

As of March 31, 2025, less than 1% of the home improvement loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the three months ended March 31, 2025 and years ended December 31, 2024 and 2023.


(Dollars in thousands)	Total Originations		Non-prime Originations		Non-prime Originations (%)
March 31, 2025	$	48,796	$	—		—	%
December 31, 2024		298,642		586	*
December 31, 2023		357,394		3,094	*

(*) Less than 1%.

The following table presents selected financial data and ratios as of and for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Selected Earnings Data
Total interest income	$	19,771		$	17,447
Total interest expense		6,964			5,634
Net interest income		12,807			11,813
Provision for credit losses		2,845			898
Net interest income after credit loss provision		9,962			10,915
Other income		2			2
Operating expenses:
Salaries		(2,377	)		(2,085	)
Loan servicing fees and collection costs		(753	)		(838	)
Other costs		(1,854	)		(1,191	)
Net income before taxes		4,980			6,803
Income tax provision		(1,652	)		(2,417	)
Net income after taxes	$	3,328		$	4,386
Balance Sheet Data
Total loans, gross	$	812,381		$	752,262
Allowance for credit losses		20,249			17,930
Total loans, net		792,132			734,332
Total assets		795,868			738,551
Total segment borrowings		654,632			605,107
Selected Financial Ratios
Return on average assets		1.68	%		2.38	%
Return on average equity		10.33			14.93
Interest yield		9.78			9.28
Net interest margin, gross		6.33			6.28
Net interest margin, net of allowance		6.50			6.45
Reserve coverage (1)		2.49			2.38
Delinquency status (2)		0.19			0.18
Charge-off ratio (3)		1.55			2.12

(1)

Allowance for credit losses as a percent of gross loans.

(2)

Loans 90 days or more past due as a percent of total loans.

(3)

Net charge-offs as a percent of annual average gross loans.

Commercial Lending

We originate both senior and subordinated loans nationwide to businesses in a variety of industries, with California and Illinois having 31% and 10% of the segment portfolio, and no other states having a concentration at or above 10%. These mezzanine loans are primarily secured by a second position on all assets of the businesses and generally range in amount from $2.5 million to $6.0 million at origination, and typically include an equity component as part of the financing. These equity components, although a small portion of the overall financing, have the potential to generate significant yield enhancement when the underlying portfolio company enters a capital transaction. During the three months ended March 31, 2025, net gains of $9.4 million were recognized with respect to these equity investments. The commercial lending business has concentrations in manufacturing, construction, and wholesale trade making up 58%, 13%, and 12%, of the loans outstanding as of March 31, 2025. During the three months ended March 31, 2025, we originated $9.7 million of new commercial loans.

The following table presents selected financial data and ratios as of and for the three months ended March 31, 2025 and 2024. The commercial segment encompasses the mezzanine lending business, and the other legacy commercial loans (immaterial to total) have been allocated to corporate and other investments.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Selected Earnings Data
Total interest income	$	3,343		$	3,645
Total interest expense		1,053			1,098
Net interest income		2,290			2,547
Provision for credit losses		3,114			216
Net interest (expense) income after credit loss provision		(824	)		2,331
Other income:
Gains on equity investments, net		9,430			4,167
Other income		212			35
Operating expenses:
Salaries		(1,142	)		(856	)
Other costs		(331	)		(129	)
Net income before taxes		7,345			5,548
Income tax provision		(2,436	)		(1,971	)
Net income after taxes	$	4,909		$	3,577
Balance Sheet Data
Total loans, gross	$	116,059		$	106,570
Allowance for credit losses		8,174			4,384
Total loans, net		107,885			102,186
Total assets		109,565			102,331
Total segment borrowings		90,121			83,842
Selected Financial Ratios
Return on average assets		18.45	%		13.50	%
Return on average equity		113.46			84.71
Interest yield		12.05			12.99
Net interest margin, gross		8.25			9.08
Net interest margin, net of allowance		8.71			9.43
Reserve coverage (1)		7.04			4.11
Delinquency status (2)		17.63			7.80
Charge-off (recovery) ratio (3)		0.47			(0.07	)

(1)

Allowance for credit losses as a percent of gross loans.

