Medallion Financial Q3 earnings fall to $0.10 a share
Nine-month operating cash flow was $103.397 million versus $91.211 million, while quarterly attributable net income was $2.397 million.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Medallion Financial Corp. reported third-quarter 2026 results with total interest income of $88.890 million, versus $80.771 million a year earlier, and net interest income of $58.379 million, versus $55.686 million. Its provision for credit losses was $30.769 million, compared with $18.556 million. Net income attributable to Medallion Financial Corp. was $2.397 million, versus $7.763 million, and diluted earnings per share were $0.10, versus $0.32. Its stated strategic focus is consumer finance and commercial lending.
For the nine months ended September 30, 2026, the company reported $14.795 million in net income attributable to Medallion Financial Corp., compared with $30.846 million, and $103.397 million in net cash provided by operating activities, versus $91.211 million. At September 30, 2026, total assets were $3,360.644 million, compared with $2,955.464 million at December 31, 2025; net loans receivable were $2,786.466 million, versus $2,436.916 million.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month operating cash flow reached $103.397 million, versus $91.211 million.
Negative
- Moderate pointQuarterly attributable net income was $2.397 million, versus $7.763 million.
- Moderate pointCredit-loss provision rose to $30.769 million from $18.556 million. 13% of market cap
Filing Explained
The $51,913 thousand equity raise is at Medallion Bank and is recorded as subsidiary non-controlling equity, not parent-company common stock.
Form 10-Q is an unaudited quarterly report; this filing reports the quarter ended
As of
Medallion Bank raised
Key Figures
Key Terms
current expected credit loss financial
allowance for credit losses financial
non-controlling interest financial
Tier 1 leverage ratio regulatory
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much was MFIN's net income in Q3 2026?
What was MFIN's operating cash flow for the first nine months of 2026?
How much in deposits did MFIN report at September 30, 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
(State of Incorporation) |
(IRS Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Trading symbols |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO
The number of outstanding shares of registrant’s Common Stock, par value $0.01, as of November 4, 2026, was
MEDALLION FINANCIAL CORP.
FORM 10-Q
TABLE OF CONTENTS
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Page |
PART I – FINANCIAL INFORMATION |
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3 |
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ITEM 1. FINANCIAL STATEMENTS |
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3 |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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38 |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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60 |
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ITEM 4. CONTROLS AND PROCEDURES |
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60 |
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PART II—OTHER INFORMATION |
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60 |
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ITEM 1. LEGAL PROCEEDINGS |
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60 |
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ITEM 1A. RISK FACTORS |
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60 |
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
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60 |
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ITEM 5. OTHER INFORMATION |
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60 |
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ITEM 6. EXHIBITS |
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61 |
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SIGNATURES |
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62 |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with our financial statements and the notes to those statements and other financial information appearing elsewhere in this report.
This report contains forward-looking statements relating to future events and future performance applicable to us within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions, or future strategies that are signified by the words expects, anticipates, intends, believes, or similar language. In connection with certain forward-looking statements contained in this Form 10-Q and those that may be made in the future by or on behalf of the Company, the Company notes that there are various factors that could cause actual results to differ materially from those set forth in any such forward-looking statements. The forward-looking statements contained in this Form 10-Q were prepared by management and are qualified by, and subject to, significant business, economic, competitive, regulatory, and other uncertainties and contingencies, including those relating to the U.S. and global economies, including the current inflationary environment, the impact of tariffs, the risk of recession and the impact of the geopolitical environment (including the conflict with Iran), all of which are difficult or impossible to predict, and many of which are beyond control of the Company.
All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any forward-looking statements. The statements have not been audited by, examined by, compiled by, or subjected to agreed-upon procedures by independent accountants, and no third-party has independently verified or reviewed such statements. Readers of this Form 10-Q should consider these facts in evaluating the information contained herein. In addition, the business and operations of the Company are subject to substantial risks which increase the uncertainty inherent in the forward-looking statements contained in this Form 10-Q. The inclusion of the forward-looking statements contained in this Form 10-Q should not be regarded as a representation by the Company or any other person that the forward-looking statements contained in this Form 10-Q will be achieved.
In light of the foregoing, readers of this Form 10-Q are cautioned not to place undue reliance on the forward-looking statements contained herein. You should consider these risks and those described under Risk Factors in the Company’s Annual Report on Form 10-K and others that are detailed in the other reports that the Company files from time to time with the Securities and Exchange Commission, or the SEC.
Page 2 of 63
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BASIS OF PREPARATION
We, Medallion Financial Corp., or the Company, are a specialty finance company organized as a Delaware corporation. Our strategic focus is operating and growing our consumer finance and commercial lending businesses. Our total assets were $3.36 billion and $2.96 billion as of September 30, 2026 and December 31, 2025.
We conduct our business through various wholly-owned subsidiaries including:
Our consolidated balance sheets as of September 30, 2026, and the related consolidated statements of operations, consolidated statements of other comprehensive income, consolidated statements of stockholders’ equity and cash flows for the three and nine months then ended included in Item 1 have been prepared by us, without audit, pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying consolidated financial statements include all adjustments, which are of a normal and recurring nature, necessary to present fairly our consolidated financial position and results of operations. The results of operations for the three and nine months ended September 30, 2026 may not be indicative of future performance. These financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Page 3 of 63
MEDALLION FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
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(Unaudited) |
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(Dollars in thousands, except share and per share data) |
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September 30, 2026 |
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December 31, 2025 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Federal funds sold |
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Investment securities, at fair value |
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Equity investments |
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Loans held for sale, at lower of amortized cost or fair value |
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Loans |
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Allowance for credit losses |
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( |
) |
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( |
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Net loans receivable |
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Goodwill |
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Intangible assets, net |
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Accrued interest receivable |
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Property, equipment, and right-of-use lease assets, net |
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Loan collateral in process of foreclosure |
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Income tax receivable |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities |
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Deposits (1) |
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$ |
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$ |
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Long-term debt (2) |
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Short-term debt |
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Deferred tax liabilities, net (3) |
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Operating lease liabilities |
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Accrued interest payable |
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Income tax payable |
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Accounts payable and accrued expenses (4) |
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Total liabilities |
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Commitments and contingencies (5) |
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Stockholders’ equity |
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Preferred stock ( |
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Common stock ( |
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Additional paid in capital |
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Treasury stock ( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Retained earnings |
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Total stockholders’ equity |
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Non-controlling interest in consolidated subsidiaries |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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Number of shares outstanding |
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Book value per share |
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$ |
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$ |
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The accompanying notes should be read in conjunction with these consolidated financial statements.
Page 4 of 63
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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(Dollars in thousands, except share and per share data) |
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2026 |
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2025 |
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2026 |
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2025 |
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Interest and fees on loans |
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$ |
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$ |
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$ |
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$ |
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Non-loan interest and dividend income |
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Total interest income |
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Interest on deposits |
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Interest on long-term debt |
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Interest on short-term borrowings |
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Total interest expense |
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Net interest income |
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Provision for credit losses |
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Net interest income after provision for credit losses |
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Other income |
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Gain on taxi medallion assets, net |
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Strategic partnership fees |
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Gain on sale of recreation and home improvement loans |
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Gain (loss) on equity investments, net |
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( |
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Other income |
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Total other income, net |
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Other expenses |
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Salaries and employee benefits |
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Loan servicing fees |
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Collection costs |
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Professional fee costs, net |
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Regulatory fees |
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Rent expense |
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Depreciation |
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Director compensation |
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Amortization of intangible assets |
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Other expenses |
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Total other expenses |
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Income before income taxes |
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Income tax provision |
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Net income |
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||||
Less: income attributable to the non-controlling interest |
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Less: redemption of non-controlling interest |
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||||
Net income attributable to Medallion Financial Corp. |
|
$ |
|
|
$ |
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|
$ |
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$ |
|
||||
Basic earnings per share |
|
$ |
|
|
$ |
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$ |
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$ |
|
||||
Diluted earnings per share |
|
$ |
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$ |
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$ |
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$ |
|
||||
Weighted average common shares outstanding |
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||||
Basic |
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Diluted |
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The accompanying notes should be read in conjunction with these consolidated financial statements.
Page 5 of 63
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(UNAUDITED)
|
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
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2026 |
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2025 |
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2026 |
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2025 |
|
||||
Net income |
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$ |
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|
$ |
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$ |
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$ |
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||||
Unrealized holding (losses) gains on investment securities arising during the period |
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( |
) |
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( |
) |
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Tax effect on unrealized (losses) gains on investments |
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( |
) |
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( |
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||
Total comprehensive income |
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||||
Less: income attributable to the non-controlling interest |
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Less: redemption of non-controlling interest |
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||||
Total comprehensive income attributable to Medallion Financial Corp. |
|
$ |
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$ |
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$ |
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$ |
|
||||
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page 6 of 63
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(Dollars in thousands) |
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Common |
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Common |
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Additional |
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Treasury |
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Treasury |
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Retained |
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Accumulated |
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Total |
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Non- |
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Total |
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||||||||||
Balance at December 31, 2025 |
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|
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|
$ |
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|
$ |
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|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
— |
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|
|
— |
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— |
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|
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— |
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— |
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— |
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|
||||
Distributions to non-controlling interest |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
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— |
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|
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|
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— |
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— |
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— |
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— |
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— |
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||||
Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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— |
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||||
Issuance of restricted stock, net |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
|
— |
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|
Issuance in connection with vesting of performance stock units |
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|
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Withheld restricted stock for employees' tax obligations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
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|
|
— |
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|
|
— |
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|
|
— |
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|
|
( |
) |
|
|
— |
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|
|
( |
) |
Forfeiture of restricted stock, net |
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|
( |
) |
|
|
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
|
Dividends paid on common stock |
|
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— |
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|
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— |
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|
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— |
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— |
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|
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— |
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|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at March 31, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Exercise of stock options |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Forfeiture of restricted stock, net |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance in connection with vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Withheld restricted stock for employees' tax obligations |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Purchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends paid on common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Non-controlling interest equity raised by Medallion Bank |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Exercise of stock options |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Forfeiture of restricted stock, net |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Purchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends paid on common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at September 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page 7 of 63
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(Dollars in thousands) |
|
Common |
|
|
Common |
|
|
Additional |
|
|
Treasury |
|
|
Treasury |
|
|
Retained |
|
|
Accumulated |
|
|
Total |
|
|
Non- |
|
|
Total |
|
||||||||||
Balance at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Exercise of stock options |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Issuance of restricted stock, net |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Withheld restricted stock for employees' tax obligations |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Forfeiture of restricted stock, net |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Purchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends paid on common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Non-controlling interest equity raised by Medallion Bank |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Exercise of stock options |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Forfeiture of restricted stock, net |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance in connection with vesting of restricted stock units |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Purchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Dividends paid on common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Distributions to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Non-controlling interest redemption at Medallion Bank |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Exercise of stock options |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Dividends paid on common stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance at September 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page 8 of 63
MEDALLION FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Nine Months Ended September 30, |
|
|||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net income resulting from operations |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income resulting from operations to net cash provided by operating activities: |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Proceeds from sales of strategic partnership loans held for sale |
|
|
|
|
|
|
||
Gain on sale of recreation and home improvement loans |
|
|
( |
) |
|
|
( |
) |
Origination of loans held for sale |
|
|
( |
) |
|
|
( |
) |
Paid-in-kind interest income |
|
|
( |
) |
|
|
( |
) |
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of loan origination costs and fees, net |
|
|
|
|
|
|
||
(Decrease) increase in deferred and other tax liabilities, net |
|
|
( |
) |
|
|
|
|
Net gains on equity investments |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation expense |
|
|
|
|
|
|
||
Increase in accrued interest receivable |
|
|
( |
) |
|
|
( |
) |
(Increase) decrease in other assets |
|
|
( |
) |
|
|
|
|
Increase (decrease) in accounts payable and accrued expenses |
|
|
|
|
|
( |
) |
|
Increase (decrease) in accrued interest payable |
|
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Loans originated |
|
|
( |
) |
|
|
( |
) |
Proceeds from principal receipts, sales, and maturities of loans |
|
|
|
|
|
|
||
Purchases of investments |
|
|
( |
) |
|
|
( |
) |
Proceeds from principal receipts, sales, and maturities of investments |
|
|
|
|
|
|
||
Proceeds from the sale and principal payments on loan collateral in process of foreclosure |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Proceeds from time deposits and funds borrowed |
|
|
|
|
|
|
||
Repayments of time deposits and funds borrowed |
|
|
( |
) |
|
|
( |
) |
Non-controlling interest equity raised by Medallion Bank |
|
|
|
|
|
|
||
Non-controlling interest redemption at Medallion Bank |
|
|
|
|
|
( |
) |
|
Cash dividends paid on common stock |
|
|
( |
) |
|
|
( |
) |
Distributions to non-controlling interests |
|
|
( |
) |
|
|
( |
) |
Payment of withholding taxes on net settlement of vested stock |
|
|
( |
) |
|
|
( |
) |
Treasury stock repurchased |
|
|
( |
) |
|
|
( |
) |
Proceeds from the exercise of stock options |
|
|
|
|
|
|
||
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents, beginning of period (1) |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period (1) |
|
$ |
|
|
$ |
|
||
SUPPLEMENTAL INFORMATION |
|
|
|
|
|
|
||
Cash paid during the period for interest |
|
$ |
|
|
$ |
|
||
Cash paid during the period for income taxes |
|
|
|
|
|
|
||
NON-CASH INVESTING |
|
|
|
|
|
|
||
Loans transferred to loan collateral in process of foreclosure, net |
|
$ |
|
|
$ |
|
||
The accompanying notes should be read in conjunction with these consolidated financial statements.
Page 9 of 63
MEDALLION FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2026
(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 swimming pools, roofs, and windows. 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; and Freshstart Venture Capital Corp., or Freshstart, which historically originated and serviced taxi medallion and commercial loans. Medallion Capital, an SBIC, is 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 $
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of the consolidated financial statements in conformity with generally accepted accounting principles 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 variable interest entities, or 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.
Page 10 of 63
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid instruments with an original purchased maturity of three months or less, federal funds sold, interest-bearing deposits in other banks, and money market mutual funds to be cash equivalents. A non-interest-bearing compensating balance of $
Fair Value of Assets and Liabilities
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 were $
During 2021, the Company purchased $
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.
Page 11 of 63
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 the Company 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 (loss), 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
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.
Loan origination fees and certain direct origination costs are deferred and recognized as an adjustment to the yield of the related loans. As of September 30, 2026 and December 31, 2025, net loan origination costs included in loans were $
Interest income is recorded on the accrual basis. The consumer loan portfolio is typified by a large number of smaller dollar loans that have similar characteristics. 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, a loan is considered 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, and are charged off in their entirety when deemed uncollectible, if they enter bankruptcy, or when they become 120 days past due, whichever occurs first. The Company takes appropriate recovery efforts against both the borrower and the underlying collateral are initiated for nonaccrual loans. For the recreation loan portfolio, the process to repossess the collateral is generally 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 collectibility 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.
Page 12 of 63
Loans Held for Sale
Loans held for sale consist of consumer loans, including loans originated through strategic partnerships, that are intended to be sold. 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).
All recreation and home improvement loans are made with the intent to hold for investment. From time to time, the Company may consider selling a group of its recreation and home improvement loans. Recreation and home improvement loans are transferred to the held for sale portfolio when the Company has entered into a commitment to sell a specific portion of its held for investment portfolio or when the Bank has a formal marketing strategy to sell a group of loans. During the three and nine months ended September 30, 2026, the Company did
Allowance for Credit Losses
The Company follows Accounting Standards Update, or ASU, 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, qualitative adjustments, 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 collectibility 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 assets arose as a result of the excess of fair value over book value for several of our previously unconsolidated portfolio investment companies as of April 2, 2018. This fair value was brought forward under the Company's requirement to consolidate these previously unconsolidated subsidiaries and was subject to a purchase price accounting allocation process conducted by an independent third-party expert to arrive at the current categories and amounts. Goodwill is not amortized, but is subject to quarterly review by management to determine whether additional impairment testing is needed, and such testing is performed at least on an annual basis.
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 September 30, 2026 and December 31, 2025, the Company had goodwill of $
Management engaged an independent third-party expert to perform a quantitative assessment of goodwill for impairment at October 1, 2025. The third-party expert, as of the most recent goodwill impairment testing date, determined that a fair value premium existed in excess of the carrying value of the recreation and home improvement lending segments. During the three and nine months ended September 30, 2026, the Company did not identify any triggering events that would require re-evaluation of goodwill impairment in either segment.
The table below presents the intangible assets as of the dates presented:
(Dollars in thousands) |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Brand-related intellectual property |
|
$ |
|
|
$ |
|
||
Home improvement contractor relationships |
|
|
|
|
|
|
||
Total intangible assets |
|
$ |
|
|
$ |
|
||
Page 13 of 63
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
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 $
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.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands, except share and per share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net income attributable to Medallion Financial Corp. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average common shares outstanding applicable to basic EPS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of performance stock unit grants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of restricted stock grants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted weighted average common shares outstanding applicable to diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Potentially dilutive common shares excluded from the above calculations were
Page 14 of 63
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, or PSUs, 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 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
|
|
Regulatory |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
Adequately Capitalized |
|
|
Well- |
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||
Common equity tier 1 capital |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
Tier 1 capital |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total capital |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Risk-weighted assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Leverage ratio (1) |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Common equity tier 1 capital ratio (2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Tier 1 capital ratio (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total capital ratio (3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
In the above table, the minimum risk-based ratios as of September 30, 2026 and December 31, 2025 reflect the capital conservation buffer of
Recently Issued Accounting Standards
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 for annual periods 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.