(2)

Loans 90 days or more past due as a percent of total loans.

(3)

Net charge-offs as a percent of annual average gross loans.


	As of March 31,
	2025					2024
Geographic Concentrations (Dollars in thousands)	Total Gross Loans		% of Market			Total Gross Loans		% of Market
California	$	35,409		31	%	$	31,543		25	%
Illinois		12,084		10			8,471		11
Wisconsin		10,682		9			11,476		11
New York		9,428		8			2,258		2
North Carolina		8,350		7			2,350		2
Minnesota		5,349		5			8,637		14
Texas		5,070		4			10,752		10
Other		29,687		26			31,083		25
Total	$	116,059		100	%	$	106,570		100	%

Taxi Medallion Lending

The taxi medallion lending segment operates in the New York City metropolitan area. During the three months ended March 31, 2025, we continued to utilize a taxi medallion value of $79,500 in the New York City and Newark markets despite fluctuating transfer prices that have exceeded that value, with all other markets being valued at $0 at the end of the quarter. We continued to not recognize interest income with all loans being placed on nonaccrual (except for settled loans with interest being paid in excess of the loan balance), and by transferring underperforming loans from the portfolio to loan collateral in process of foreclosure with charge-offs to collateral value, once loans become more than 120 days past due.

During the three months ended March 31, 2025, we collected $2.6 million related to taxi medallion and related assets, which resulted in net recoveries and gains of $1.7 million in the quarter. The amount of cash collected as well as recoveries recorded vary greatly from period to period due to a wide variety of circumstances surrounding each of the underlying assets, and while we continue to focus on collection and recovery efforts, it is unlikely that there will be future collections at the higher levels experienced in prior years.

The following table presents selected financial data and ratios as of and for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Selected Earnings Data
Total interest income	$	80		$	140
Total interest expense		12			28
Net interest income		68			112
Benefit for credit losses		(815	)		(944	)
Net interest income after credit loss benefit		883			1,056
Other income		844			639
Operating expenses:
Salaries		(650	)		(699	)
Loan servicing fees and collection costs		(149	)		(149	)
Other costs		(184	)		105
Net income before taxes		744			952
Income tax provision		(247	)		(338	)
Net income after taxes	$	497		$	614
Balance Sheet Data
Total loans, gross	$	1,650		$	3,560
Allowance for credit losses		385			1,502
Total loans, net		1,265			2,058
Total assets		6,855			8,611
Total segment borrowings		5,638			7,055
Selected Financial Ratios
Return on average assets		30.14	%		23.68	%
Return on average equity		185.45			148.65
Interest yield		19.12			15.59
Net interest margin, gross		16.25			12.47
Net interest margin, net of allowance		21.87			21.57
Reserve coverage (1)		23.32			42.19
Delinquency status (2)		—			—
Charge-off (recovery) ratio (3)		(157.97	)		(101.47	)

(1)

Allowance for credit losses as a percent of gross loans.

(2)

Loans 90 days or more past due as a percent of total loans.

(3)

Net charge-offs as a percent of annual average gross loans.

Corporate and Other Investments

This non-operating segment relates to our equity and investment securities as well as our legacy commercial business, and other assets, liabilities, revenues, and expenses, which are not specifically allocated to the operating segments. Additionally, we historically have and continue to account for goodwill in this non-operating segment. All goodwill relates to the Bank, specifically the recreation and home improvement lending segments.

This segment includes loans related to our strategic partnership program, which are issued by the Bank. The associated activities of the strategic partnership program are currently limited to originating loans or other receivables facilitated by our strategic partners and selling those loans or receivables to our strategic partners or other third parties, without recourse, within a specified time after origination, such as three business days. Strategic partnership loans were $10.5 million as of March 31, 2025 and $0.9 million as of March 31, 2024, with originations of $136.2 million during the three months ended March 31, 2025 and $15.8 million during the three months ended March 31, 2024.

The following table presents selected financial data and ratios as of and for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Selected Earnings Data
Total interest income	$	1,765		$	1,911
Total interest expense		3,943			2,748
Net interest expense		(2,178	)		(837	)
Provision for credit losses		—			1
Net interest income after credit loss benefit		(2,178	)		(838	)
Strategic partnership fee income		685			326
Other income (loss)		26			(16	)
Operating expenses:
Salaries		(2,182	)		(2,666	)
Loan servicing fees and collection costs		(448	)		—
Other costs		(724	)		(1,430	)
Net loss before taxes		(4,821	)		(4,624	)
Income tax benefit		1,599			1,642
Net loss after taxes	$	(3,222	)	$	(2,982	)
Balance Sheet Data
Total loans	$	10,499		$	869
Total assets		440,300			446,508
Total segment borrowings		362,164			365,832

SUMMARY CONSOLIDATED FINANCIAL DATA

The table below presents our selected financial data for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
(Dollars in thousands)	2025			2024
Return on average assets		1.93	%		1.80	%
Return on average equity		12.32			11.18
Return on average stockholders' equity		12.96			11.65
Net interest margin, gross		7.94			8.10
Equity to assets (1)		15.77			15.96
Debt to equity (1) (2)	5.2x			5.1x
Net loans receivable to assets		79	%		82	%
Net charge-offs	$	19,016		$	17,609
Net charge-offs as a % of average loans receivable (3)		3.10	%		3.20	%
Reserve coverage ratio (4)		4.25			3.76

(1)

Includes $68.8 million related to non-controlling interests in consolidated subsidiaries as of both March 31, 2025 and 2024.

(2)

Excludes deferred financing costs of $8.1 million and $8.5 million as of March 31, 2025 and 2024.

(3)

Net charge-offs as a percent of annual average gross loans.

(4)

Allowance for credit losses as a percent of loans held for investment. Loans held for sale are carried at the lesser of amortized cost or fair value, do not have an allowance for credit losses, and are excluded from this calculation.

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Net income attributable to shareholders was $12.0 million, or $0.50 per diluted share, for the three months ended March 31, 2025, compared to $10.0 million, or $0.42 per diluted share, for the three months ended March 31, 2024.

Total interest income was $75.4 million for the three months ended March 31, 2025, compared to $67.1 million for the three months ended March 31, 2024. The increase in interest income reflects the continued growth in our recreation and home improvement lending segments and increased weighted average interest rates charged on those loans. The yield on interest earning assets was 11.65% for the three months ended March 31, 2025, compared to 11.34% for the three months ended March 31, 2024. The increase reflects higher interest rates on new originations in our recreation and home improvement lending segments, with the yield anticipated to continue to increase as older loans with lower rates amortize and newer originations at the higher current rates continue to become a larger portion of our portfolio. We expect this increased yield to be partially offset by lower originations due to the economic environment and our risk mitigation strategy, as further described below.

Loans, inclusive of both loans held for investment and those held for sale, were $2.4 billion as of March 31, 2025, comprised of recreation ($1.5 billion), home improvement ($812.4 million), commercial ($116.1 million), strategic partnership ($10.5 million), and taxi medallion ($1.7 million) loans. We had an allowance for credit losses as of March 31, 2025 of $100.4 million, which was attributable to recreation (71%), home improvement (20%), commercial (8%), and taxi medallion (1%) loans.

Loans decreased $4.6 million, or less than 1%, from December 31, 2024 and increased $258.0 million from March 31, 2024. Originations during the quarter were $281.7 million and included $136.2 million of originations for loans held for sale in our strategic partnership program and $145.4 million of originations of loans held for investment, as compared to $173.1 million of total originations in the prior year quarter. Originations decreased in both of our consumer segments as we saw a decrease in demand related to the current economic environment. We continue to focus on originating loans that we believe will perform better during economic downturns, as opposed to originating loans at lower credit standards.