Page 15 of 63
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 September 30, 2026 and December 31, 2025.
September 30, 2026 |
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Fair |
|
||||
Mortgage-backed securities, principally obligations of U.S. federal agencies |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
State and municipalities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Agency bonds |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2025 |
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Fair |
|
||||
Mortgage-backed securities, principally obligations of U.S. federal agencies |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
State and municipalities |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Agency bonds |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The amortized cost and estimated fair market value of investment securities at September 30, 2026 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. Mortgage‑backed securities are included in the table based on their contractual maturities and are reflected in each category below.
September 30, 2026 |
|
Amortized |
|
|
Fair |
|
||
Due in one year or less |
|
$ |
|
|
$ |
|
||
Due after one year through five years |
|
|
|
|
|
|
||
Due after five years through ten years |
|
|
|
|
|
|
||
Due after ten years |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The following tables present information pertaining to securities with gross unrealized losses as of September 30, 2026 and December 31, 2025, 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 |
|
||||||||||
September 30, 2026 |
|
Gross |
|
|
Fair |
|
|
Gross |
|
|
Fair |
|
||||
Mortgage-backed securities |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
State and municipalities |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Agency bonds |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Less than Twelve Months |
|
|
Twelve Months and Over |
|
||||||||||
December 31, 2025 |
|
Gross |
|
|
Fair |
|
|
Gross |
|
|
Fair |
|
||||
Mortgage-backed securities |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
State and municipalities |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Agency bonds |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Page 16 of 63
As of September 30, 2026 and December 31, 2025, the Company had
(4) LOANS AND ALLOWANCE FOR CREDIT LOSSES
The following table presents the major classification of loans, inclusive of capitalized loan origination costs, as of September 30, 2026 and December 31, 2025.
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
(Dollars in thousands) |
|
Amount |
|
|
As a |
|
|
Amount |
|
|
As a |
|
||||
Loans held for investment: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recreation |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Taxi medallion |
|
|
|
|
* |
|
|
|
|
|
* |
|
||||
Total loans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans held for sale, at lower of amortized cost or fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Strategic partnership |
|
|
|
|
* |
|
|
|
|
|
* |
|
||||
Total loans held for sale, at lower of amortized cost or fair value |
|
|
|
|
* |
|
|
|
|
|
* |
|
||||
Total loans and loans held for sale |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
(1) Percentage may not foot due to rounding.
(*) Less than 1%.
The following tables present the activity of the gross loans and loans held for sale for the three and nine months ended September 30, 2026.
Three Months Ended September 30, 2026 |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – June 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Loan originations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Principal receipts, sales, and maturities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Transfer to loan collateral in process of foreclosure, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Amortization of origination fees and costs, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Origination fees and costs, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Paid-in-kind interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross loans – September 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nine Months Ended September 30, 2026 |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Loan originations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Principal receipts, sales, and maturities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Transfer to loan collateral in process of foreclosure, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Amortization of origination fees and costs, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Origination fees and costs, net |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Paid-in-kind interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross loans – September 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Page 17 of 63
The following tables present the activity of the gross loans and loans held for sale for the three and nine months ended September 30, 2025.
Three Months Ended September 30, 2025 |
|
Recreation (1) |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Loan originations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Principal receipts, sales, and maturities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Transfer to loan collateral in process of foreclosure, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Amortization of origination fees and costs, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Origination fees and costs, net |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Paid-in-kind interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross loans – September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nine Months Ended September 30, 2025 |
|
Recreation (1) |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Loan originations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Principal receipts, sales, and maturities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Transfer to loan collateral in process of foreclosure, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Amortization of origination fees and costs, net |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Origination fees and costs, net |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Paid-in-kind interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross loans – September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2026.
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Total |
|
|||||
Balance at December 31, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Balance at March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Balance at June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Balance at September 30, 2026 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Page 18 of 63
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2025.
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Total |
|
|||||
Balance at December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Balance at March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Balance at June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Recoveries |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Balance at September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The following tables present the gross charge-offs for the three and nine months ended September 30, 2026, by the year of origination.
Three Months Ended September 30, 2026 |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Nine Months Ended September 30, 2026 |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The following tables present the gross charge-offs for the three and nine months ended September 30, 2025, by the year of origination.
Three Months Ended September 30, 2025 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Nine Months Ended September 30, 2025 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Page 19 of 63
The following table presents the allowance for credit losses by type as of September 30, 2026.
September 30, 2026 |
|
Amount |
|
|
Percentage |
|
|
Allowance as |
|
|||
Recreation |
|
$ |
|
|
|
% |
|
|
% |
|||
Home improvement |
|
|
|
|
|
|
|
|
|
|||
Commercial |
|
|
|
|
|
|
|
|
|
|||
Taxi medallion |
|
|
|
|
* |
|
|
|
|
|||
Total (1) |
|
$ |
|
|
|
% |
|
|
|
|||
(*) Less than 0.1%.
The following table presents the allowance for credit losses by type as of December 31, 2025.
December 31, 2025 |
|
Amount |
|
|
Percentage |
|
|
Allowance as |
|
|||
Recreation |
|
$ |
|
|
|
% |
|
|
% |
|||
Home improvement |
|
|
|
|
|
|
|
|
|
|||
Commercial |
|
|
|
|
|
|
|
|
|
|||
Taxi medallion |
|
|
|
|
* |
|
|
|
|
|||
Total (1) |
|
$ |
|
|
|
% |
|
|
|
|||
(*) Less than 0.1%.
The following table presents the performance status of loans as of September 30, 2026.
September 30, 2026 |
|
Performing |
|
|
Nonperforming |
|
|
Total |
|
|
Percentage of |
|
||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Strategic partnership |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
||||
The following table presents the performance status of loans as of December 31, 2025.
December 31, 2025 |
|
Performing |
|
|
Nonperforming |
|
|
Total |
|
|
Percentage of |
|
||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Strategic partnership |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
||||
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 a result, deemed nonperforming.
The following table presents the aging of loans as of September 30, 2026.
September 30, 2026 |
|
Days Past Due |
|
|
|
|
|
|
|
|
|
|
|
Recorded |
|
|||||||||||||
(Dollars in thousands) |
|
30-59 |
|
|
60-89 |
|
|
90 + |
|
|
Total |
|
|
Current |
|
|
Total (1) |
|
|
Accruing |
|
|||||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Strategic partnership |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Page 20 of 63
The following table presents the aging of loans as of December 31, 2025.
December 31, 2025 |
|
Days Past Due |
|
|
|
|
|
|
|
|
|
|
|
Recorded |
|
|||||||||||||
(Dollars in thousands) |
|
30-59 |
|
|
60-89 |
|
|
90 + |
|
|
Total |
|
|
Current |
|
|
Total (1) |
|
|
Accruing |
|
|||||||
Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Taxi medallion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Strategic partnership |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The following table presents loan delinquency for recreation and home improvement loans as of September 30, 2026, by the year of origination:
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total (1) |
|
|||||||
Recreation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
30-59 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
60-89 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
90 + Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
30-59 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
60-89 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
90 + Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Home improvement |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The following table presents loan delinquency for recreation and home improvement loans as of December 31, 2025, by the year of origination:
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total (1) |
|
|||||||
Recreation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
30-59 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
60-89 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
90 + Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Recreation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Home improvement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
30-59 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
60-89 Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
90 + Days |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total Home improvement |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Page 21 of 63
(5) FUNDS BORROWED
The following table presents outstanding balances of funds borrowed.
|
|
Payments Due for the Twelve Months Ending September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
(Dollars in thousands) |
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
2031 |
|
|
Thereafter |
|
|
September 30, 2026 (1) |
|
|
December 31, 2025 (1) |
|
|
Interest |
|
|||||||||
Deposits (3) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|||||||||
Privately placed notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
SBA debentures and borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Trust preferred securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Federal reserve and other borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Strategic partner collateral deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|||||||||
(A) DEPOSITS
Most deposits are raised through the use of investment brokerage firms that package time deposits in denominations of less than $
(Dollars in thousands) |
|
September 30, 2026 |
|
|
Three months or less |
|
$ |
|
|
Over three months through six months |
|
|
|
|
Over six months through one year |
|
|
|
|
Over one year |
|
|
|
|
Deposits |
|
|
|
|
Strategic partner collateral deposits |
|
|
|
|
Total deposits |
|
$ |
|
|
(B) FEDERAL RESERVE DISCOUNT WINDOW AND OTHER BORROWINGS
As of September 30, 2026, the Bank had $
The Bank has borrowing arrangements with correspondent banks. These agreements are accommodations that can be terminated at any time, for any reason and allow the Bank to borrow up to $
Page 22 of 63
(C) PRIVATELY PLACED NOTES
The Company has entered into various private placements with certain institutional investors over time.
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Date of Notes |
|
Maturity |
|
Interest Rate |
|
|
Interest Payable |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
|||
December 2020 |
|
December 2027 |
|
|
% |
|
|
$ |
|
|
$ |
|
||||
February 2021 |
|
February 2026 |
|
|
% |
|
|
|
|
|
|
|
||||
September 2023 |
|
September 2028 |
|
|
% |
|
|
|
|
|
|
|
||||
June 2024 |
|
June 2039 |
|
|
% |
|
|
|
|
|
|
|
||||
August 2024 |
|
August 2039 |
|
|
% |
|
|
|
|
|
|
|
||||
April 2026 |
|
May 2031 |
|
|
% |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
(D) SBA DEBENTURES AND BORROWINGS
Over the years, the SBA has approved commitments for Medallion Capital, typically for a four and a half year term and a
In 2025, the SBA informed Medallion Capital that it needs to have Medallion Capital’s management team reviewed through the SBA’s licensing division; until successful completion of that review, Medallion Capital was not deemed by the SBA to have a qualified management team. Medallion Capital submitted a management team for review through the SBA’s licensing division on March 31, 2026 and on the same day, the SBA notified Medallion Capital that it has declared an event of default with respect to outstanding debentures and directed Medallion Capital, within 120 days, to identify and submit at least one qualified candidate for consideration as a full-time principal and investment committee member of Medallion Capital. In April 2026, Medallion Capital submitted two candidates to the SBA for its consideration. On June 3, 2026, the SBA notified Medallion Capital that Medallion Capital’s submission of two candidates cures the previously disclosed event of default, subject to the satisfactory completion of the candidates’ background checks. On June 11, 2026, the SBA notified Medallion Capital that there was a satisfactory completion of such background checks, which cured the previously disclosed event of default with respect to its outstanding SBA debentures. The SBA’s notice and event of default did not trigger any cross-default clauses in any of the Company's debt arrangements. In subsequent discussions with the SBA, the SBA has indicated that Medallion Capital must supplement its submission for purposes of obtaining new and future commitments for debenture financing by identifying and submitting one additional qualified candidate for consideration. Medallion Capital is currently in the process of identifying such an additional qualified candidate for submission.
The following table presents the SBA debentures and borrowings as of September 30, 2026 and December 31, 2025.
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Date of Notes |
|
Maturity |
|
Interest Rate |
|
|
Interest Payable |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
|||
March 2016 |
|
March 2026 |
|
|
% |
|
|
$ |
|
|
$ |
|
||||
March 2016 |
|
March 2026 |
|
|
% |
|
|
|
|
|
|
|
||||
May 2016 |
|
September 2026 |
|
|
% |
|
|
|
|
|
|
|
||||
March 2017 |
|
March 2027 |
|
|
% |
|
|
|
|
|
|
|
||||
September 2018 |
|
September 2028 |
|
|
% |
|
|
|
|
|
|
|
||||
March 2019 |
|
March 2029 |
|
|
% |
|
|
|
|
|
|
|
||||
September 2020 |
|
September 2030 |
|
|
% |
|
|
|
|
|
|
|
||||
June 2021 |
|
September 2031 |
|
|
% |
|
|
|
|
|
|
|
||||
October 2021 |
|
March 2032 |
|
|
% |
|
|
|
|
|
|
|
||||
October 2022 |
|
March 2033 |
|
|
% |
|
|
|
|
|
|
|
||||
April 2023 |
|
September 2033 |
|
|
% |
|
|
|
|
|
|
|
||||
September 2023 |
|
March 2034 |
|
|
% |
|
|
|
|
|
|
|
||||
November 2023 |
|
March 2034 |
|
|
% |
|
|
|
|
|
|
|
||||
March 2025 |
|
September 2035 |
|
|
% |
|
|
|
|
|
|
|
||||
August 2025 |
|
September 2035 |
|
|
% |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||
(E) TRUST PREFERRED SECURITIES
In June 2007, the Company issued and sold $
Page 23 of 63
(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 September 30, 2026, the Company was in compliance with all such covenants.
(6) LEASES
The Company has leased premises that expire at various dates through June 30, 2037 subject to various operating leases.
The following table presents the operating lease costs and additional information for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Operating lease costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating cash flows from operating leases |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Right-of-use asset obtained in exchange for lease liability |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
The following table presents the breakout of the operating leases as of September 30, 2026 and December 31, 2025.
(Dollars in thousands) |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Other current liabilities |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Total operating lease liabilities |
|
|
|
|
|
|
||
Weighted average remaining lease term |
|
|
|
|
||||
Weighted average discount rate |
|
|
% |
|
|
% |
||
At September 30, 2026, maturities of the lease liabilities were as follows:
(Dollars in thousands) |
|
|
|
|
Remainder of 2026 |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease payments |
|
|
|
|
Less imputed interest |
|
|
|
|
Total operating lease liabilities |
|
$ |
|
|
(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 September 30, 2026 and December 31, 2025.
(Dollars in thousands) |
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Provision for credit losses |
|
$ |
|
|
$ |
|
||
Accrued expenses, compensation, and other assets |
|
|
|
|
|
|
||
Net operating loss carryforwards (1) |
|
|
|
|
|
|
||
Other investments and investment securities |
|
|
|
|
|
|
||
Valuation allowance |
|
|
( |
) |
|
|
( |
) |
Total deferred tax assets |
|
|
|
|
|
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Goodwill and other intangibles |
|
|
|
|
|
|
||
Total deferred tax liabilities |
|
|
|
|
|
|
||
Deferred tax liability, net |
|
$ |
|
|
$ |
|
||
Page 24 of 63
The following table presents the components of the Company's tax provision for the three and nine months ended September 30, 2026 and 2025:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Current |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Federal |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
State |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Federal |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
State |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net provision for income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision reported for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||||
|
|
Amount |
|
|
Percent (1) |
|
|
Amount |
|
|
Percent (1) |
|
|
Amount |
|
|
Percent (1) |
|
|
Amount |
|
|
Percent (1) |
|
||||||||
Statutory Federal income tax provision |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
State and local income taxes, net of federal income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Non-deductible expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Valuation allowance against deferred tax assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||||||
Stock-based compensation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Change in effective state income tax rates and accrual |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total income tax provision |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||||
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 September 30, 2026.
The Company has filed tax returns in many states. Federal, Utah, California, New York, Florida, and Texas tax filings of the Company for the tax years
(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 the 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, or RSUs, PSUs, 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. 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. On April 25, 2025, 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 12, 2025. A total of
Page 25 of 63
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 Securities and Exchange Commission, or SEC, on February 29, 2016. A total of
Additional shares are only available for future issuance under the 2018 Plan. As of September 30, 2026,
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
The Company’s Compensation Committee of the Board of Directors grants 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
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 |
|
|
|
Grant Price |
|
|
Weighted |
|
|||
Outstanding at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
|
|
|
|
|
|
|
|
|||
Vested |
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at December 31, 2025 |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
|
|
|
|
|
|
|
|
|||
Vested (1) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Outstanding at March 31, 2026 |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Vested (1) |
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at June 30, 2026 |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
|
|
|
|
|
|
|
|
|||
Vested |
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at September 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
||||
Page 26 of 63
The following table presents restricted stock activity for the nine months ended September 30, 2026 and the year ended December 31, 2025.
|
|
Number of |
|
|
|
Grant Price |
|
|
Weighted |
|
|||
Outstanding at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
||||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Vested (1) |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at December 31, 2025 |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Vested |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at March 31, 2026 |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Vested (1) |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at June 30, 2026 (2) |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Vested (1) |
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at September 30, 2026 (2) |
|
|
|
|
$ |
|
|
$ |
|
||||
The following table presents stock option activity for the nine months ended September 30, 2026 and the year ended December 31, 2025.
|
|
Number of |
|
|
|
Exercise Price |
|
|
Weighted |
|
|||
Outstanding at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at December 31, 2025 |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|
||
Exercised (1) |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at March 31, 2026 |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Exercised (1) |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at June 30, 2026 (2) |
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|||
Exercised (1) |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at September 30, 2026 (2) |
|
|
|
|
$ |
|
|
$ |
|
||||
Options exercisable at: |
|
|
|
|
|
|
|
|
|
|
|||
December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
||||
September 30, 2026 (2) |
|
|
|
|
$ |
|
|
$ |
|
||||
Page 27 of 63
The following table presents activity for the unvested options outstanding under the plans for the nine months ended September 30, 2026 and the year ended December 31, 2025.
|
|
Number of |
|
|
|
Exercise Price |
|
|
Weighted |
|
|||
Outstanding at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
( |
) |
|
|
|
|
|
|
|
||
Vested (1) |
|
|
( |
) |
|
|
|
|
|
|
|||
Outstanding at December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
|
|
|
|
|
|
|
|
|||
Vested |
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
|
|
|
|
|
|
|
|
|||
Vested |
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|||
Granted |
|
|
|
|
|
|
|
|
|
|
|||
Cancelled |
|
|
|
|
|
|
|
|
|
|
|||
Vested |
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at September 30, 2026 |
|
|
|
|
$ |
|
|
|
$ |
|
|||
During the nine months ended September 30, 2026, the Company granted
(9) SEGMENT REPORTING
The Company has
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
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 percentage 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.
Page 28 of 63
The Company's chief operating decision maker, or CODM, is a group comprised of the Executive Chairman, Chief Executive Officer, and Chief Financial Officer, and other senior members of management.
The following table presents segment data as of and for the three months ended September 30, 2026.
Three Months Ended September 30, 2026 |
|
Consumer Lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi Medallion |
|
|
Corporate and |
|
|
Consolidated |
|
||||||
Total interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Net interest income after credit loss provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other income (loss), net |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Salaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loan servicing fees and collection costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) before taxes |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Income tax (provision) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income (loss) after taxes |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Income attributable to the non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total net income attributable to Medallion Financial Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total loans, gross (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total funds borrowed (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Return on average assets |
|
|
% |
|
|
% |
|
|
( |
)% |
|
NM |
|
|
NM |
|
|
|
% |
|||||
Return on average stockholders' equity |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
|
|
||||||
Return on average equity |
|
|
|
|
|
|
|
|
( |
) |
|
NM |
|
|
NM |
|
|
|
|
|||||
Interest yield |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Net interest margin |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Reserve coverage (3) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Delinquency status (4) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Charge-off ratio (5) |
|
|
|
|
|
|
|
|
( |
) |
|
NM |
|
|
NM |
|
|
|
|
|||||
(NM) Not meaningful.
(*) Line item is not applicable to segments.
Page 29 of 63
The following table presents segment data as of and for the nine months ended September 30, 2026.
Nine Months Ended September 30, 2026 |
|
Consumer Lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi Medallion |
|
|
Corporate and |
|
|
Consolidated |
|
||||||
Total interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Net interest income after credit loss provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Salaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loan servicing fees and collection costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) before taxes |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Income tax (provision) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income (loss) after taxes |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Income attributable to the non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total net income attributable to Medallion Financial Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total loans, gross (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total funds borrowed (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Return on average assets |
|
|
% |
|
|
% |
|
|
( |
)% |
|
NM |
|
|
NM |
|
|
|
% |
|||||
Return on average stockholders' equity |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
|
|
||||||
Return on average equity |
|
|
|
|
|
|
|
|
( |
) |
|
NM |
|
|
NM |
|
|
|
|
|||||
Interest yield |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Net interest margin |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Reserve coverage (3) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Delinquency status (4) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Charge-off ratio (5) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
(NM) Not meaningful.
(*) Line item is not applicable to segments.
Page 30 of 63
The following table presents segment data as of and for the three months ended September 30, 2025.
Three Months Ended September 30, 2025 |
|
Consumer Lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi Medallion |
|
|
Corporate and |
|
|
Consolidated |
|
||||||
Total interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Net interest income (loss) after credit loss provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Salaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loan servicing fees and collection costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) before taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Income tax (provision) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income (loss) after taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Income attributable to the non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Redemption of non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total net income attributable to Medallion Financial Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total loans, gross |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total funds borrowed (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Return on average assets |
|
|
% |
|
|
% |
|
|
% |
|
NM |
|
|
NM |
|
|
|
% |
||||||
Return on average stockholders' equity |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
|
|
||||||
Return on average equity |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Interest yield |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Net interest margin |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Reserve coverage (3) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Delinquency status (4) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Charge-off ratio (5) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
(NM) Not meaningful.
(*) Line item is not applicable to segments.
Page 31 of 63
The following table presents segment data as of and for the nine months ended September 30, 2025.
Nine Months Ended September 30, 2025 |
|
Consumer Lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi Medallion |
|
|
Corporate and |
|
|
Consolidated |
|
||||||
Total interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Provision (benefit) for credit losses |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Net interest income (loss) after credit loss provision |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Salaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loan servicing fees and collection costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) before taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Income tax (provision) benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net income (loss) after taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Income attributable to the non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Redemption of non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total net income attributable to Medallion Financial Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
||||||
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total loans, gross |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total funds borrowed (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Return on average assets |
|
|
% |
|
|
% |
|
|
% |
|
NM |
|
|
NM |
|
|
|
% |
||||||
Return on average stockholders' equity |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
|
|
||||||
Return on average equity |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Interest yield |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Net interest margin |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Reserve coverage (3) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Delinquency status (4) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
Charge-off ratio (5) |
|
|
|
|
|
|
|
|
|
|
NM |
|
|
NM |
|
|
|
|
||||||
(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 will renew for new one-, two- or three- 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-, two- or three-year term (as applicable); however, there is currently 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.
Page 32 of 63
On October 24, 2025, Mr. Alvin Murstein, the Company's current Executive Chairman of the Board of Directors, or the Board, 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: (i) effective as of January 31, 2026 (the “Transition Date”), Mr. Murstein no longer served as the Chief Executive Officer and became the Executive Chairman of the Board to serve through May 29, 2027 (the “Term”); (ii) during the period between the date of such amendment and the Transition Date, Mr. Murstein, among other things, continued to serve as Chief Executive Officer of the Company; (iii) during the period from the Transition Date until the end of the Term (the “Retirement Date”), Mr. Murstein shall, among other things, continue to serve as Executive Chairman of the Board with the Company's expectation that Mr. Murstein will be nominated to serve a new three-year term as a Board member at the 2026 Annual Meeting of Shareholders of the Company and a failure by the Board to so nominate Mr. Murstein would constitute termination without cause under his employment agreement; (iv) Mr. Murstein remains an employee of the Company in his role as Executive Chairman of the Board; (v) Mr. Murstein's compensation shall be determined without regard to the transition to Executive Chairman, provided that, all incentive equity awards that are determined to be granted to Mr. Murstein in respect of calendar years 2025, 2026 and 2027 shall be granted solely in the form of restricted stock and options; and (vi) on the Retirement Date (or earlier if termination occurs by reason of death or disability), all outstanding unvested equity awards, other than performance awards, will immediately vest and, if applicable, become exercisable and all outstanding performance awards will remain outstanding until the end of the relevant performance periods and vest and be earned to the extent applicable objects have been met, on a prorated basis for the portion of the performance period that Mr. Murstein was employed.
In addition, on October 24, 2025, Mr. Andrew Murstein, the Company’s current President, Chief Executive Officer 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 January 31, 2026, Mr. Andrew Murstein became the President, Chief Executive Officer and Chief Operating Officer of the Company and shall remain President, Chief Executive Officer and Chief Operating Officer through the remainder of the employment term.
On January 12, 2026, the Company, Medallion Bank, and Mr. Donald Poulton entered into an amendment to the Employment Agreement, dated June 27, 2016 among Mr. Poulton, the Company, and Medallion Bank. Pursuant to such amendment, effective January 12, 2026, Donald Poulton no longer served as President of Medallion Bank, but remained the Chief Executive Officer of Medallion Bank through the remainder of the employment term. All other terms of his existing employment agreement continued to be in full force and effect, in accordance with its terms, through Mr. Poulton's retirement effective June 30, 2026.
In addition, on January 12, 2026, the Company, Medallion Bank and Mr. D. Justin Haley entered into a Second Amended and Restated Employment Agreement. Pursuant to the agreement, effective January 12, 2026, Mr. Haley no longer served as Executive Vice President and Chief Financial Officer of Medallion Bank, but became the President of Medallion Bank. Effective June 30, 2026, Mr. Haley assumed the role of Chief Executive Officer. The employment agreement has a two-year term that automatically renews each year for an additional two-year term commencing on January 1, 2027 unless terminated by either party. Under the employment agreement, Mr. Haley is entitled to an annual base salary of $
As of September 30, 2026,
(B) OTHER COMMITMENTS
As of September 30, 2026, the Company had
(C) 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, 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, Freshstart, and the Bank, as well as other subsidiaries. Officer salaries are set by the Board of Directors of the Company.
Page 33 of 63
Jeffrey Rudnick, the son of one of the Company’s directors and brother-in-law of one of the Company’s officers and directors, previously served as the Company’s Senior Vice President and effective July 24, 2025, serves as the Company's Executive Vice President at a salary of $
Jameson Poulton, the son of one of Medallion Bank’s former officers and current Medallion Bank director, serves as Medallion Bank’s Manager of Data Analytics at a salary of $
(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 table presents the carrying amounts and fair values of the Company’s financial instruments as of September 30, 2026.
|
|
September 30, 2026 |
|
|||||||||||||||||
(Dollars in thousands) |
|
Carrying |
|
|
Fair |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||||
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash, cash equivalents, and federal funds sold (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans held for investment, net of allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans held for sale, at lower of amortized cost or fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity securities (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Funds borrowed (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
The following table presents the carrying amounts and fair values of the Company’s financial instruments as of December 31, 2025.
|
|
December 31, 2025 |
|
|||||||||||||||||
(Dollars in thousands) |
|
Carrying |
|
|
Fair |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|||||
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash, cash equivalents, and federal funds sold (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Investment securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans held for investment, net of allowance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans held for sale, at lower of amortized cost or fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity securities (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Funds borrowed (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accrued interest payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
(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.
Page 34 of 63
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:
The Company’s investment securities are recorded at the estimated fair value of such investments.
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 table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2026.
September 30, 2026 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities (1) |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Equity securities (2) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2025.
December 31, 2025 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities (1) |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Equity securities (2) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Page 35 of 63
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2026.
September 30, 2026 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investments (1) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2025.
December 31, 2025 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investments (1) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Total |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
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 following table presents the Company’s valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of September 30, 2026.
(Dollars in thousands) |
|
Fair Value |
|
|
Valuation Techniques |
|
Unobservable Inputs |
|
Range |
|
Equity investments (1) |
|
$ |
|
|
Investee financial analysis |
|
Financial condition and operating performance of the borrower |
|
N/A |
|
The following table presents the Company’s valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of December 31, 2025.
(Dollars in thousands) |
|
Fair Value |
|
|
Valuation Techniques |
|
Unobservable Inputs |
|
Range |
|
Equity investments (1) |
|
$ |
|
|
Investee financial analysis |
|
Financial condition and operating performance of the borrower |
|
N/A |
|
(14) MEDALLION BANK PREFERRED STOCK (Non-controlling interest)
On July 21, 2011, the Bank issued, and the U.S. Treasury purchased,
On December 17, 2019, the Bank closed an initial public offering of
Page 36 of 63
On May 22, 2025, the Bank closed an initial public offering of
On July 1, 2025, the Bank redeemed its Series F Preferred Stock, in its entirety, at an aggregate redemption price of $
On September 30, 2026, the Bank closed a public offering of
(15) SUBSEQUENT EVENTS
On October 21, 2026, the Company repurchased $
The Company has evaluated the effects of events that have occurred subsequent to September 30, 2026 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.
Page 37 of 63
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 and nine months ended September 30, 2026 and the year ended December 31, 2025. 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 financial technology, or fintech, partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of September 30, 2026, consumer loans represented 95% of our gross loan portfolio and commercial loans represented 4%. Total assets were $3.36 billion and $2.96 billion as of September 30, 2026 and December 31, 2025.
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, privately placed notes, debentures issued to and guaranteed by the SBA, 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, the impact of geopolitical events, including the conflict with Iran, 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 seeking, and continue to seek, borrowers with strong credit ratings and the ability to repay their obligations in the event of a potential economic downturn and in light of the current uncertainties and inflationary environment.
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 and savings deposits. 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. 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 in the fourth quarter of 2025 sold its remaining taxi medallion portfolio to another of our subsidiaries.
In 2019, the Bank launched a strategic partnership program to provide lending and other services to fintech companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans. The Bank has six active partnerships, including one partnership added in September 2026, and 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.
Page 38 of 63
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 September 30, 2026, 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, 2025, and there have been no material changes in such policies and estimates since the date of such report.
RECENTLY ISSUED ACCOUNTING STANDARDS
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 for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are assessing the impact of the update on the accompanying 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:
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.
Page 39 of 63
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 reflects the average yield on assets and average costs on liabilities as of and for the three months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
(Dollars in thousands) |
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
||||||
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest earning cash equivalents |
|
$ |
67,550 |
|
|
$ |
598 |
|
|
|
3.51 |
% |
|
$ |
22,094 |
|
|
$ |
177 |
|
|
|
3.18 |
% |
Federal funds sold |
|
|
134,558 |
|
|
|
1,292 |
|
|
|
3.81 |
|
|
|
71,673 |
|
|
|
1,046 |
|
|
|
5.79 |
|
Investment securities |
|
|
67,747 |
|
|
|
700 |
|
|
|
4.10 |
|
|
|
60,900 |
|
|
|
614 |
|
|
|
4.00 |
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Recreation |
|
|
1,816,101 |
|
|
|
60,977 |
|
|
|
13.32 |
|
|
|
1,579,820 |
|
|
|
53,565 |
|
|
|
13.45 |
|
Home improvement |
|
|
926,228 |
|
|
|
21,403 |
|
|
|
9.17 |
|
|
|
802,745 |
|
|
|
20,453 |
|
|
|
10.11 |
|
Commercial |
|
|
123,946 |
|
|
|
3,239 |
|
|
|
10.37 |
|
|
|
130,486 |
|
|
|
4,354 |
|
|
|
13.24 |
|
Taxi medallion |
|
|
1,240 |
|
|
|
55 |
|
|
|
17.60 |
|
|
|
1,593 |
|
|
|
91 |
|
|
|
22.66 |
|
Strategic partnerships |
|
|
16,442 |
|
|
|
626 |
|
|
|
15.11 |
|
|
|
12,794 |
|
|
|
471 |
|
|
|
14.67 |
|
Total loans |
|
|
2,883,957 |
|
|
|
86,300 |
|
|
|
11.87 |
|
|
|
2,527,438 |
|
|
|
78,934 |
|
|
|
12.39 |
|
Total interest-earning assets |
|
$ |
3,153,812 |
|
|
$ |
88,890 |
|
|
|
11.18 |
% |
|
$ |
2,682,105 |
|
|
$ |
80,771 |
|
|
|
11.92 |
% |
Non-interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for credit losses |
|
$ |
(128,384 |
) |
|
|
|
|
|
|
|
$ |
(108,719 |
) |
|
|
|
|
|
|
||||
Cash |
|
|
10,052 |
|
|
|
|
|
|
|
|
|
49,133 |
|
|
|
|
|
|
|
||||
Equity investments |
|
|
8,596 |
|
|
|
|
|
|
|
|
|
8,903 |
|
|
|
|
|
|
|
||||
Loan collateral in process of foreclosure |
|
|
6,432 |
|
|
|
|
|
|
|
|
|
8,517 |
|
|
|
|
|
|
|
||||
Goodwill and intangible assets |
|
|
167,603 |
|
|
|
|
|
|
|
|
|
169,048 |
|
|
|
|
|
|
|
||||
Other assets |
|
|
67,576 |
|
|
|
|
|
|
|
|
|
61,459 |
|
|
|
|
|
|
|
||||
Total non-interest-earning assets |
|
|
131,875 |
|
|
|
|
|
|
|
|
|
188,341 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
3,285,687 |
|
|
|
|
|
|
|
|
$ |
2,870,446 |
|
|
|
|
|
|
|
||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits and federal reserve borrowings |
|
$ |
2,424,820 |
|
|
$ |
24,998 |
|
|
|
4.09 |
% |
|
$ |
2,066,763 |
|
|
$ |
20,502 |
|
|
|
3.94 |
% |
Privately placed notes |
|
|
190,250 |
|
|
|
4,185 |
|
|
|
8.73 |
|
|
|
146,500 |
|
|
|
3,166 |
|
|
|
8.57 |
|
SBA debentures and borrowings |
|
|
72,250 |
|
|
|
814 |
|
|
|
4.47 |
|
|
|
77,750 |
|
|
|
855 |
|
|
|
4.36 |
|
Trust preferred securities |
|
|
33,000 |
|
|
|
514 |
|
|
|
6.18 |
|
|
|
33,000 |
|
|
|
562 |
|
|
|
6.76 |
|
Total interest-bearing liabilities |
|
|
2,720,320 |
|
|
|
30,511 |
|
|
|
4.45 |
|
|
|
2,324,013 |
|
|
|
25,085 |
|
|
|
4.28 |
|
Non-interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deferred tax liability |
|
|
18,242 |
|
|
|
|
|
|
|
|
|
18,985 |
|
|
|
|
|
|
|
||||
Other liabilities (1) |
|
|
30,930 |
|
|
|
|
|
|
|
|
|
23,872 |
|
|
|
|
|
|
|
||||
Total non-interest-bearing liabilities |
|
|
49,172 |
|
|
|
|
|
|
|
|
|
42,857 |
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
2,769,492 |
|
|
|
|
|
|
|
|
|
2,366,870 |
|
|
|
|
|
|
|
||||
Non-controlling interest |
|
|
112,991 |
|
|
|
|
|
|
|
|
|
111,201 |
|
|
|
|
|
|
|
||||
Total stockholders’ equity |
|
|
403,204 |
|
|
|
|
|
|
|
|
|
392,375 |
|
|
|
|
|
|
|
||||
Total liabilities and stockholders’ equity |
|
$ |
3,285,687 |
|
|
|
|
|
|
|
|
$ |
2,870,446 |
|
|
|
|
|
|
|
||||
Net interest income |
|
|
|
|
$ |
58,379 |
|
|
|
|
|
|
|
|
$ |
55,686 |
|
|
|
|
||||
Net interest margin |
|
|
|
|
|
|
|
|
7.34 |
% |
|
|
|
|
|
|
|
|
8.21 |
% |
||||
Page 40 of 63
The following table presents our consolidated average balance sheets, interest income and expense, and the average interest earning/bearing assets and liabilities, and reflects the average yield on assets and average costs on liabilities as of and for the nine months ended September 30, 2026 and 2025.