The provisions for credit losses were $22.0 million for the three months ended March 31, 2025, compared to $17.2 million in the three months ended March 31, 2024. The current quarter provision included $0.8 million of net loan recoveries in the taxi medallion lending segment and $3.1 million of provisions associated with our commercial lending segment as we increased provisions on loans which have potential exposure to uncertain tariff policies and the related risk of recession. Additionally, the provision reflected $1.2 million and $0.2 million of increased allowance for credit losses on the recreation and home improvement loan portfolios as we adjusted qualitative factors to address uncertainty due to the current economic environment. Net charged off loans of $19.0 million increased from $17.6 million in the prior year quarter, including $16.4 million related to the recreation loan portfolio, compared to $14.6 million in the prior year quarter, and $3.1 million related to the home improvement loan portfolio, compared to $4.0 million in the prior year quarter. Gross charge-offs were $20.2 million and $4.2 million in the recreation and home improvement lending segments, compared to $18.1 million and $4.9 million in the prior year quarter. Charge-offs in the consumer lending segments correlate with delinquency status, which improved from December 31, 2024, consistent with seasonal trends.

Interest expense was $24.0 million for the three months ended March 31, 2025, compared to $19.2 million for the three months ended March 31, 2024, reflecting both higher average borrowings and higher average borrowing costs during the three months ended March 31, 2025, with borrowing costs expected to further increase in the current interest rate environment. The average cost of borrowed funds was 4.16% for the three months ended March 31, 2025, compared to 3.67% for the three months ended March 31, 2024. The increase of 49 basis points over the prior year quarter is largely attributable to the increased cost of newly issued certificates of deposit used both to fund our growth and to replace older maturing vintages with lower rates. As we replace upcoming deposit maturities with new issues, we expect our cost of funds to further increase. During the three months ended March 31, 2025, we issued certificates of deposit at rates up to 4.45% and 4.33% for three and five year certificates of deposits, with the most recent issuances being at rates of 4.15% for three and five year certificates. In addition, we expect our interest expense related to SBA borrowings to increase as newly issued SBA debentures carry a higher rate compared to some of our previously issued debentures. Average debt outstanding was $2.3 billion for the three months ended March 31, 2025, up from $2.1 billion for the three months ended March 31, 2024, as we have increased our borrowings, particularly certificates of deposit to fund our loan growth. See page 36 for tables that present average balances and cost of funds for our funding sources.

Net interest income was $51.4 million for the three months ended March 31, 2025, compared to $47.9 million for the three months ended March 31, 2024. The net interest margin before the impact of the allowance for credit losses was 7.94% for the three months ended March 31, 2025, compared to 8.10% for the three months ended March 31, 2024, reflecting the above, particularly the rising cost of borrowings experienced over the prior year quarter, offset to an extent by higher yields on loans and investments compared to the prior year quarter. With the rates we charge on outstanding loans being fixed, and our cost of funds increasing, our net interest margin has tightened over the prior periods as we can only increase our yield through higher rates charged on new originations. We expect this trend of tightening margins to continue to some degree as our cost of funds, particularly on deposits, continues to increase, with the current average rate on deposits of 3.75% being lower than new issuance costs.

Net other income, which is comprised primarily of gains on equity investments, gains related to and in connection with the disposition of taxi medallion assets, fees associated with our strategic partnership program, as well as including prepayment fees, servicing fee income, and late charges was $11.6 million for the three months ended March 31, 2025, compared to $5.4 million for the three months ended March 31, 2024, and included net equity gains of $9.4 million in the current quarter compared to $4.2 million in the prior year quarter.

Operating expenses were $20.8 million for the three months ended March 31, 2025, compared to $18.2 million for the three months ended March 31, 2024. Salaries and benefits were $10.0 million for the three months ended March 31, 2025, compared to $9.5 million for the three months ended March 31, 2024, primarily reflecting a greater head count at our operating subsidiaries, Medallion Bank and Medallion Capital, and higher equity compensation costs in the current quarter. Legal and professional fees were $1.8 million for the three months ended March 31, 2025, up from $0.8 million in the three months ended March 31, 2024, which included, in the three months ended March 31, 2024, $0.6 million of proxy-related costs and $0.3 million of professional technology costs associated with our loan servicing platform. Additionally loan servicing fees of $2.8 million increased from $2.5 million in the prior year quarter and depreciation expense increased $0.5 million, primarily related to our loan servicing platform.

ASSET/LIABILITY MANAGEMENT

Interest Rate Sensitivity

We, like other financial institutions, are subject to interest rate risk to the extent that our interest-earning assets (consisting of consumer, commercial, and taxi medallion loans, and investment securities) reprice on a different basis over time in comparison to our interest-bearing liabilities (consisting primarily of bank certificates of deposit, SBA debentures and borrowings, historically credit facilities, and borrowings from banks and other lenders).