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
(Dollars in thousands) |
|
Average |
|
|
Interest |
|
|
Average |
|
|
Average |
|
|
Interest |
|
|
Average |
|
||||||
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest earning cash equivalents |
|
$ |
58,840 |
|
|
$ |
1,387 |
|
|
|
3.15 |
% |
|
$ |
31,321 |
|
|
$ |
896 |
|
|
|
3.82 |
% |
Federal funds sold |
|
|
122,189 |
|
|
|
3,028 |
|
|
|
3.31 |
|
|
|
67,537 |
|
|
|
2,817 |
|
|
|
5.58 |
|
Investment securities |
|
|
65,800 |
|
|
|
1,999 |
|
|
|
4.06 |
|
|
|
59,745 |
|
|
|
1,726 |
|
|
|
3.86 |
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Recreation |
|
|
1,718,903 |
|
|
|
172,112 |
|
|
|
13.39 |
|
|
|
1,551,859 |
|
|
|
155,132 |
|
|
|
13.37 |
|
Home improvement |
|
|
863,771 |
|
|
|
61,708 |
|
|
|
9.55 |
|
|
|
810,918 |
|
|
|
60,357 |
|
|
|
9.95 |
|
Commercial |
|
|
122,501 |
|
|
|
10,123 |
|
|
|
11.05 |
|
|
|
120,964 |
|
|
|
11,292 |
|
|
|
12.48 |
|
Taxi medallion |
|
|
1,206 |
|
|
|
281 |
|
|
|
31.15 |
|
|
|
1,637 |
|
|
|
243 |
|
|
|
19.60 |
|
Strategic partnerships |
|
|
13,031 |
|
|
|
1,697 |
|
|
|
17.41 |
|
|
|
10,282 |
|
|
|
1,174 |
|
|
|
15.30 |
|
Total loans |
|
|
2,719,412 |
|
|
|
245,921 |
|
|
|
12.09 |
|
|
|
2,495,660 |
|
|
|
228,198 |
|
|
|
12.23 |
|
Total interest-earning assets |
|
$ |
2,966,241 |
|
|
$ |
252,335 |
|
|
|
11.37 |
% |
|
$ |
2,654,263 |
|
|
$ |
233,637 |
|
|
|
11.75 |
% |
Non-interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Allowance for credit losses |
|
$ |
(121,101 |
) |
|
|
|
|
|
|
|
$ |
(103,312 |
) |
|
|
|
|
|
|
||||
Cash |
|
|
9,097 |
|
|
|
|
|
|
|
|
|
51,542 |
|
|
|
|
|
|
|
||||
Equity investments |
|
|
8,365 |
|
|
|
|
|
|
|
|
|
8,907 |
|
|
|
|
|
|
|
||||
Loan collateral in process of foreclosure |
|
|
6,574 |
|
|
|
|
|
|
|
|
|
9,011 |
|
|
|
|
|
|
|
||||
Goodwill and intangible assets |
|
|
167,964 |
|
|
|
|
|
|
|
|
|
169,409 |
|
|
|
|
|
|
|
||||
Other assets |
|
|
61,772 |
|
|
|
|
|
|
|
|
|
57,139 |
|
|
|
|
|
|
|
||||
Total non-interest-earning assets |
|
|
132,671 |
|
|
|
|
|
|
|
|
|
192,696 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
3,098,912 |
|
|
|
|
|
|
|
|
$ |
2,846,959 |
|
|
|
|
|
|
|
||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits and federal reserve borrowings |
|
$ |
2,264,690 |
|
|
$ |
67,856 |
|
|
|
4.01 |
% |
|
$ |
2,064,744 |
|
|
$ |
59,725 |
|
|
|
3.87 |
% |
Privately placed notes |
|
|
166,500 |
|
|
|
10,777 |
|
|
|
8.65 |
|
|
|
146,500 |
|
|
|
9,516 |
|
|
|
8.68 |
|
SBA debentures and borrowings |
|
|
75,300 |
|
|
|
2,493 |
|
|
|
4.43 |
|
|
|
72,325 |
|
|
|
2,247 |
|
|
|
4.15 |
|
Trust preferred securities |
|
|
33,000 |
|
|
|
1,524 |
|
|
|
6.17 |
|
|
|
33,000 |
|
|
|
1,682 |
|
|
|
6.81 |
|
Total interest-bearing liabilities |
|
|
2,539,490 |
|
|
|
82,650 |
|
|
|
4.35 |
|
|
|
2,316,569 |
|
|
|
73,170 |
|
|
|
4.22 |
|
Non-interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deferred tax liability |
|
|
19,127 |
|
|
|
|
|
|
|
|
|
19,686 |
|
|
|
|
|
|
|
||||
Other liabilities (1) |
|
|
27,886 |
|
|
|
|
|
|
|
|
|
32,380 |
|
|
|
|
|
|
|
||||
Total non-interest-bearing liabilities |
|
|
47,013 |
|
|
|
|
|
|
|
|
|
52,066 |
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
2,586,503 |
|
|
|
|
|
|
|
|
|
2,368,635 |
|
|
|
|
|
|
|
||||
Non-controlling interest |
|
|
105,321 |
|
|
|
|
|
|
|
|
|
93,420 |
|
|
|
|
|
|
|
||||
Total stockholders’ equity |
|
|
407,088 |
|
|
|
|
|
|
|
|
|
384,904 |
|
|
|
|
|
|
|
||||
Total liabilities and stockholders’ equity |
|
$ |
3,098,912 |
|
|
|
|
|
|
|
|
$ |
2,846,959 |
|
|
|
|
|
|
|
||||
Net interest income |
|
|
|
|
$ |
169,685 |
|
|
|
|
|
|
|
|
$ |
160,467 |
|
|
|
|
||||
Net interest margin |
|
|
|
|
|
|
|
|
7.65 |
% |
|
|
|
|
|
|
|
|
8.07 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For the three months ended September 30, 2026, our total loans yielded 11.87%, as compared to 12.39% for the three months ended September 30, 2025. For the nine months ended September 30, 2026, our total loans yielded 12.09%, as compared to 12.23% for the nine months ended September 30, 2025. The decrease reflects, on average, a somewhat lower interest rate charged on loans originated in the current year as we have lowered rates in an effort to be more competitive with market rates and attract borrowers who are more likely to perform better through varying economic cycles as well as the greater proportion of home improvement loans in our portfolio. The weighted average FICO score, measured at origination, of our recreation loans outstanding was 686 as of September 30, 2026, compared to 685 as of September 30, 2025. We use weighted average FICO scores as an indicator of portfolio risk. At the beginning of 2026, we reduced the rate charged on our recreation loans to improve our loss adjusted yield. During the three months ended September 30, 2026, we wrote new recreation loans at an average rate of 14.74% compared to 15.77% in the prior year period, as we reduced our origination rate to be more in line with our competition. We also reduced the rate charged on certain home improvement loans during the nine months ended September 30, 2026, seeking to be more competitive in specific segments of the market and generate an improved risk-adjusted return.
Page 41 of 63
Our debt, with certificates of deposit being our largest source, funds our growing lending business. Our average interest cost for the three and nine months ended September 30, 2026 was 4.45% and 4.35%, up 17 and 13 basis points, from the three and nine months ended September 30, 2025, due to the higher interest rate environment experienced over the past several years, particularly the higher cost associated with issuing brokered certificates of deposit. 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 September 30, 2026, we issued certificates of deposit for 36 months at rates as high as 4.43% and for 60 months at rates as high as 4.38%. Additionally, during the quarter, we expanded our retail certificates and savings deposits to $218.0 million as we seek alternative borrowings that provide a lower cost of funds from our traditional brokered deposits.
RATE/VOLUME ANALYSIS
The following tables present 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 September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
(Dollars in thousands) |
|
Increase |
|
|
Increase |
|
|
Net Change |
|
|
Increase |
|
|
Increase |
|
|
Net Change |
|
||||||
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest earning cash and cash equivalents |
|
$ |
1,013 |
|
|
$ |
(346 |
) |
|
$ |
667 |
|
|
$ |
43 |
|
|
$ |
(121 |
) |
|
$ |
(78 |
) |
Investment securities |
|
|
71 |
|
|
|
15 |
|
|
|
86 |
|
|
|
52 |
|
|
|
(8 |
) |
|
|
44 |
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Recreation |
|
|
7,933 |
|
|
|
(521 |
) |
|
|
7,412 |
|
|
|
1,535 |
|
|
|
588 |
|
|
|
2,123 |
|
Home improvement |
|
|
2,853 |
|
|
|
(1,903 |
) |
|
|
950 |
|
|
|
186 |
|
|
|
1,260 |
|
|
|
1,446 |
|
Commercial |
|
|
(171 |
) |
|
|
(944 |
) |
|
|
(1,115 |
) |
|
|
676 |
|
|
|
(139 |
) |
|
|
537 |
|
Taxi medallion |
|
|
(16 |
) |
|
|
(20 |
) |
|
|
(36 |
) |
|
|
(99 |
) |
|
|
17 |
|
|
|
(82 |
) |
Strategic partnerships |
|
|
139 |
|
|
|
16 |
|
|
|
155 |
|
|
|
385 |
|
|
|
(13 |
) |
|
|
372 |
|
Total loans |
|
$ |
10,738 |
|
|
$ |
(3,372 |
) |
|
$ |
7,366 |
|
|
$ |
2,683 |
|
|
$ |
1,713 |
|
|
$ |
4,396 |
|
Total interest-earning assets |
|
$ |
11,822 |
|
|
$ |
(3,703 |
) |
|
$ |
8,119 |
|
|
$ |
2,778 |
|
|
$ |
1,584 |
|
|
$ |
4,362 |
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits |
|
|
3,691 |
|
|
|
805 |
|
|
|
4,496 |
|
|
|
(122 |
) |
|
|
1,431 |
|
|
|
1,309 |
|
Privately placed notes |
|
|
962 |
|
|
|
57 |
|
|
|
1,019 |
|
|
|
54 |
|
|
|
(11 |
) |
|
|
43 |
|
SBA debentures and borrowings |
|
|
(62 |
) |
|
|
21 |
|
|
|
(41 |
) |
|
|
69 |
|
|
|
76 |
|
|
|
145 |
|
Trust preferred securities |
|
|
— |
|
|
|
(48 |
) |
|
|
(48 |
) |
|
|
— |
|
|
|
(84 |
) |
|
|
(84 |
) |
Total interest-bearing liabilities |
|
$ |
4,591 |
|
|
$ |
835 |
|
|
$ |
5,426 |
|
|
$ |
1 |
|
|
$ |
1,412 |
|
|
$ |
1,413 |
|
Net |
|
$ |
7,231 |
|
|
$ |
(4,538 |
) |
|
$ |
2,693 |
|
|
$ |
2,777 |
|
|
$ |
172 |
|
|
$ |
2,949 |
|
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
(Dollars in thousands) |
|
Increase |
|
|
Increase |
|
|
Net Change |
|
|
Increase |
|
|
Increase |
|
|
Net Change |
|
||||||
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest earning cash and cash equivalents |
|
$ |
2,004 |
|
|
$ |
(1,302 |
) |
|
$ |
702 |
|
|
$ |
11 |
|
|
$ |
(296 |
) |
|
$ |
(285 |
) |
Investment securities |
|
|
184 |
|
|
|
89 |
|
|
|
273 |
|
|
|
143 |
|
|
|
19 |
|
|
|
162 |
|
Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Recreation |
|
|
16,726 |
|
|
|
254 |
|
|
|
16,980 |
|
|
|
11,903 |
|
|
|
367 |
|
|
|
12,270 |
|
Home improvement |
|
|
3,776 |
|
|
|
(2,425 |
) |
|
|
1,351 |
|
|
|
2,995 |
|
|
|
3,256 |
|
|
|
6,251 |
|
Commercial |
|
|
127 |
|
|
|
(1,296 |
) |
|
|
(1,169 |
) |
|
|
957 |
|
|
|
(610 |
) |
|
|
347 |
|
Taxi medallion |
|
|
(100 |
) |
|
|
138 |
|
|
|
38 |
|
|
|
(270 |
) |
|
|
20 |
|
|
|
(250 |
) |
Strategic partnerships |
|
|
358 |
|
|
|
165 |
|
|
|
523 |
|
|
|
1,004 |
|
|
|
(45 |
) |
|
|
959 |
|
Total loans |
|
$ |
20,887 |
|
|
$ |
(3,164 |
) |
|
$ |
17,723 |
|
|
$ |
16,589 |
|
|
$ |
2,988 |
|
|
$ |
19,577 |
|
Total interest-earning assets |
|
$ |
23,075 |
|
|
$ |
(4,377 |
) |
|
$ |
18,698 |
|
|
$ |
16,743 |
|
|
$ |
2,711 |
|
|
$ |
19,454 |
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits |
|
|
5,991 |
|
|
|
2,140 |
|
|
|
8,131 |
|
|
|
3,026 |
|
|
|
6,229 |
|
|
|
9,255 |
|
Privately placed notes |
|
|
1,295 |
|
|
|
(34 |
) |
|
|
1,261 |
|
|
|
396 |
|
|
|
35 |
|
|
|
431 |
|
SBA debentures and borrowings |
|
|
98 |
|
|
|
148 |
|
|
|
246 |
|
|
|
(13 |
) |
|
|
95 |
|
|
|
82 |
|
Trust preferred securities |
|
|
— |
|
|
|
(158 |
) |
|
|
(158 |
) |
|
|
— |
|
|
|
(259 |
) |
|
|
(259 |
) |
Total interest-bearing liabilities |
|
$ |
7,384 |
|
|
$ |
2,096 |
|
|
$ |
9,480 |
|
|
$ |
3,409 |
|
|
$ |
6,100 |
|
|
$ |
9,509 |
|
Net |
|
$ |
15,691 |
|
|
$ |
(6,473 |
) |
|
$ |
9,218 |
|
|
$ |
13,334 |
|
|
$ |
(3,389 |
) |
|
$ |
9,945 |
|
Page 42 of 63
During the three and nine months ended September 30, 2026, the increase in interest income over the prior year period was mainly driven by the increase in the size of the consumer loan portfolios, both recreation loans and home improvement loans, despite a decrease in overall yield on interest-earning assets as we have reduced our rates in an effort to seek better performing credit and borrowers. The increase in interest expense was driven by an increase in borrowing costs, primarily due to the increase 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, non-brokered time deposits and high yield savings accounts, 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.
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.
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 tables present the average borrowings and related borrowing costs for the three and nine months ended September 30, 2026 and 2025. We expect our borrowing costs to further increase as we take deposits and borrow other funds, including the private placement completed in April 2026, at the current prevailing rates.
We have sought 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 have used SBA funding to fund loans that qualify under the SBIA and SBA regulations. As of September 30, 2026, SBA borrowings were less than 3% of total borrowed funds. In February 2024, we obtained an $18.5 million commitment from the SBA, all of which had been utilized as of September 30, 2026. We currently are not able to obtain new commitments from the SBA.
In 2025, the SBA informed Medallion Capital that it needs to have Medallion Capital’s management team reviewed through the SBA’s licensing division; until successful completion of that review, Medallion Capital was not deemed by the SBA to have a qualified management team. Medallion Capital submitted a management team for review through the SBA’s licensing division on March 31, 2026 and on the same day, the SBA notified Medallion Capital that it has declared an event of default with respect to outstanding debentures and directed Medallion Capital, within 120 days, to identify and submit at least one qualified candidate for consideration as a full-time principal and investment committee member of Medallion Capital. In April 2026, Medallion Capital submitted two candidates to the SBA for its consideration. On June 3, 2026, the SBA notified Medallion Capital that Medallion Capital’s submission of two candidates cures the previously disclosed event of default, subject to the satisfactory completion of the candidates’ background checks. On June 11, 2026, the SBA notified Medallion Capital that there was a satisfactory completion of such background checks, which cured the previously disclosed event of default with respect to its outstanding SBA debentures. The SBA’s notice and event of default did not trigger any cross-default clauses in any of our debt arrangements. In subsequent discussions with the SBA, the SBA has indicated that Medallion Capital must supplement its submission for purposes of obtaining new and future commitments for debenture financing by identifying and submitting one additional qualified candidate for consideration. Medallion Capital is currently in the process of identifying such an additional qualified candidate for submission.
At September 30, 2026 and 2025, adjustable rate debt constituted less than 2% of total debt and was comprised solely of our trust preferred securities borrowings.
Page 43 of 63
LOANS
Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, primarily consisting of deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three and nine months ended September 30, 2026, there was significant growth in the recreation lending and home improvement lending segments, as compared to the prior year.
The following tables present the activity of the gross loans and loans held for sale for the three and nine months ended September 30, 2026.
Three Months Ended September 30, 2026 |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – June 30, 2026 |
|
$ |
1,760,297 |
|
|
$ |
885,599 |
|
|
$ |
126,177 |
|
|
$ |
1,293 |
|
|
$ |
21,376 |
|
|
$ |
2,794,742 |
|
Loan originations |
|
|
198,204 |
|
|
|
146,269 |
|
|
|
— |
|
|
|
— |
|
|
|
259,414 |
|
|
|
603,887 |
|
Principal receipts, sales, and maturities |
|
|
(85,162 |
) |
|
|
(81,950 |
) |
|
|
(7,754 |
) |
|
|
(37 |
) |
|
|
(265,557 |
) |
|
|
(440,460 |
) |
Charge-offs |
|
|
(21,212 |
) |
|
|
(4,581 |
) |
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
|
|
(25,806 |
) |
Transfer to loan collateral in process of foreclosure, net |
|
|
(3,025 |
) |
|
|
— |
|
|
|
— |
|
|
|
(34 |
) |
|
|
— |
|
|
|
(3,059 |
) |
Amortization of origination fees and costs, net |
|
|
(4,126 |
) |
|
|
428 |
|
|
|
14 |
|
|
|
— |
|
|
|
— |
|
|
|
(3,684 |
) |
Origination fees and costs, net |
|
|
7,982 |
|
|
|
1,738 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,720 |
|
Paid-in-kind interest |
|
|
— |
|
|
|
— |
|
|
|
254 |
|
|
|
— |
|
|
|
— |
|
|
|
254 |
|
Gross loans – September 30, 2026 |
|
$ |
1,852,958 |
|
|
$ |
947,503 |
|
|
$ |
118,691 |
|
|
$ |
1,209 |
|
|
$ |
15,233 |
|
|
$ |
2,935,594 |
|
Nine Months Ended September 30, 2026 |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – December 31, 2025 |
|
$ |
1,617,221 |
|
|
$ |
810,237 |
|
|
$ |
123,068 |
|
|
$ |
1,179 |
|
|
$ |
15,144 |
|
|
$ |
2,566,849 |
|
Loan originations |
|
|
569,221 |
|
|
|
339,311 |
|
|
|
7,134 |
|
|
|
266 |
|
|
|
676,496 |
|
|
|
1,592,428 |
|
Principal receipts, sales, and maturities |
|
|
(271,356 |
) |
|
|
(193,614 |
) |
|
|
(12,172 |
) |
|
|
(151 |
) |
|
|
(676,407 |
) |
|
|
(1,153,700 |
) |
Charge-offs |
|
|
(62,208 |
) |
|
|
(13,097 |
) |
|
|
(74 |
) |
|
|
(51 |
) |
|
|
— |
|
|
|
(75,430 |
) |
Transfer to loan collateral in process of foreclosure, net |
|
|
(9,061 |
) |
|
|
— |
|
|
|
— |
|
|
|
(34 |
) |
|
|
— |
|
|
|
(9,095 |
) |
Amortization of origination fees and costs, net |
|
|
(12,061 |
) |
|
|
1,679 |
|
|
|
34 |
|
|
|
— |
|
|
|
— |
|
|
|
(10,348 |
) |
Origination fees and costs, net |
|
|
21,202 |
|
|
|
2,987 |
|
|
|
(143 |
) |
|
|
— |
|
|
|
— |
|
|
|
24,046 |
|
Paid-in-kind interest |
|
|
— |
|
|
|
— |
|
|
|
844 |
|
|
|
— |
|
|
|
— |
|
|
|
844 |
|
Gross loans – September 30, 2026 |
|
$ |
1,852,958 |
|
|
$ |
947,503 |
|
|
$ |
118,691 |
|
|
$ |
1,209 |
|
|
$ |
15,233 |
|
|
$ |
2,935,594 |
|
The following tables present the activity of the gross loans and loans held for sale for the three and nine months ended September 30, 2025.
Three Months Ended September 30, 2025 |
|
Recreation (1) |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – June 30, 2025 |
|
$ |
1,546,252 |
|
|
$ |
803,535 |
|
|
$ |
121,415 |
|
|
$ |
1,564 |
|
|
$ |
12,285 |
|
|
$ |
2,485,051 |
|
Loan originations |
|
|
141,667 |
|
|
|
59,711 |
|
|
|
17,500 |
|
|
|
125 |
|
|
|
208,352 |
|
|
|
427,355 |
|
Principal receipts, sales, and maturities |
|
|
(68,918 |
) |
|
|
(55,762 |
) |
|
|
(3,009 |
) |
|
|
(180 |
) |
|
|
(205,360 |
) |
|
|
(333,229 |
) |
Charge-offs |
|
|
(16,844 |
) |
|
|
(3,840 |
) |
|
|
(1,103 |
) |
|
|
— |
|
|
|
— |
|
|
|
(21,787 |
) |
Transfer to loan collateral in process of foreclosure, net |
|
|
(2,508 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,508 |
) |
Amortization of origination fees and costs, net |
|
|
(3,768 |
) |
|
|
1,040 |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
(2,725 |
) |
Origination fees and costs, net |
|
|
7,288 |
|
|
|
(681 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,607 |
|
Paid-in-kind interest |
|
|
— |
|
|
|
— |
|
|
|
317 |
|
|
|
— |
|
|
|
— |
|
|
|
317 |
|
Gross loans – September 30, 2025 |
|
$ |
1,603,169 |
|
|
$ |
804,003 |
|
|
$ |
135,123 |
|
|
$ |
1,509 |
|
|
$ |
15,277 |
|
|
$ |
2,559,081 |
|
Nine Months Ended September 30, 2025 |
|
Recreation (1) |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Strategic |
|
|
Total |
|
||||||
Gross loans – December 31, 2024 |
|
$ |
1,543,243 |
|
|
$ |
827,211 |
|
|
$ |
111,273 |
|
|
$ |
1,909 |
|
|
$ |
7,386 |
|
|
$ |
2,491,022 |
|
Loan originations |
|
|
371,289 |
|
|
|
162,760 |
|
|
|
36,575 |
|
|
|
197 |
|
|
|
513,229 |
|
|
|
1,084,050 |
|
Principal receipts, sales, and maturities |
|
|
(253,630 |
) |
|
|
(173,753 |
) |
|
|
(12,320 |
) |
|
|
(582 |
) |
|
|
(505,338 |
) |
|
|
(945,623 |
) |
Charge-offs |
|
|
(53,391 |
) |
|
|
(13,018 |
) |
|
|
(1,233 |
) |
|
|
(15 |
) |
|
|
— |
|
|
|
(67,657 |
) |
Transfer to loan collateral in process of foreclosure, net |
|
|
(8,353 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,353 |
) |
Amortization of origination fees and costs, net |
|
|
(10,995 |
) |
|
|
3,329 |
|
|
|
26 |
|
|
|
— |
|
|
|
— |
|
|
|
(7,640 |
) |
Origination fees and costs, net |
|
|
15,006 |
|
|
|
(2,526 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,480 |
|
Paid-in-kind interest |
|
|
— |
|
|
|
— |
|
|
|
802 |
|
|
|
— |
|
|
|
— |
|
|
|
802 |
|
Gross loans – September 30, 2025 |
|
$ |
1,603,169 |
|
|
$ |
804,003 |
|
|
$ |
135,123 |
|
|
$ |
1,509 |
|
|
$ |
15,277 |
|
|
$ |
2,559,081 |
|
Page 44 of 63
The following table presents the maturities and sensitivity to change in interest rates for our loans as of September 30, 2026.
|
|
Loan Maturity |
|
|||||||||||||||||
|
|
Within 1 year |
|
|
After 1 to 5 years |
|
|
After 5 to 15 years |
|
|
After 15 years |
|
|
Total |
|
|||||
Fixed-rate |
|
$ |
29,227 |
|
|
$ |
235,767 |
|
|
$ |
2,165,810 |
|
|
$ |
438,930 |
|
|
$ |
2,869,734 |
|
Recreation |
|
|
5,034 |
|
|
|
100,818 |
|
|
|
1,591,494 |
|
|
|
91,214 |
|
|
|
1,788,560 |
|
Home improvement |
|
|
2,193 |
|
|
|
26,611 |
|
|
|
569,265 |
|
|
|
347,716 |
|
|
|
945,785 |
|
Commercial |
|
|
6,379 |
|
|
|
107,517 |
|
|
|
5,051 |
|
|
|
— |
|
|
|
118,947 |
|
Strategic partnerships |
|
|
15,233 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15,233 |
|
Taxi medallion |
|
|
388 |
|
|
|
821 |
|
|
|
— |
|
|
|
— |
|
|
|
1,209 |
|
Adjustable-rate |
|
$ |
137 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
137 |
|
Recreation |
|
|
137 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
137 |
|
Home improvement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Taxi medallion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total loans (1) |
|
$ |
29,364 |
|
|
$ |
235,767 |
|
|
$ |
2,165,810 |
|
|
$ |
438,930 |
|
|
$ |
2,869,871 |
|
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 September 30, 2026 and December 31, 2025, the allowance totaled $133.9 million and $114.8 million, which represented 4.58% and 4.50% of total loans held for investment. The provision for credit losses was $30.8 million and $75.5 million for the three and nine months ended September 30, 2026 compared to $18.6 million and $62.1 million for the three and nine months ended September 30, 2025 as a result of growth in our consumer loan portfolios, loan losses, fluctuation in delinquencies, and adjustments to forecasts in our consumer loan portfolios along with lower recoveries on taxi medallion loans.
During the three and nine months ended September 30, 2026, we recognized provisions of $1.0 million and $2.2 million related to specific commercial loans. Provisions and the correlated allowance for credit losses of commercial loans are assessed on specific indicators, such as, the underlying borrower not performing as expected and consideration of the current economic environment and economic policies which impact, or are likely to impact, the borrower's underlying business operations.
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2026.
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
Total |
|
|||||
Balance at December 31, 2025 |
|
$ |
85,956 |
|
|
$ |
19,563 |
|
|
$ |
9,052 |
|
|
$ |
218 |
|
|
$ |
114,789 |
|
Charge-offs |
|
|
(22,491 |
) |
|
|
(4,351 |
) |
|
|
— |
|
|
|
(38 |
) |
|
|
(26,880 |
) |
Recoveries |
|
|
4,820 |
|
|
|
1,465 |
|
|
|
5 |
|
|
|
21 |
|
|
|
6,311 |
|
Provision (benefit) for credit losses |
|
|
18,445 |
|
|
|
3,618 |
|
|
|
459 |
|
|
|
(46 |
) |
|
|
22,476 |
|
Balance at March 31, 2026 |
|
|
86,730 |
|
|
|
20,295 |
|
|
|
9,516 |
|
|
|
155 |
|
|
|
116,696 |
|
Charge-offs |
|
|
(18,505 |
) |
|
|
(4,165 |
) |
|
|
(74 |
) |
|
|
— |
|
|
|
(22,744 |
) |
Recoveries |
|
|
5,158 |
|
|
|
1,276 |
|
|
|
— |
|
|
|
42 |
|
|
|
6,476 |
|
Provision (benefit) for credit losses |
|
|
17,501 |
|
|
|
4,066 |
|
|
|
774 |
|
|
|
(68 |
) |
|
|
22,273 |
|
Balance at June 30, 2026 |
|
|
90,884 |
|
|
|
21,472 |
|
|
|
10,216 |
|
|
|
129 |
|
|
|
122,701 |
|
Charge-offs |
|
|
(21,212 |
) |
|
|
(4,581 |
) |
|
|
— |
|
|
|
(13 |
) |
|
|
(25,806 |
) |
Recoveries |
|
|
4,954 |
|
|
|
1,283 |
|
|
|
5 |
|
|
|
(11 |
) |
|
|
6,231 |
|
Provision (benefit) for credit losses |
|
|
23,515 |
|
|
|
6,320 |
|
|
|
972 |
|
|
|
(38 |
) |
|
|
30,769 |
|
Balance at September 30, 2026 |
|
$ |
98,141 |
|
|
$ |
24,494 |
|
|
$ |
11,193 |
|
|
$ |
67 |
|
|
$ |
133,895 |
|
Page 45 of 63
The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2025.
(Dollars in thousands) |
|
Recreation |
|
|
Home |
|
|
Commercial |
|
|
Taxi |
|
|
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 |
|
Charge-offs |
|
|
(16,273 |
) |
|
|
(4,951 |
) |
|
|
— |
|
|
|
— |
|
|
|
(21,224 |
) |
Recoveries |
|
|
4,419 |
|
|
|
1,190 |
|
|
|
10 |
|
|
|
573 |
|
|
|
6,192 |
|
Provision (benefit) for credit losses |
|
|
15,336 |
|
|
|
3,934 |
|
|
|
2,912 |
|
|
|
(620 |
) |
|
|
21,562 |
|
Balance at June 30, 2025 |
|
|
75,040 |
|
|
|
20,422 |
|
|
|
11,096 |
|
|
|
338 |
|
|
|
106,896 |
|
Charge-offs |
|
|
(16,844 |
) |
|
|
(3,840 |
) |
|
|
(1,103 |
) |
|
|
— |
|
|
|
(21,787 |
) |
Recoveries |
|
|
3,965 |
|
|
|
1,758 |
|
|
|
(10 |
) |
|
|
1,675 |
|
|
|
7,388 |
|
Provision (benefit) for credit losses |
|
|
16,708 |
|
|
|
2,125 |
|
|
|
1,414 |
|
|
|
(1,691 |
) |
|
|
18,556 |
|
Balance at September 30, 2025 |
|
$ |
78,869 |
|
|
$ |
20,465 |
|
|
$ |
11,397 |
|
|
$ |
322 |
|
|
$ |
111,053 |
|
The following tables present the gross charge-offs for the three and nine months ended September 30, 2026, by the year of origination:
Three Months Ended September 30, 2026 |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
1,089 |
|
|
$ |
4,960 |
|
|
$ |
4,705 |
|
|
$ |
3,651 |
|
|
$ |
3,249 |
|
|
$ |
3,558 |
|
|
$ |
21,212 |
|
Home improvement |
|
|
219 |
|
|
|
995 |
|
|
|
693 |
|
|
|
1,161 |
|
|
|
997 |
|
|
|
516 |
|
|
|
4,581 |
|
Commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Taxi medallion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
13 |
|
Total |
|
$ |
1,308 |
|
|
$ |
5,955 |
|
|
$ |
5,398 |
|
|
$ |
4,812 |
|
|
$ |
4,246 |
|
|
$ |
4,087 |
|
|
$ |
25,806 |
|
Nine Months Ended September 30, 2026 |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
1,201 |
|
|
$ |
12,215 |
|
|
$ |
14,194 |
|
|
$ |
11,803 |
|
|
$ |
10,408 |
|
|
$ |
12,387 |
|
|
$ |
62,208 |
|
Home improvement |
|
|
316 |
|
|
|
1,794 |
|
|
|
2,417 |
|
|
|
3,754 |
|
|
|
2,788 |
|
|
|
2,028 |
|
|
|
13,097 |
|
Commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
74 |
|
|
|
74 |
|
Taxi medallion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
51 |
|
|
|
51 |
|
Total |
|
$ |
1,517 |
|
|
$ |
14,009 |
|
|
$ |
16,611 |
|
|
$ |
15,557 |
|
|
$ |
13,196 |
|
|
$ |
14,540 |
|
|
$ |
75,430 |
|
The following tables present the gross charge-offs for the three and nine months ended September 30, 2025, by the year of origination:
Three Months Ended September 30, 2025 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
774 |
|
|
$ |
3,803 |
|
|
$ |
4,041 |
|
|
$ |
4,136 |
|
|
$ |
1,975 |
|
|
$ |
2,115 |
|
|
$ |
16,844 |
|
Home improvement |
|
|
26 |
|
|
|
957 |
|
|
|
929 |
|
|
|
1,109 |
|
|
|
358 |
|
|
|
461 |
|
|
|
3,840 |
|
Commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,103 |
|
|
|
1,103 |
|
Taxi medallion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
800 |
|
|
$ |
4,760 |
|
|
$ |
4,970 |
|
|
$ |
5,245 |
|
|
$ |
2,333 |
|
|
$ |
3,679 |
|
|
$ |
21,787 |
|
Nine Months Ended September 30, 2025 |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Total |
|
|||||||
Recreation |
|
$ |
785 |
|
|
$ |
10,343 |
|
|
$ |
11,665 |
|
|
$ |
13,081 |
|
|
$ |
6,014 |
|
|
$ |
11,503 |
|
|
$ |
53,391 |
|
Home improvement |
|
|
26 |
|
|
|
2,905 |
|
|
|
4,135 |
|
|
|
3,303 |
|
|
|
1,429 |
|
|
|
1,220 |
|
|
|
13,018 |
|
Commercial |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
130 |
|
|
|
— |
|
|
|
1,103 |
|
|
|
1,233 |
|
Taxi medallion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15 |
|
|
|
15 |
|
Total |
|
$ |
811 |
|
|
$ |
13,248 |
|
|
$ |
15,800 |
|
|
$ |
16,514 |
|
|
$ |
7,443 |
|
|
$ |
13,841 |
|
|
$ |
67,657 |
|
Page 46 of 63
The following table presents the allowance for credit losses for loans held for investment, by type, as of September 30, 2026.
September 30, 2026 |
|
Amount |
|
|
Percentage |
|
|
Allowance as |
|
|||
Recreation |
|
$ |
98,141 |
|
|
|
73 |
% |
|
|
5.30 |
% |
Home improvement |
|
|
24,494 |
|
|
|
18 |
|
|
|
2.59 |
|
Commercial |
|
|
11,193 |
|
|
|
8 |
|
|
|
9.43 |
|
Taxi medallion |
|
|
67 |
|
|
* |
|
|
|
5.54 |
|
|
Total |
|
$ |
133,895 |
|
|
|
100 |
% |
|
|
|
|
(*) Less than 0.1%.
The following table presents the allowance for credit losses for loans held for investment, by type, as of December 31, 2025.
December 31, 2025 |
|
Amount |
|
|
Percentage |
|
|
Allowance as |
|
|||
Recreation |
|
$ |
85,956 |
|
|
|
75 |
% |
|
|
5.32 |
% |
Home improvement |
|
|
19,563 |
|
|
|
17 |
|
|
|
2.41 |
|
Commercial |
|
|
9,052 |
|
|
|
8 |
|
|
|
7.36 |
|
Taxi medallion |
|
|
218 |
|
|
* |
|
|
|
18.49 |
|
|
Total |
|
$ |
114,789 |
|
|
|
100 |
% |
|
|
|
|
(*) Less than 0.1%.