Having interest-bearing liabilities that mature or reprice more frequently on average than assets may be beneficial in times of declining interest rates, although such an asset/liability structure may result in declining net earnings during periods of rising interest rates. Abrupt increases in market rates of interest may have an adverse impact on our earnings until we are able to originate new loans at the higher prevailing interest rates. Conversely, having interest-earning assets that mature or reprice more frequently on average than liabilities may be beneficial in times of rising interest rates, although this asset/liability structure may result in declining net earnings during periods of falling interest rates. This mismatch between maturities and interest rate sensitivities of our interest-earning assets and interest-bearing liabilities results in interest rate risk.

The effect of changes in interest rates is mitigated by regular turnover of the portfolios. We believe that the average life of our loan portfolios varies to some extent as a function of changes in interest rates. Borrowers are more likely to exercise prepayment rights in a decreasing interest rate environment because the interest rate payable on the borrower’s loan is high relative to prevailing interest rates. Conversely, borrowers are less likely to prepay in a rising interest rate environment. However, borrowers may prepay for a variety of other reasons, such as to monetize increases in the underlying collateral values. In addition, we manage our exposure to increases in market rates of interest by incurring fixed-rate indebtedness, such as ten year subordinated SBA debentures, and by setting repricing intervals on certificates of deposit, for terms of up to five years.

A relative measure of interest rate risk can be derived from our interest rate sensitivity gap. The interest rate sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities, which mature and/or reprice within specified intervals of time. The gap is considered to be positive when repriceable assets exceed repriceable liabilities, and negative when repriceable liabilities exceed repriceable assets. A relative measure of interest rate sensitivity is provided by the cumulative difference between interest sensitive assets and interest sensitive liabilities for a given time interval expressed as a percent of total assets.

The following table presents our interest rate sensitivity gap at March 31, 2025. The principal amounts of interest earning assets are assigned to the time frames in which such principal amounts are contractually obligated to be repriced. We do not reflect any prepayment assumptions in preparing the analysis, despite historical average life experience being significantly shorter than contractual terms.


March 31, 2025 Cumulative Gap (1)
(Dollars in thousands)	Less Than 1 Year			More Than 1 and Less Than 2 Years			More Than 2 and Less Than 3 Years			More Than 3 and Less Than 4 Years			More Than 4 and Less Than 5 Years			More Than 5 and Less Than 6 Years			Thereafter		Total
Earning assets
Fixed-rate	$	31,403		$	24,373		$	60,836		$	60,949		$	89,908		$	74,486		$	2,097,138	$	2,439,093
Adjustable rate		535			—			—			—			—			—			—		535
Investment securities and equity investments		4,897			1,960			2,524			10,666			8,132			6,292			34,950		69,421
Cash and cash equivalents		157,994			—			—			—			—			—			—		157,994
Total earning assets	$	194,829		$	26,333		$	63,360		$	71,615		$	98,040		$	80,778		$	2,132,088	$	2,667,043
Interest bearing liabilities
Deposits	$	807,514		$	466,604		$	389,848		$	173,104		$	186,054		$	—		$	—	$	2,023,124
Privately placed notes		31,250			—			53,750			39,000			—			—			22,500		146,500
SBA debentures and borrowings		15,500			4,500			—			2,500			—			3,000			45,000		70,500
Trust preferred securities		—			—			—			—			—			—			33,000		33,000
Federal reserve and other borrowings		65,000			—			—			—			—			—			—		65,000
Total liabilities	$	919,264		$	471,104		$	443,598		$	214,604		$	186,054		$	3,000		$	100,500	$	2,338,124
Interest rate gap	$	(724,435	)	$	(1,169,206	)	$	(1,549,444	)	$	(1,692,433	)	$	(1,780,447	)	$	(1,702,669	)	$	328,919	$	—
Cumulative interest rate gap	$	(724,435	)	$	(1,169,206	)	$	(1,549,444	)	$	(1,692,433	)	$	(1,780,447	)	$	(1,702,669	)	$	328,919	$	—
December 31, 2024 (2)	$	(584,817	)	$	(456,813	)	$	(426,717	)	$	(114,216	)	$	(80,863	)	$	70,765		$	1,930,856	$	—
December 31, 2023(2)	$	(498,772	)	$	(1,015,143	)	$	(1,335,301	)	$	(1,474,758	)	$	(1,578,162	)	$	(1,494,411	)	$	281,971	$	—

(1)

The ratio of the cumulative one-year gap to total interest rate sensitive assets was (27%) as of March 31, 2025, and was (18%) as of December 31, 2024.