The following table presents the trend in loans 90 days or more past due as of the dates indicated.
|
|
September 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
(Dollars in thousands) |
|
Amount |
|
|
% (1) |
|
|
Amount |
|
|
% (1) |
|
||||
Recreation |
|
$ |
11,874 |
|
|
|
0.4 |
% |
|
$ |
12,856 |
|
|
|
0.5 |
% |
Home improvement |
|
|
1,743 |
|
|
|
0.1 |
|
|
|
1,300 |
|
|
|
0.1 |
|
Commercial |
|
|
15,897 |
|
|
|
0.6 |
|
|
|
10,274 |
|
|
|
0.4 |
|
Taxi medallion |
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
* |
|
|
Total loans 90 days or more past due |
|
$ |
29,514 |
|
|
|
1.0 |
% |
|
$ |
24,471 |
|
|
|
1.0 |
% |
(*) Less than 0.1%.
As of September 30, 2026, taxi medallion loans in the process of foreclosure included 231 taxi medallions in the New York City market, 186 taxi medallions in the Chicago market, 19 taxi medallions in the Newark market, and 31 taxi medallions in various other markets.
Page 47 of 63
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 69% and 68% of our interest income for the three and nine months ended September 30, 2026 and 66% for both the three and nine months ended September 30, 2025.
We maintain relationships with approximately 3,500 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. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten relationships were responsible for 38% and 39% of recreation lending’s new loan originations for the nine months ended September 30, 2026 and 2025. The percentage of new loan originations by the top ten dealers and/or 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 thousands of geographically distributed loans with an average loan size of approximately $23,000 as of September 30, 2026. 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 September 30, 2026 is approximately 12 years.
The loans are secured primarily by RVs, boats, and collector cars, with RV loans making up 53% of the portfolio, boat loans making up 22%, and collector car loans making up 13% of the portfolio as of September 30, 2026, compared to 54%, 21%, and 12% as of September 30, 2025. Recreation loans are made to borrowers residing nationwide, with the highest concentrations as of September 30, 2026 in Texas and Florida at 17% and 9% of loans outstanding, compared to 16% and 13% at September 30, 2025, and with no other states at or above 10%. As of September 30, 2026 and September 30, 2025, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 686 and 685. The weighted average FICO scores at the time of origination for the loans funded in the nine months ended September 30, 2026 and 2025 were 688 in both periods.
As of September 30, 2026, the recreation loan portfolio was $1.9 billion, with the average interest rate decreasing 16 basis points to 15.01% from a year ago. Additionally, the allowance for credit losses increased 24% from September 30, 2025, primarily reflecting overall growth in the portfolio.
During the three and nine months ended September 30, 2026, we originated $198.2 million and $569.2 million in recreation loans, compared to $141.7 million and $371.3 million for the three and nine months ended September 30, 2025. Increased origination volumes reflect strong consumer demand and increased marketing efforts, along with pricing changes intended to generate stronger credit, which we believe will perform better during all phases of the economic cycle. The following table presents quarterly originations for 2026, 2025, and 2024.
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|||
First Quarter |
|
$ |
142,548 |
|
|
$ |
86,833 |
|
|
$ |
105,765 |
|
Second Quarter |
|
|
228,469 |
|
|
|
142,789 |
|
|
|
209,563 |
|
Third Quarter |
|
|
198,204 |
|
|
|
141,667 |
|
|
|
139,105 |
|
Fourth Quarter |
|
|
— |
|
|
|
97,178 |
|
|
|
72,201 |
|
Year Ended |
|
$ |
569,221 |
|
|
$ |
468,467 |
|
|
$ |
526,634 |
|
As of September 30, 2026, 36% 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 nine months ended September 30, 2026 and years ended December 31, 2025 and 2024.
(Dollars in thousands) |
|
Total |
|
|
Non-prime |
|
|
Non-prime |
|
|||
September 30, 2026 |
|
$ |
569,221 |
|
|
$ |
202,716 |
|
|
|
36 |
% |
December 31, 2025 |
|
|
468,467 |
|
|
|
169,498 |
|
|
|
36 |
|
December 31, 2024 |
|
|
526,634 |
|
|
|
185,334 |
|
|
|
35 |
|
Page 48 of 63
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Selected Earnings Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total interest income |
|
$ |
60,977 |
|
|
$ |
53,565 |
|
|
$ |
172,112 |
|
|
$ |
155,132 |
|
Total interest expense |
|
|
17,952 |
|
|
|
13,487 |
|
|
|
48,109 |
|
|
|
38,382 |
|
Net interest income |
|
|
43,025 |
|
|
|
40,078 |
|
|
|
124,003 |
|
|
|
116,750 |
|
Provision for credit losses |
|
|
23,515 |
|
|
|
16,708 |
|
|
|
59,461 |
|
|
|
48,914 |
|
Net interest income after credit loss provision |
|
|
19,510 |
|
|
|
23,370 |
|
|
|
64,542 |
|
|
|
67,836 |
|
Other income, net |
|
|
350 |
|
|
|
87 |
|
|
|
1,793 |
|
|
|
1,853 |
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries |
|
|
3,999 |
|
|
|
3,475 |
|
|
|
12,177 |
|
|
|
10,125 |
|
Loan servicing fees and collection costs |
|
|
4,492 |
|
|
|
3,781 |
|
|
|
13,733 |
|
|
|
11,019 |
|
Other costs |
|
|
3,245 |
|
|
|
2,838 |
|
|
|
9,192 |
|
|
|
8,950 |
|
Net income before taxes |
|
|
8,124 |
|
|
|
13,363 |
|
|
|
31,233 |
|
|
|
39,595 |
|
Income tax provision |
|
|
(2,708 |
) |
|
|
(4,027 |
) |
|
|
(10,712 |
) |
|
|
(12,296 |
) |
Net income after taxes |
|
$ |
5,416 |
|
|
$ |
9,336 |
|
|
$ |
20,521 |
|
|
$ |
27,299 |
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total loans, gross (1) |
|
|
|
|
|
|
|
$ |
1,852,958 |
|
|
$ |
1,603,169 |
|
||
Allowance for credit losses |
|
|
|
|
|
|
|
|
98,141 |
|
|
|
78,869 |
|
||
Total loans, net |
|
|
|
|
|
|
|
|
1,754,817 |
|
|
|
1,524,300 |
|
||
Total assets |
|
|
|
|
|
|
|
|
1,779,045 |
|
|
|
1,546,505 |
|
||
Total segment borrowings |
|
|
|
|
|
|
|
|
1,461,628 |
|
|
|
1,258,773 |
|
||
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Return on average assets |
|
|
1.24 |
% |
|
|
2.44 |
% |
|
|
1.65 |
% |
|
|
2.42 |
% |
Return on average equity |
|
|
7.87 |
|
|
|
13.69 |
|
|
|
10.08 |
|
|
|
14.21 |
|
Interest yield |
|
|
13.32 |
|
|
|
13.45 |
|
|
|
13.39 |
|
|
|
13.37 |
|
Net interest margin |
|
|
9.40 |
|
|
|
10.06 |
|
|
|
9.65 |
|
|
|
10.06 |
|
Reserve coverage (2) |
|
|
5.30 |
|
|
|
5.10 |
|
|
|
5.30 |
|
|
|
5.10 |
|
Delinquency status (3) |
|
|
0.66 |
|
|
|
0.57 |
|
|
|
0.66 |
|
|
|
0.57 |
|
Charge-off ratio (4) |
|
|
3.55 |
|
|
|
3.23 |
|
|
|
3.68 |
|
|
|
3.58 |
|
Home Improvement Lending
The home improvement lending segment works with contractors and FSPs to finance home improvements and is concentrated in swimming pools, roofs, and windows at 46%, 23%, and 9% of total home improvement loans outstanding as of September 30, 2026, as compared to 31%, 29%, and 11% as of September 30, 2025, 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 15% and 15% of loans outstanding as of September 30, 2026, with each such state representing 13% and 12% as of September 30, 2025 and no other states at or above 10%. As of September 30, 2026 and 2025, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, were 768 and 767. The weighted average FICO scores at the time of origination for the loans funded in the nine months ended September 30, 2026 and 2025 were 773 and 779.
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 800 contractors and/or FSPs. Our top ten contractors and FSP relationships were responsible for 82% of home improvement lending’s new loan originations for the nine months ended September 30, 2026. The percentage of new loan originations by the top ten contractor and/or 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 tens of thousands of geographically distributed loans with an average loan size of approximately $26,500 as of September 30, 2026. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 17 years. The weighted average maturity of our loans outstanding as of September 30, 2026 was approximately 14 years.
Page 49 of 63
As of September 30, 2026, the home improvement portfolio totaled $947.5 million, with an allowance for credit losses of $24.5 million. The average interest rate charged on our loans decreased 35 basis points to 9.52% at September 30, 2026 from a year ago due to increased loan originations for swimming pool loans during the nine months ended September 30, 2026.
During the three and nine months ended September 30, 2026, we originated $146.3 million and $339.3 million of home improvement loans, compared to $59.7 million and $162.8 million for the three and nine months ended September 30, 2025. The higher origination volumes reflect strong consumer demand and increased price competitiveness to attract swimming pool loan volume as we seek to originate loans that we believe will perform better during all phases of the economic cycle. The following table presents quarterly originations for 2026, 2025, and 2024.
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2024 |
|
|||
First Quarter |
|
$ |
64,402 |
|
|
$ |
48,796 |
|
|
$ |
51,576 |
|
Second Quarter |
|
|
128,640 |
|
|
|
54,253 |
|
|
|
67,990 |
|
Third Quarter |
|
|
146,269 |
|
|
|
59,711 |
|
|
|
96,545 |
|
Fourth Quarter |
|
|
— |
|
|
|
61,718 |
|
|
|
82,531 |
|
Year Ended |
|
$ |
339,311 |
|
|
$ |
224,478 |
|
|
$ |
298,642 |
|
As of September 30, 2026, 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 nine months ended September 30, 2026 and years ended December 31, 2025 and 2024.
(Dollars in thousands) |
|
Total |
|
|
Non-prime |
|
|
Non-prime |
|
|||
September 30, 2026 |
|
$ |
339,311 |
|
|
$ |
— |
|
|
|
— |
% |
December 31, 2025 |
|
|
224,478 |
|
|
|
65 |
|
|
* |
|
|
December 31, 2024 |
|
|
298,642 |
|
|
|
586 |
|
|
* |
|
|
(*) Less than 1%.
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Selected Earnings Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total interest income |
|
$ |
21,403 |
|
|
$ |
20,453 |
|
|
$ |
61,708 |
|
|
$ |
60,357 |
|
Total interest expense |
|
|
8,406 |
|
|
|
7,344 |
|
|
|
23,049 |
|
|
|
21,633 |
|
Net interest income |
|
|
12,997 |
|
|
|
13,109 |
|
|
|
38,659 |
|
|
|
38,724 |
|
Provision for credit losses |
|
|
6,320 |
|
|
|
2,125 |
|
|
|
14,004 |
|
|
|
8,904 |
|
Net interest income after credit loss provision |
|
|
6,677 |
|
|
|
10,984 |
|
|
|
24,655 |
|
|
|
29,820 |
|
Other income, net |
|
|
1,461 |
|
|
|
2 |
|
|
|
1,471 |
|
|
|
7 |
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries |
|
|
2,085 |
|
|
|
2,170 |
|
|
|
6,549 |
|
|
|
6,523 |
|
Loan servicing fees and collection costs |
|
|
1,182 |
|
|
|
985 |
|
|
|
3,592 |
|
|
|
2,955 |
|
Other costs |
|
|
1,789 |
|
|
|
1,436 |
|
|
|
4,765 |
|
|
|
4,807 |
|
Net income before taxes |
|
|
3,082 |
|
|
|
6,395 |
|
|
|
11,220 |
|
|
|
15,542 |
|
Income tax provision |
|
|
(1,029 |
) |
|
|
(1,943 |
) |
|
|
(3,848 |
) |
|
|
(4,827 |
) |
Net income after taxes |
|
$ |
2,053 |
|
|
$ |
4,452 |
|
|
$ |
7,372 |
|
|
$ |
10,715 |
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total loans, gross |
|
|
|
|
|
|
|
$ |
947,503 |
|
|
$ |
804,003 |
|
||
Allowance for credit losses |
|
|
|
|
|
|
|
|
24,494 |
|
|
|
20,465 |
|
||
Total loans, net |
|
|
|
|
|
|
|
|
923,009 |
|
|
|
783,538 |
|
||
Total assets |
|
|
|
|
|
|
|
|
929,740 |
|
|
|
788,764 |
|
||
Total segment borrowings |
|
|
|
|
|
|
|
|
763,856 |
|
|
|
642,012 |
|
||
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Return on average assets |
|
|
0.90 |
% |
|
|
2.24 |
% |
|
|
1.16 |
% |
|
|
1.80 |
% |
Return on average equity |
|
|
5.80 |
|
|
|
12.59 |
|
|
|
7.10 |
|
|
|
10.57 |
|
Interest yield |
|
|
9.17 |
|
|
|
10.11 |
|
|
|
9.55 |
|
|
|
9.95 |
|
Net interest margin |
|
|
5.57 |
|
|
|
6.48 |
|
|
|
5.98 |
|
|
|
6.38 |
|
Reserve coverage (1) |
|
|
2.59 |
|
|
|
2.55 |
|
|
|
2.59 |
|
|
|
2.55 |
|
Delinquency status (2) |
|
|
0.18 |
|
|
|
0.16 |
|
|
|
0.18 |
|
|
|
0.16 |
|
Charge-off ratio (3) |
|
|
1.42 |
|
|
|
1.03 |
|
|
|
1.41 |
|
|
|
1.48 |
|
Page 50 of 63
Commercial Lending
We originate both senior and subordinated loans nationwide to businesses in a variety of industries, with California, Wisconsin, and New York having 17%, 15%, and 12% 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 and nine months ended September 30, 2026, net loss of $0.2 million and net gains of $0.3 million was recognized with respect to these equity investments. The commercial lending business has concentrations in manufacturing, wholesale trade, and construction, and making up 59%, 14%, and 10% of the loans outstanding as of September 30, 2026. We did not originate any commercial loans during the three months ended September 30, 2026, and we originated $7.1 million during the nine months ended September 30, 2026, compared to $17.5 million and $36.6 million originated during the three and nine months ended September 30, 2025.
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2026 and 2025. 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 September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Selected Earnings Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total interest income |
|
$ |
3,169 |
|
|
$ |
4,227 |
|
|
$ |
10,123 |
|
|
$ |
11,325 |
|
Total interest expense |
|
|
1,471 |
|
|
|
1,252 |
|
|
|
4,234 |
|
|
|
3,462 |
|
Net interest income |
|
|
1,698 |
|
|
|
2,975 |
|
|
|
5,889 |
|
|
|
7,863 |
|
Provision for credit losses |
|
|
972 |
|
|
|
1,414 |
|
|
|
2,131 |
|
|
|
7,440 |
|
Net interest income after credit loss provision |
|
|
726 |
|
|
|
1,561 |
|
|
|
3,758 |
|
|
|
423 |
|
Other (loss) income, net |
|
|
(214 |
) |
|
|
260 |
|
|
|
471 |
|
|
|
16,260 |
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries |
|
|
902 |
|
|
|
1,133 |
|
|
|
2,707 |
|
|
|
3,349 |
|
Other costs |
|
|
502 |
|
|
|
357 |
|
|
|
1,793 |
|
|
|
1,023 |
|
Net income (loss) before taxes |
|
|
(892 |
) |
|
|
331 |
|
|
|
(271 |
) |
|
|
12,311 |
|
Income tax benefit (provision) |
|
|
350 |
|
|
|
(50 |
) |
|
|
155 |
|
|
|
(3,823 |
) |
Net (loss) income after taxes |
|
$ |
(542 |
) |
|
$ |
281 |
|
|
$ |
(116 |
) |
|
$ |
8,488 |
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total loans, gross |
|
|
|
|
|
|
|
$ |
118,691 |
|
|
$ |
135,123 |
|
||
Allowance for credit losses |
|
|
|
|
|
|
|
|
11,193 |
|
|
|
11,397 |
|
||
Total loans, net |
|
|
|
|
|
|
|
|
107,498 |
|
|
|
123,726 |
|
||
Total assets |
|
|
|
|
|
|
|
|
109,039 |
|
|
|
125,349 |
|
||
Total segment borrowings |
|
|
|
|
|
|
|
|
89,584 |
|
|
|
102,027 |
|
||
Selected Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Return on average assets |
|
|
(1.90 |
)% |
|
|
0.89 |
% |
|
|
(0.22 |
)% |
|
|
9.73 |
% |
Return on average equity |
|
|
(11.35 |
) |
|
|
5.19 |
|
|
|
(1.32 |
) |
|
|
58.17 |
|
Interest yield |
|
|
10.37 |
|
|
|
13.24 |
|
|
|
11.05 |
|
|
|
12.48 |
|
Net interest margin |
|
|
5.44 |
|
|
|
9.05 |
|
|
|
6.43 |
|
|
|
8.69 |
|
Reserve coverage (1) |
|
|
9.43 |
|
|
|
8.43 |
|
|
|
9.43 |
|
|
|
8.43 |
|
Delinquency status (2) |
|
|
13.36 |
|
|
|
13.99 |
|
|
|
13.36 |
|
|
|
13.99 |
|
Charge-off (recovery) ratio (3) |
|
|
(0.02 |
) |
|
|
3.38 |
|
|
|
0.07 |
|
|
|
1.36 |
|
|
|
As of September 30, |
|
|||||||||||||
|
|
2026 |
|
|
2025 |
|
||||||||||
Geographic Concentrations |
|
Total Gross |
|
|
% of |
|
|
Total Gross |
|
|
% of |
|
||||
California |
|
$ |
20,526 |
|
|
|
17 |
% |
|
$ |
33,350 |
|
|
|
25 |
% |
Wisconsin |
|
|
17,791 |
|
|
|
15 |
|
|
|
10,723 |
|
|
|
8 |
|
New York |
|
|
13,872 |
|
|
|
12 |
|
|
|
13,552 |
|
|
|
10 |
|
Other (1) |
|
|
66,502 |
|
|
|
56 |
|
|
|
77,498 |
|
|
|
57 |
|
Total |
|
$ |
118,691 |
|
|
|
100 |
% |
|
$ |
135,123 |
|
|
|
100 |
% |
Page 51 of 63
Taxi Medallion Lending
The taxi medallion lending segment operates in the New York City metropolitan area. During the three and nine months ended September 30, 2026, 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 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 and nine months ended September 30, 2026, we collected $1.7 million and $5.3 million related to taxi medallion and related assets, which resulted in net recoveries and gains of $1.1 million and $3.6 million. 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 levels experienced in prior years.