(2)

Excludes federal funds sold and investment securities.

Our interest rate sensitive assets were $2.7 billion and interest rate sensitive liabilities were $2.3 billion at March 31, 2025. The one-year cumulative interest rate gap was a negative $724.4 million, or 27% of interest rate sensitive assets. We actively monitor the level of exposure with the goal that movements in interest rates not adversely and unexpectedly negatively affect future earnings. We use net interest income sensitivity analysis as our primary metric to measure and manage the interest rate sensitivities of our loan and investment securities portfolios.

Our trust preferred securities bare a variable rate of interest of the 90-day Secured Overnight Financing Rate, or SOFR, adjusted by a relevant spread adjustment of approximately 26 basis points.

Liquidity and Capital Resources

Our sources of liquidity include brokered certificates of deposit and other borrowings at the Bank, unfunded commitments to sell debentures to the SBA, loan amortization and prepayments, private and public issuances of debt securities, participations or sales of loans to third parties, issuances of preferred securities at our subsidiaries, and the disposition of our other assets.

In August 2024, we completed a private placement to certain institutional investors of $5.0 million aggregate principal amount of 8.625% unsecured senior notes due August 2039, with interest payable semiannually. We used the net proceeds from the offering for general corporate purposes.

In June 2024, we amended the notes previously issued in a private placement to certain institutional investors in December 2023, increasing the principal amount from $12.5 million to $17.5 million, reducing the interest rate to 8.875% from 9.0%, and extending the maturity date from December 2033 to June 2039. We used the net proceeds from the offering for general corporate purposes, which included the repayment of the remaining 8.25% notes that matured in March 2024 described below.

On February 28, 2024, Medallion Capital accepted a commitment from the SBA for $18.5 million in debenture financing with a ten-year term. Medallion Capital can draw funds under the commitment, in whole or in part, until September 30, 2028. In connection with the commitment, Medallion Capital paid the SBA a leverage fee of $0.2 million, with the remaining $0.4 million of the fee to be paid pro rata as Medallion Capital draws under the commitment.

In September 2023, we completed a private placement to certain institutional investors of $39.0 million aggregate principal amount of 9.25% unsecured senior notes due September 2028, with interest payable semiannually.

In April 2023, the Bank began to originate retail savings deposits through a third-party service provider and, as of March 31, 2025, the Bank had $5.2 million in retail savings deposit balances.

In March 2023, the Bank established a discount window line of credit at the Federal Reserve. As of March 31, 2025, the Bank had $213.4 million in home improvement loans pledged as collateral to the Federal Reserve. The current advance rate on the pledged securities is approximately 46% of book value, for a total of approximately $97.4 million in secured borrowing capacity, of which $65.0 million was utilized as of March 31, 2025.

The Bank has borrowing arrangements with several correspondent banks. These agreements are accommodations that can be terminated at any time, for any reason, and allow the Bank to borrow up to $75.0 million. As of March 31, 2025, there were no outstanding amounts with respect to these arrangements.

The net proceeds from the various private placements were used for general corporate purposes, including repayment of outstanding debt, including repayment of our 9.00% notes at maturity in April 2021 and to pay down other borrowings, including some borrowings at a discount, and to repurchase, repay, and cancel $36.0 million of our 8.25% notes, which matured in March 2024.