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Selected Earnings Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total interest income |
|
$ |
55 |
|
|
$ |
91 |
|
|
$ |
281 |
|
|
$ |
243 |
|
Total interest expense |
|
|
34 |
|
|
|
16 |
|
|
|
93 |
|
|
|
66 |
|
Net interest income |
|
|
21 |
|
|
|
75 |
|
|
|
188 |
|
|
|
177 |
|
Benefit for credit losses |
|
|
(38 |
) |
|
|
(1,691 |
) |
|
|
(152 |
) |
|
|
(3,126 |
) |
Net interest income after credit loss benefit |
|
|
59 |
|
|
|
1,766 |
|
|
|
340 |
|
|
|
3,303 |
|
Other income, net |
|
|
1,113 |
|
|
|
1,781 |
|
|
|
3,562 |
|
|
|
3,373 |
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries |
|
|
679 |
|
|
|
509 |
|
|
|
2,098 |
|
|
|
1,742 |
|
Loan servicing fees and collection costs |
|
|
112 |
|
|
|
36 |
|
|
|
170 |
|
|
|
287 |
|
Other costs |
|
|
192 |
|
|
|
275 |
|
|
|
351 |
|
|
|
614 |
|
Net income before taxes |
|
|
189 |
|
|
|
2,727 |
|
|
|
1,283 |
|
|
|
4,033 |
|
Income tax provision |
|
|
(60 |
) |
|
|
(838 |
) |
|
|
(440 |
) |
|
|
(1,253 |
) |
Net income after taxes |
|
$ |
129 |
|
|
$ |
1,889 |
|
|
$ |
843 |
|
|
$ |
2,780 |
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total loans, gross |
|
|
|
|
|
|
|
$ |
1,209 |
|
|
$ |
1,509 |
|
||
Allowance for credit losses |
|
|
|
|
|
|
|
|
67 |
|
|
|
322 |
|
||
Total loans, net |
|
|
|
|
|
|
|
|
1,142 |
|
|
|
1,187 |
|
||
Total assets |
|
|
|
|
|
|
|
|
4,801 |
|
|
|
5,204 |
|
||
Total segment borrowings |
|
|
|
|
|
|
|
|
3,944 |
|
|
|
4,236 |
|
||
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 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.
Commencing with the 2020 second quarter, the Bank began issuing loans related to its strategic partnership business, which is included within this segment. The associated activities of the strategic partnership business 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 held for sale were $15.2 million as of September 30, 2026 and $15.3 million as of September 30, 2025, with originations of $259.4 million and $676.5 million during the three and nine months ended September 30, 2026 compared to $208.4 million and $513.2 million during the three and nine months ended September 30, 2025, with the increased origination volume driven by the overall growth in our four existing relationships and one new strategic partner added during the second quarter. A sixth strategic partner was added in September 2026.
Page 52 of 63
The following table presents selected financial data and ratios as of and for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Selected Earnings Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total interest income |
|
$ |
3,286 |
|
|
$ |
2,435 |
|
|
$ |
8,111 |
|
|
$ |
6,580 |
|
Total interest expense |
|
|
2,648 |
|
|
|
2,986 |
|
|
|
7,165 |
|
|
|
9,627 |
|
Net interest income (expense) |
|
|
638 |
|
|
|
(551 |
) |
|
|
946 |
|
|
|
(3,047 |
) |
Provision for credit losses |
|
|
— |
|
|
|
— |
|
|
|
74 |
|
|
|
— |
|
Other income, net |
|
|
714 |
|
|
|
918 |
|
|
|
3,011 |
|
|
|
2,365 |
|
Other expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries |
|
|
3,134 |
|
|
|
2,858 |
|
|
|
9,515 |
|
|
|
8,547 |
|
Loan servicing fees and collection costs |
|
|
74 |
|
|
|
20 |
|
|
|
136 |
|
|
|
49 |
|
Other costs |
|
|
1,579 |
|
|
|
829 |
|
|
|
4,515 |
|
|
|
3,016 |
|
Net loss before taxes |
|
|
(3,435 |
) |
|
|
(3,340 |
) |
|
|
(10,283 |
) |
|
|
(12,294 |
) |
Income tax benefit |
|
|
1,111 |
|
|
|
996 |
|
|
|
3,464 |
|
|
|
3,819 |
|
Net loss after taxes |
|
$ |
(2,324 |
) |
|
$ |
(2,344 |
) |
|
$ |
(6,819 |
) |
|
$ |
(8,475 |
) |
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total loans |
|
|
|
|
|
|
|
$ |
15,233 |
|
|
$ |
15,277 |
|
||
Total assets |
|
|
|
|
|
|
|
|
538,019 |
|
|
|
434,565 |
|
||
Total segment borrowings |
|
|
|
|
|
|
|
|
442,026 |
|
|
|
353,713 |
|
||
SUMMARY CONSOLIDATED FINANCIAL DATA
The table below presents our selected financial data for the three and nine months ended September 30, 2026 and 2025.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Return on average assets |
|
|
0.57 |
% |
|
|
1.88 |
% |
|
|
0.94 |
% |
|
|
1.91 |
% |
Return on average equity |
|
|
3.64 |
% |
|
|
10.73 |
% |
|
|
5.69 |
% |
|
|
11.41 |
% |
Return on average stockholders' equity |
|
|
2.36 |
% |
|
|
7.85 |
% |
|
|
4.86 |
% |
|
|
10.71 |
% |
Net interest margin, gross |
|
|
7.34 |
% |
|
|
8.21 |
% |
|
|
7.65 |
% |
|
|
8.07 |
% |
Equity to assets (1) |
|
|
16.40 |
% |
|
|
17.13 |
% |
|
|
16.40 |
% |
|
|
17.13 |
% |
Debt to equity (1) (2) |
|
5x |
|
|
4.8x |
|
|
5x |
|
|
4.8x |
|
||||
Net loans receivable to assets (3) |
|
|
83 |
% |
|
|
84 |
% |
|
|
83 |
% |
|
|
84 |
% |
Net charge-offs |
|
$ |
19,575 |
|
|
$ |
14,399 |
|
|
$ |
56,412 |
|
|
$ |
48,447 |
|
Net charge-offs as a % of average loans receivable (4) |
|
|
2.69 |
% |
|
|
2.26 |
% |
|
|
2.77 |
% |
|
|
2.60 |
% |
Reserve coverage ratio (5) |
|
|
4.58 |
% |
|
|
4.47 |
% |
|
|
4.58 |
% |
|
|
4.47 |
% |
CONSOLIDATED RESULTS OF OPERATIONS
Three and Nine Months Ended September 30, 2026 Compared to the Three and Nine Months Ended September 30, 2025
Net income attributable to Medallion Financial Corp. was $2.4 million and $14.8 million, or $0.10 and $0.61 per diluted share, for the three and nine months ended September 30, 2026, compared to $7.8 million and $30.8 million, or $0.32 and $1.28 per diluted share, for the three and nine months ended September 30, 2025.
Total interest income was $88.9 million and $252.3 million for the three and nine months ended September 30, 2026, compared to $80.8 million and $233.6 million for the three and nine months ended September 30, 2025. The 10% and 8% increases in interest income from the prior periods reflect the continued growth in our recreation and home improvement lending segments, with those loan portfolios growing 16% and 18% from a year ago. Our average yield on our loans was 11.87% and 12.09% for the three and nine months ended September 30, 2026, compared to 12.39% and 12.23% for the three and nine months ended September 30, 2025. The decrease reflects, on average, a somewhat lower interest rate charged on loans originated in the current year as we have lowered rates in an effort to be more competitive with market rates as well as attract borrowers who are more likely to perform better through varying economic cycles.
Loans, inclusive of loans held for sale, were $2.936 billion as of September 30, 2026, comprised of recreation ($1.853 billion), home improvement ($947.5 million), commercial ($118.7 million), strategic partnership ($15.2 million), and taxi medallion ($1.2 million) loans. We had an allowance for credit losses as of September 30, 2026 of $133.9 million, which was attributable to recreation (73%), home improvement (18%), commercial (8%), and taxi medallion (less than 1%) loans.
Page 53 of 63
Loans increased $140.9 million, or 5% during the quarter and increased $368.7 million, or 14%, since December 31, 2025. Originations for the three and nine months ended September 30, 2026 were $603.9 million and $1.592 billion compared to $427.4 million and $1.084 billion for the three and nine months ended September 30, 2025. Originations for the three and nine months ended September 30, 2026 included $259.4 million and $676.5 million of strategic partnership program loans, compared to $208.4 million and $513.2 million of strategic partnership program loans for the three and nine months ended September 30, 2025. Originations increased in both of our consumer lending segments in the current quarter from the prior year quarter, with recreation loan originations increasing 40% and home improvement loan originations increasing 145% as we expanded both programs as part of our growth strategy described above.
The provision for credit losses was $30.8 million and $75.5 million for the three and nine months ended September 30, 2026, compared to $18.6 million and $62.1 million for the three and nine months ended September 30, 2025. The provision for the three and nine months ended September 30, 2026 included net charge-offs of $19.6 million and $56.4 million, compared to $14.4 million and $48.4 million in the prior year periods, with recreation loans accounting for $16.3 million and $47.3 million compared to $12.9 million and $41.1 million in the prior year. Credit provisions were $1.0 million and $2.2 million for commercial loans for the three and nine months ended September 30, 2026, compared to $1.4 million and $7.4 million for the three and nine months ended September 30, 2025. The provision for credit losses for the three and nine months ended September 30, 2026 reflected the impact of growth of our consumer loan portfolio, particularly the recreation loan portfolio, which grew 5% during the quarter and 15% during the nine month period, and which required an allowance for credit losses of approximately $5.6 million and $14.2 million for the three and nine months ended September 30, 2026. Additionally, fluctuations in portfolio aging and other economic factors caused us to adjust our allowance coverage ratios. These fluctuations resulted in an approximate $4.7 million increase in calculated allowance for credit loss which in turn resulted in an increase in the provision for credit loss during the quarter, with the allowance for credit loss increasing from 5.16% to 5.30% during the quarter for recreation loans and increasing from 2.42% to 2.59% for home improvement loans. Net charge-offs in the recreation loan portfolio, excluding loans held for sale, continued to be elevated from historic norms, and were 3.55% and 3.68% for the three and nine months ended September 30, 2026 compared to 3.36% and 3.74% for the three and nine months ended September 30, 2025. For home improvement loans, net charge offs were 1.42% and 1.41% for the three and nine months ended September 30, 2026 compared to 1.03% and 1.48% for the three and nine months ended September 30, 2025. As of September 30, 2026, current loans (those less than 30 days past due) were 95.13% and 98.91% of the recreation and home improvement loan portfolios, compared to 95.21% and 99.08% at September 30, 2025. Charge-off activity and loan delinquency are two of the more prominent indicators of future loss experience and thus have a significant impact on our determination of allowance for credit loss. See Note 4 of the accompanying consolidated financial statements for additional information on loans and allowance for credit losses.
Interest expense was $30.5 million and $82.7 million for the three and nine months ended September 30, 2026, compared to $25.1 million and $73.2 million for the three and nine months ended September 30, 2025, reflecting both higher average borrowings and higher average borrowing costs during the three and nine months ended September 30, 2026, with borrowing costs expected to remain elevated in the current interest rate environment. The average cost of borrowed funds was 4.45% and 4.35% for the three and nine months ended September 30, 2026, compared to 4.28% and 4.22% for the three and nine months ended September 30, 2025. The increases of 17 and 13 basis points over the prior year periods were largely attributable to the increased cost of newly issued certificates of deposit used both to fund our growth and to replace older maturing deposits with lower rates, with our average deposit costs increasing 15 and 14 basis points during the three and nine months to 4.09% and 4.01%. We expect our cost of funds to further increase as we replace upcoming deposit maturities with new issues. During the three months ended September 30, 2026, we issued certificates of deposit for 36 months at rates as high as 4.43% and for 60 months at rates as high as 4.38%. Average debt outstanding was $2.720 billion and $2.539 billion for the three and nine months ended September 30, 2026 up from $2.324 billion and $2.317 billion for the three and nine months ended September 30, 2025, as we increased our borrowings, particularly certificates of deposit to fund our loan growth. In addition, in April 2026, we issued $75.0 million aggregate principal amount of our 8.25% senior notes due 2031, which has increased our interest costs in the current quarter and will increase costs in the future.
Net interest income was $58.4 million and $169.7 million for the three and nine months ended September 30, 2026, an increase of 5% and 6% from $55.7 million and $160.5 million in the prior year period. The net interest margin before the impact of the allowance for credit losses was 7.34% and 7.65% for the three and nine months ended September 30, 2026, compared to 8.21% and 8.07% for the three and nine months ended September 30, 2025, reflecting the above, particularly our higher average cost of borrowing over the prior year periods. With the rates we charge on outstanding loans being fixed, and our average cost of funds increasing, our net interest margin has tightened. We continue to take steps to increase rates on newly originated consumer loans from those current levels charged since the beginning of 2026 in an effort to steady our net interest margin. Interest rate alone is not the only driver of changes in our net interest margin, and as our portfolio mix continues to shift, particularly with our higher credit home improvement loans becoming a larger portion of our overall loan portfolio, we expect further reductions in margin. The decrease in net interest margin reflects, on average, a somewhat lower interest rate charged on loans originated in the current year as we have lowered rates in an effort to be more competitive with market rates as well as attract borrowers who are more likely to perform better through varying economic cycles. This change will have a negative impact on our net interest margin to some extent; however, we believe that these changes were critical to improving credit losses over the long term.
Page 54 of 63
Net other income, which is typically comprised of gains on equity investments, gains related to and in connection with the disposition of taxi medallion assets, gains on the sale of consumer loans, fees associated with our strategic partnership program, prepayment fees, servicing fee income, and late charges, was $3.4 million and $10.3 million for the three and nine months ended September 30, 2026, compared to $3.0 million and $23.9 million for the three and nine months ended September 30, 2025. Included in other income were gains from the sale of consumer loans, both recreation and home improvement, of $1.7 million and $3.0 million during the three and nine months ended September 30, 2026, compared to $0 and $1.3 million for the three and nine months ended September 30, 2025. Strategic partnership fees were $0.8 million and $2.7 million in the current year periods compared to $1.0 million and $2.5 million for the three and nine months ended September 30, 2025. Net gains on equity investments were a loss of $0.2 million and income of $0.3 million for the three and nine months ended September 30, 2026, compared to $0.3 million and $15.8 million for the three and nine months ended September 30, 2025. Additionally, for the three and nine months ended September 30, 2026, other income included $1.1 million and $3.5 million of gains on the disposition of taxi medallion assets.
Operating expenses were $24.0 million and $71.3 million for the three and nine months ended September 30, 2026, compared to $20.7 million and $63.0 million for the three and nine months ended September 30, 2025. Such amounts were inclusive of salaries and employee benefits of $10.8 million and $33.0 million during the current quarter and nine-month period, compared to $10.1 million and $30.3 million for the prior year periods, with the increase reflecting higher costs associated with a greater head count at our operating subsidiary, Medallion Bank, and higher equity compensation costs in the current nine month period. Additionally, other expenses were higher, particularly loan servicing expense and regulatory costs, reflecting our growing loan portfolio. We expect our operating expenses to further increase as we continue to build capacity as part of our growth strategy.
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, 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 consumer 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 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 percentage of total assets.
Page 55 of 63
The following table presents our interest rate sensitivity gap at September 30, 2026. 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.