Subject to market conditions, the Bank may seek to issue one or more additional series of preferred stock in order to increase capital levels, grow the consumer loan portfolios or, depending on the size and other terms of any such issuance and subject to receipt of any required regulatory approvals, redeem some or all of its outstanding Series F or Series E preferred stock. Any determination to seek to redeem some or all of the Bank’s outstanding preferred stock would be based on its actual and anticipated capital levels and capital deployment opportunities. There can be no assurance that the Bank will issue additional series of preferred stock or, if it does, that it will apply the proceeds to redeem the Series E or Series F preferred stock.

The table below presents the components of our debt as of March 31, 2025, exclusive of deferred financing costs of $8.1 million. See Note 5 to the consolidated financial statements for details of the contractual terms of our borrowings.


(Dollars in thousands)	Balance		Percentage (1)			Rate (2)
Deposits (3)	$	2,023,124		87	%		3.75	%
Privately placed notes		146,500		6			8.12
SBA debentures and borrowings		70,500		3			3.84
Trust preferred securities		33,000		1			6.69
Federal reserve and other borrowings		65,000		3			4.50
Total outstanding debt	$	2,338,124		100	%		4.09	%

(1)

Percentages may not foot due to rounding.

(2)

Weighted average contractual rate as of March 31, 2025.

(3)

Balance excludes $4.3 million of strategic partner reserve deposits as of March 31, 2025.

Our contractual obligations expire on or mature at various dates through September 2037. The following table presents our contractual obligations at March 31, 2025.


	Payments due by period
(Dollars in thousands)	Less than 1 year		1 – 2 years		2 – 3 years		3 – 4 years		4 – 5 years		More than 5 years		Total (1)
Borrowings
Deposits (2)	$	807,514	$	466,604	$	389,848	$	173,104	$	186,054	$	—	$	2,023,124
Privately placed notes		31,250		—		53,750		39,000		—		22,500		146,500
SBA debentures and borrowings		15,500		4,500		—		2,500		—		48,000		70,500
Trust preferred securities		—		—		—		—		—		33,000		33,000
Federal reserve and other borrowings		65,000		—		—		—		—		—		65,000
Total outstanding borrowings		919,264		471,104		443,598		214,604		186,054		103,500		2,338,124
Operating lease obligations		2,552		2,572		838		578		594		398		7,532
Total contractual obligations	$	921,816	$	473,676	$	444,436	$	215,182	$	186,648	$	103,898	$	2,345,656

(1)

Total debt is exclusive of deferred financing costs of $8.1 million as of March 31, 2025.

(2)

Balance excludes $4.3 million of strategic partner reserve deposits as of March 31, 2025.

Approximately $1.4 billion of our borrowings have maturity dates during the next two years, a majority of which are brokered certificates of deposits that have no right of voluntary withdrawal.

In addition, the illiquidity of portions of our loan portfolio and investments may adversely affect our ability to dispose of them at times when it may be advantageous for us to liquidate such portfolio or investments. In addition, if we were required to liquidate some or all of our portfolio, the proceeds of such liquidation may be significantly less than the current value of such investments. Because we borrow money to make loans and investments, our net operating income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our interest income. In periods of sharply rising interest rates, our cost of funds would increase, which would reduce our net interest income.

We use a combination of long-term and short-term borrowings and equity capital to finance our lending and investing activities. Our long-term fixed-rate investments are financed primarily with fixed-rate debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. We have analyzed the potential impact of changes in interest rates on net interest income. Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of March 31, 2025 by $2.4 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $2.8 million at March 31, 2025. Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in credit quality, size, and composition of the assets on the balance sheet, and other business developments that could affect net income from operations in a particular quarter or for the year taken as a whole. Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates.

From time to time, we work with investment banking firms and other financial intermediaries to investigate the viability of several other financing options which include, among others, the sale or spinoff of certain assets or divisions, the development of a securitization conduit program, and other independent financing for certain subsidiaries or asset classes. These financing options would also provide additional sources of funds for both external expansion and continuation of internal growth.

The following table illustrates sources of available funds for us and each of our subsidiaries, and amounts outstanding under trust preferred securities and borrowings and their respective end of period weighted average interest rates at March 31, 2025. See Note 5 to the consolidated financial statements for additional information about each borrowing.


(Dollars in thousands)	Medallion Financial Corp.			Medallion Funding LLC		Medallion Capital Inc.				Freshstart Venture Capital Corp.		Medallion Bank				March 31, 2025			December 31, 2024
Cash, cash equivalents and federal funds sold	$	21,083		$	285	$	18,070		(1)	$	3,549	$	115,007			$	157,994		$	169,572
Trust preferred securities		33,000															33,000			33,000
Average interest rate		6.69	%														6.69	%		6.83	%
Maturity	9/37															9/37			9/37
Privately placed notes		146,500															146,500			146,500
Average interest rate		8.12	%														8.12	%		8.12	%
Maturity	2/26 - 8/39															2/26 - 8/39			2/26 - 8/39
SBA debentures & borrowings
Amounts available							18,500										18,500			28,750
Amounts outstanding							70,500										70,500			70,250
Average interest rate							3.84	%									3.84	%		3.53	%
Maturity						9/25 - 9/35										9/25 - 9/35			3/25- 3/34
Brokered certificates of deposit													2,027,374		(2)		2,027,374			2,094,663
Average interest rate													3.75	%			3.75	%		3.71	%
Maturity												4/25 - 3/30				4/25 - 3/30			1/25 - 12/29
Federal reserve and other borrowings													65,000				65,000			35,000
Average interest rate													4.50	%			4.50	%		0
Maturity												N/A				N/A			N/A
Total cash	$	21,083		$	285	$	18,070			$	3,549	$	115,007			$	157,994		$	169,572
Total debt outstanding	$	179,500		$	—	$	70,500			$	—	$	2,092,374			$	2,342,374		$	2,379,413

(1)

Cash resides in the applicable SBIC and is generally not available for corporate use.

(2)

Includes deposits of $4.3 million related to the strategic partnership program and $10.4 million related to listing services.

Loan amortization, prepayments, and sales also provide a source of funding for us. Prepayments on loans are influenced significantly by general interest rates, taxi medallion loan market values, economic conditions, and competition.

We also generate liquidity through deposits generated at the Bank, the offering of privately placed notes, through the issuance of SBA debentures, through our trust preferred securities, and through preferred securities at our subsidiaries and have utilized borrowing arrangements with other banks in the past, as well as from cash flow from operations. In addition, we may choose to participate out a greater portion of our loan portfolio to third parties. We regularly seek additional sources of liquidity; however, given current market conditions, there can be no assurance that we will be able to secure additional liquidity on terms favorable to us or at all. If that occurs, we may decline to underwrite lower yielding loans in order to conserve capital until credit conditions in the market become more favorable; or we may be required to dispose of assets when we would not otherwise do so, and at prices which may be below the net book value of such assets in order for us to repay indebtedness on a timely basis.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

Emerging growth company	☐


		Page
PART I – FINANCIAL INFORMATION		4

ITEM 1. FINANCIAL STATEMENTS		4

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		34

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		52

ITEM 4. CONTROLS AND PROCEDURES		52

PART II—OTHER INFORMATION		53

ITEM 1. LEGAL PROCEEDINGS		53

ITEM 1A. RISK FACTORS		53

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		53

ITEM 5. OTHER INFORMATION		53

ITEM 6. EXHIBITS		54

SIGNATURES		55


	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Total Amount Paid		Maximum Approximate Dollar Value of Shares that May Yet to Be Purchased under the Plans or Programs
January 1 - January 31		—	$	—		—	$	—	$	15,392,299
February 1 - February 28		—		—		—		—		15,392,299
March 1 - March 31		60,185		8.83		60,185		531,230		14,861,069
Total		60,185	$	8.83		60,185	$	531,230	$	14,861,069


Number		Description

31.1		Certification of Alvin Murstein pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

31.2		Certification of Anthony N. Cutrone pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32.1		Certification of Alvin Murstein pursuant to 18 USC. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32.2		Certification of Anthony N. Cutrone pursuant to 18 USC. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


MEDALLION FINANCIAL CORP.


Date:	May 6, 2025

By:	/s/ Alvin Murstein
	Alvin Murstein
	Chairman and Chief Executive Officer

By:	/s/ Anthony N. Cutrone
	Anthony N. Cutrone
	Executive Vice President and Chief Financial Officer

	Signing on behalf of the registrant as principal financial and accounting officer.