September 30, 2026 Cumulative Gap (1) |
|
|||||||||||||||||||||||||||||||
(Dollars in thousands) |
|
Less |
|
|
More |
|
|
More |
|
|
More |
|
|
More |
|
|
More |
|
|
Thereafter |
|
|
Total |
|
||||||||
Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed-rate (2) |
|
$ |
29,227 |
|
|
$ |
37,519 |
|
|
$ |
42,794 |
|
|
$ |
70,585 |
|
|
$ |
84,869 |
|
|
$ |
80,160 |
|
|
$ |
2,524,580 |
|
|
$ |
2,869,734 |
|
Adjustable rate (2) |
|
|
137 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
137 |
|
Investment and equity securities |
|
|
157 |
|
|
|
1,730 |
|
|
|
7,095 |
|
|
|
4,458 |
|
|
|
3,378 |
|
|
|
6,280 |
|
|
|
48,940 |
|
|
|
72,038 |
|
Cash and cash equivalents |
|
|
243,056 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
243,056 |
|
Total earning assets |
|
$ |
272,577 |
|
|
$ |
39,249 |
|
|
$ |
49,889 |
|
|
$ |
75,043 |
|
|
$ |
88,247 |
|
|
$ |
86,440 |
|
|
$ |
2,573,520 |
|
|
$ |
3,184,965 |
|
Interest bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Deposits (3) |
|
$ |
928,317 |
|
|
$ |
566,803 |
|
|
$ |
421,940 |
|
|
$ |
258,312 |
|
|
$ |
209,291 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,384,663 |
|
Privately placed notes |
|
|
— |
|
|
|
92,750 |
|
|
|
— |
|
|
|
— |
|
|
|
75,000 |
|
|
|
— |
|
|
|
22,500 |
|
|
|
190,250 |
|
SBA debentures and borrowings |
|
|
2,000 |
|
|
|
1,250 |
|
|
|
1,250 |
|
|
|
3,000 |
|
|
|
8,500 |
|
|
|
— |
|
|
|
55,000 |
|
|
|
71,000 |
|
Trust preferred securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
33,000 |
|
|
|
33,000 |
|
Federal reserve and other borrowings |
|
|
75,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
75,000 |
|
Strategic partner collateral deposits |
|
|
7,125 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,125 |
|
Total liabilities |
|
$ |
1,012,442 |
|
|
$ |
660,803 |
|
|
$ |
423,190 |
|
|
$ |
261,312 |
|
|
$ |
292,791 |
|
|
$ |
— |
|
|
$ |
110,500 |
|
|
$ |
2,761,038 |
|
Interest rate gap |
|
$ |
(739,865 |
) |
|
$ |
(621,554 |
) |
|
$ |
(373,301 |
) |
|
$ |
(186,269 |
) |
|
$ |
(204,544 |
) |
|
$ |
86,440 |
|
|
$ |
2,463,020 |
|
|
$ |
423,927 |
|
Cumulative interest rate gap |
|
$ |
(739,865 |
) |
|
$ |
(1,361,419 |
) |
|
$ |
(1,734,720 |
) |
|
$ |
(1,920,989 |
) |
|
$ |
(2,125,533 |
) |
|
$ |
(2,039,093 |
) |
|
$ |
423,927 |
|
|
$ |
— |
|
December 31, 2025 (4) |
|
$ |
(547,621 |
) |
|
$ |
(590,262 |
) |
|
$ |
(420,387 |
) |
|
$ |
(100,477 |
) |
|
$ |
(143,859 |
) |
|
$ |
91,152 |
|
|
$ |
2,092,209 |
|
|
$ |
— |
|
December 31, 2024 (4) |
|
$ |
(584,817 |
) |
|
$ |
(456,813 |
) |
|
$ |
(426,717 |
) |
|
$ |
(114,216 |
) |
|
$ |
(80,863 |
) |
|
$ |
70,765 |
|
|
$ |
1,930,856 |
|
|
$ |
— |
|
Our trust preferred securities bear 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 plus 2.13%.
Our interest rate sensitive assets were $3.2 billion and interest rate sensitive liabilities were $2.8 billion at September 30, 2026. The one-year cumulative interest rate gap was a negative $739.9 million, or 23% 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.
Liquidity and Capital Resources
Our sources of liquidity include brokered certificates of deposit and other borrowings at the Bank, 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.
On September 30, 2026, the Bank closed a public offering of 2,200,000 additional shares of its Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series G, par value $1.00 per share, or Series G Preferred Stock, with an aggregate liquidation amount of $55,000,000 or $25 per share. The offering was a reopening of Medallion Bank's original issuance of its Series G Preferred Stock, which closed in May 2025.
On April 28, 2026, we issued and sold $75.0 million aggregate principal amount of senior unsecured notes to a group of institutional investors. The notes, which will mature on May 1, 2031, bear a fixed interest rate of 8.25% per year, paid semi-annually.
In February 2026, we repaid, at maturity, $31.25 million aggregate principal amount of our February 2021 privately placed notes.
In February 2026, we repaid $11.5 million of SBA debentures, which had a maturity date of March 1, 2026 and in August 2026 we repaid, in full, $2.5 million of SBA debentures, which had a maturity date of September 1, 2026. We currently do not have any commitments to access new debentures from the SBA.
In May 2025, the Bank closed an initial public offering of 3,100,000 shares of its Series G Preferred Stock, with a $77.5 million aggregate liquidation amount, or $25 per share, yielding net proceeds of $73.1 million. Dividends are payable quarterly from the date of issuance to, but excluding July 1, 2030, at a fixed rate equal to 9.00% per annum, and from and including July 1, 2030, during each reset period at a rate equal to the five-year U.S. Treasury rate plus a spread of 4.94% per annum.
Page 56 of 63
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.
Over the years, the SBA has approved commitments for Medallion Capital, 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, all of which had been fully utilized in 2025. We do not currently have any commitments available from the SBA.
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 September 30, 2026, the Bank had $100.5 million in retail savings deposit balances.
In March 2023, the Bank established a discount window line of credit at the Federal Reserve. As of September 30, 2026, the Bank had $2.6 billion of consumer loans pledged as collateral to the Federal Reserve. The advance rate on the pledged loans is approximately 51% of book value, for a total of approximately $1.3 billion in secured borrowing capacity, of which $75.0 million was utilized as of September 30, 2026. The discount window facility is not committed, and any borrowings by the Bank from the discount window facility are at the discretion of the Federal Reserve. The weighted average interest rate on funds borrowed from the discount window was 4.00% as of September 30, 2026.
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 September 30, 2026, there was no amount outstanding with respect to these arrangements.
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 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 any series of preferred stock. On July 1, 2025, the Bank redeemed its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, in its entirety, for an aggregate amount of $46.0 million, which resulted in a $3.5 million charge to earnings attributable to common stockholders upon the redemption.
The table below presents the components of our debt as of September 30, 2026, exclusive of deferred financing costs of $9.9 million. See Note 5 to the consolidated financial statements for details of the contractual terms of our borrowings.
(Dollars in thousands) |
|
Balance |
|
|
Percentage |
|
|
Rate (2) |
|
|||
Deposits (1) |
|
$ |
2,384,663 |
|
|
|
86 |
% |
|
|
3.98 |
% |
Privately placed notes |
|
|
190,250 |
|
|
|
7 |
|
|
|
8.31 |
|
SBA debentures and borrowings |
|
|
71,000 |
|
|
|
3 |
|
|
|
4.15 |
|
Trust preferred securities |
|
|
33,000 |
|
|
|
1 |
|
|
|
6.23 |
|
Federal reserve and other borrowings |
|
|
75,000 |
|
|
|
3 |
|
|
|
4.00 |
|
Strategic partner collateral deposits |
|
|
7,125 |
|
|
* |
|
|
|
3.64 |
|
|
Total outstanding debt |
|
$ |
2,761,038 |
|
|
|
100 |
% |
|
|
4.30 |
% |
(*) Less than 1%.
Page 57 of 63
Our contractual obligations expire on or mature at various dates through August 2039. The following table presents our contractual obligations at September 30, 2026.
|
|
Payments due by period |
|
|
|
|
||||||||||||||||||||||
(Dollars in thousands) |
|
Less than |
|
|
1 – 2 |
|
|
2 – 3 |
|
|
3 – 4 |
|
|
4 – 5 |
|
|
More than |
|
|
Total (1) |
|
|||||||
Borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Deposits |
|
$ |
928,317 |
|
|
$ |
566,803 |
|
|
$ |
421,940 |
|
|
$ |
258,312 |
|
|
$ |
209,291 |
|
|
$ |
— |
|
|
$ |
2,384,663 |
|
Privately placed notes |
|
|
— |
|
|
|
92,750 |
|
|
|
— |
|
|
|
— |
|
|
|
75,000 |
|
|
|
22,500 |
|
|
|
190,250 |
|
SBA debentures and borrowings |
|
|
2,000 |
|
|
|
1,250 |
|
|
|
1,250 |
|
|
|
3,000 |
|
|
|
8,500 |
|
|
|
55,000 |
|
|
|
71,000 |
|
Trust preferred securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
33,000 |
|
|
|
33,000 |
|
Federal reserve and other borrowings |
|
|
75,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
75,000 |
|
Strategic partner collateral deposits |
|
|
7,125 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,125 |
|
Total outstanding borrowings |
|
|
1,012,442 |
|
|
|
660,803 |
|
|
|
423,190 |
|
|
|
261,312 |
|
|
|
292,791 |
|
|
|
110,500 |
|
|
|
2,761,038 |
|
Operating lease obligations |
|
|
1,040 |
|
|
|
1,979 |
|
|
|
2,000 |
|
|
|
2,021 |
|
|
|
1,983 |
|
|
|
9,019 |
|
|
|
18,042 |
|
Total contractual obligations |
|
$ |
1,013,482 |
|
|
$ |
662,782 |
|
|
$ |
425,190 |
|
|
$ |
263,333 |
|
|
$ |
294,774 |
|
|
$ |
119,519 |
|
|
$ |
2,779,080 |
|
Approximately $1.7 billion of our borrowings have maturity dates during the next two years, a majority of which are brokered certificates of deposit 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 September 30, 2026 by $1.8 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 $7.4 million at September 30, 2026. 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.
Page 58 of 63
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 September 30, 2026. See Note 5 to the consolidated financial statements for additional information about each borrowing.
(Dollars in thousands) |
|
Medallion |
|
|
Medallion |
|
|
Freshstart Venture Capital Corp. |
|
|
Medallion |
|
|
September 30, |
|
|
December 31, |
|
||||||
Cash, cash equivalents and federal funds sold |
|
$ |
51,907 |
|
|
$ |
17,113 |
|
|
$ |
3,888 |
|
|
$ |
170,148 |
|
|
$ |
243,056 |
|
|
$ |
201,564 |
|
Trust preferred securities (2) |
|
|
33,000 |
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
|
|
|
33,000 |
|
|||
Average interest rate |
|
|
6.23 |
% |
|
|
|
|
|
|
|
|
|
|
|
6.23 |
% |
|
|
6.12 |
% |
|||
Maturity |
|
9/37 |
|
|
|
|
|
|
|
|
|
|
|
9/37 |
|
|
9/37 |
|
||||||
Privately placed notes |
|
|
190,250 |
|
|
|
|
|
|
|
|
|
|
|
|
190,250 |
|
|
|
146,500 |
|
|||
Average interest rate |
|
|
8.31 |
% |
|
|
|
|
|
|
|
|
|
|
|
8.31 |
% |
|
|
8.12 |
% |
|||
Maturity |
|
12/27 - 8/39 |
|
|
|
|
|
|
|
|
|
|
|
12/27 - 8/39 |
|
|
2/26 - 8/39 |
|
||||||
SBA debentures & borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amounts available |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Amounts outstanding |
|
|
|
|
|
71,000 |
|
|
|
|
|
|
|
|
|
71,000 |
|
|
|
85,000 |
|
|||
Average interest rate |
|
|
|
|
|
4.15 |
% |
|
|
|
|
|
|
|
|
4.15 |
% |
|
|
3.98 |
% |
|||
Maturity |
|
|
|
|
3/27 - 9/35 |
|
|
|
|
|
|
|
|
3/27 - 9/35 |
|
|
3/26- 9/35 |
|
||||||
Brokered certificates of deposit |
|
|
|
|
|
|
|
|
|
|
|
2,391,788 |
|
(3) |
|
2,391,788 |
|
|
|
2,089,416 |
|
|||
Average interest rate |
|
|
|
|
|
|
|
|
|
|
|
3.98 |
% |
|
|
3.98 |
% |
|
|
3.87 |
% |
|||
Maturity |
|
|
|
|
|
|
|
|
|
|
10/26 - 9/31 |
|
|
10/26 - 9/31 |
|
|
1/26 - 12/30 |
|
||||||
Federal reserve and other borrowings |
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
75,000 |
|
|
|
50,000 |
|
|||
Average interest rate |
|
|
|
|
|
|
|
|
|
|
|
4.00 |
% |
|
|
4.00 |
% |
|
|
3.75 |
% |
|||
Maturity |
|
|
|
|
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
||||||
Total cash |
|
$ |
51,907 |
|
|
$ |
17,113 |
|
|
$ |
3,888 |
|
|
$ |
170,148 |
|
|
$ |
243,056 |
|
|
$ |
201,564 |
|
Total debt outstanding |
|
$ |
223,250 |
|
|
$ |
71,000 |
|
|
$ |
— |
|
|
$ |
2,466,788 |
|
|
$ |
2,761,038 |
|
|
$ |
2,403,916 |
|
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 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.
Dividends and Stock Repurchases
Beginning in March 2022, our board of directors reinstated our quarterly dividend at $0.08 per share. Our board of directors authorized and increased the quarterly dividend to $0.10 per share on October 24, 2023, authorized and increased the quarterly dividend to $0.11 per share on October 25, 2024, authorized and increased the quarterly dividend to $0.12 per share on April 25, 2025, and further authorized and increased the quarterly dividend to $0.14 per share on April 28, 2026. We currently expect to continue to pay quarterly dividends at the current rate for the foreseeable future. We may, however, re-evaluate the dividend policy in the future depending on market conditions. There can be no assurance that we will continue to pay any cash distributions, as we may retain our earnings to facilitate the growth of our business, to finance our investments, to provide liquidity, or for other corporate purposes.
On April 29, 2022, our board of directors authorized a new stock repurchase program with no expiration date, pursuant to which we were authorized to repurchase up to $35 million of our shares, which was increased to $40 million on August 10, 2022, also with no expiration date. During the three months ended September 30, 2026, we repurchased 483,871 shares of our common stock at an aggregate price of $5.6 million. Accordingly, as of September 30, 2026, up to $1.2 million of shares remained authorized for repurchase under our stock repurchase program all of which had been utilized in October 2026.
On October 27, 2026, our board of directors approved a new stock repurchase plan with no expiration date, pursuant to which we are authorized to repurchase up to $40 million of our shares. Under the repurchase program, we may repurchase our outstanding shares of common stock from time to time in open market or privately-negotiated transactions, including accelerated share repurchase transactions, block trades, or pursuant to 10b5-1 trading plans. Any repurchases will be at management’s discretion and will be subject to market conditions, the price of the Company’s shares and other factors. The stock repurchase program may be modified, suspended or terminated by the board of directors at any time.
Page 59 of 63
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in disclosure regarding quantitative and qualitative disclosures about market risk since we filed our Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a—15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, and have concluded that they are effective as of September 30, 2026 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated our internal control over financial reporting to determine whether any changes occurred during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, and have concluded that there have been no changes that occurred during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We and our 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. We intend to vigorously defend any outstanding claims and pursue our legal rights. In the opinion of management, based on the advice of legal counsel, 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 our financial condition or results of operations.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which was filed with the Securities and Exchange Commission on March 10, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On April 29, 2022, our board of directors authorized a new stock repurchase program with no expiration date, pursuant to which we were authorized to repurchase up to $35 million of our shares, which was increased to $40 million on August 10, 2022, also with no expiration date. During the three months ended September 30, 2026, we repurchased 483,871 shares of our common stock at an aggregate price of $5.6 million. Accordingly, as of September 30, 2026, up to $1,166,647 of shares remained authorized for repurchase under our stock repurchase program, all of which was utilized in October 2026. On October 27, 2026, our board of directors approved a new stock repurchase plan with no expiration date, pursuant to which we are authorized to repurchase up to $40 million of our shares.
|
|
Total Number of Shares Purchased |
|
|
Average Price |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Total |
|
|
Maximum Approximate Dollar Value of Shares that May Yet to Be Purchased under the Plans or Programs |
|
|||||
January 1 - January 31 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
14,406,534 |
|
February 1 - February 28 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,406,534 |
|
March 1 - March 31 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,406,534 |
|
April 1 - April 30 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,406,534 |
|
May 1 - May 31 |
|
|
193,108 |
|
|
|
9.55 |
|
|
|
193,108 |
|
|
|
1,844,580 |
|
|
|
12,561,954 |
|
June 1 - June 30 |
|
|
586,691 |
|
|
|
9.95 |
|
|
|
586,691 |
|
|
|
5,839,715 |
|
|
|
6,722,239 |
|
July 1 - July 31 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,722,239 |
|
August 1 - August 31 |
|
|
298,047 |
|
|
|
11.20 |
|
|
|
298,047 |
|
|
|
3,337,730 |
|
|
|
3,384,509 |
|
September 1 - September 30 |
|
|
185,824 |
|
|
|
11.94 |
|
|
|
185,824 |
|
|
|
2,217,862 |
|
|
|
1,166,647 |
|
Total |
|
|
1,263,670 |
|
|
$ |
10.48 |
|
|
|
1,263,670 |
|
|
$ |
13,239,887 |
|
|
$ |
1,166,647 |
|
ITEM 5. OTHER INFORMATION
None of our directors or officers
Page 60 of 63
ITEM 6. EXHIBITS
EXHIBITS
10.1 |
|
Purchase and Settlement Agreement, dated October 16, 2026, by and among Medallion Financial Corp., on the one hand, and, on the other hand, BIMIZCI Fund LLC and ZimCal Asset Management LLC.Filed as Exhibit 10.1 to the Current Report on Form 8-K filed on October 19, 2026 (File No. 001-37747) and incorporated by reference herein. |
|
|
|
31.1 |
|
Certification of Andrew M. 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 Andrew M. 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) |
Page 61 of 63
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MEDALLION FINANCIAL CORP. |
|
|
|
|
|
Date: |
November 5, 2026 |
|
|
By: |
/s/ Andrew M. Murstein |
|
Andrew M. Murstein |
|
President, Chief Executive Officer, and Chief Operating 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. |
Page 62 of 63