Executive Summary

Q2 2025 delivered strong profitability: net income rose 56% YoY to $11.1M and diluted EPS was $0.46; net interest income increased 7% YoY to $53.4M, with net interest margin on gross loans at 8.09% (flat YoY on net loans at 8.42%) .
Results were a clear beat vs Wall Street: EPS $0.46 vs $0.315 consensus; “revenue” (interest income + other income) $86.7M vs $53.0M consensus; estimates based on 2 analysts* (EPS +$0.145; revenue +63%) [values retrieved from S&P Global]*.
Segment drivers: Recreation and Home Improvement loan books grew modestly; strategic partnerships set a record $168.6M originations; commercial segment recognized $6.1M equity gains; provisions increased to $21.6M amid cautious credit posture .
Capital actions and shareholder returns: $0.12 quarterly dividend declared for Q3 2025 and buybacks of ~48K shares; net book value per share climbed to $16.77 .
Near-term catalysts: outsized revenue/EPS beat*, rising strategic partnership volumes, commercial equity gains, and loan sale gains ($1.3M) support estimate revisions and sentiment, while higher allowances and recreation delinquencies temper the outlook [values retrieved from S&P Global]*.

What Went Well and What Went Wrong

What Went Well

Strong headline beat and profitability momentum: net income up 56% YoY to $11.1M; diluted EPS $0.46; net interest income up 7% YoY to $53.4M .
Strategic partnerships reached record originations of $168.6M and continued diversification; average holding period ~5 days with fees generated of $0.8M in Q2 .
Commercial segment contribution: $6.1M net equity gains; portfolio at $121.4M, average interest rate 13.43%; management highlights cumulative $27.6M equity gains over 8 quarters as a durable driver .

Selected management quotes:

“We are pleased with the strong results... 56% increase in net income year-over-year.” — Andrew Murstein .
“We would expect it [NIM] to remain in that realm over the next few quarters with some expansion coming when we start to see interest rates eventually fall.” — Anthony Cutrone .
“We think we’ve got ample capital to continue growth now.” — Anthony Cutrone (re: $77.5M Bank preferred offering) .

What Went Wrong

Recreation originations fell YoY ($142.8M vs $209.6M), while 90+ day delinquencies rose to 0.49% (from 0.41%); allowance increased to 5.05% (from 4.35%) reflecting cautious credit stance .
Provision for credit losses rose to $21.6M (vs $18.6M YoY), reflecting increased allowances across consumer and commercial portfolios .
Operating costs increased to $21.5M (from $20.0M YoY) tied to technology initiatives; margin expansion remains constrained by deposit costs (~3.81% end of June) .

Financial Results

Core P&L vs prior periods

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue (Interest income + Other income) ($USD Millions)	$71.8	$87.0	$86.7
Diluted EPS ($)	$0.30	$0.50	$0.46
Net Interest Income ($USD Millions)	$49.9	$51.4	$53.4
Net Interest Margin on Gross Loans (%)	8.12%	7.94%	8.09%
Net Interest Margin on Net Loans (%)	8.42%	8.25%	8.42%
Provision for Credit Losses ($USD Millions)	$18.6	$22.0	$21.6
Net Income attributable to MFIN ($USD Millions)	$7.1	$12.0	$11.1

Q2 2025 vs Wall Street consensus

Metric	Consensus	Actual	Surprise
EPS ($)	0.315*	0.46	+0.145*
Revenue ($USD Millions)	53.0*	86.7	+33.6 (+63%)*

Values retrieved from S&P Global.*

Segment breakdown – consumer lending

Metric	Q2 2024	Q1 2025	Q2 2025
Recreation Originations ($USD Millions)	$209.6	$86.8	$142.8
Recreation Loans ($USD Millions)	$1,497.0	$1,500.0	$1,546.0
Recreation Interest Income ($USD Millions)	$47.5	$50.5	$51.1
Recreation 90+ Day Delinquency (%)	0.41%	0.48%	0.49%
Recreation Allowance for Credit Loss (%)	4.35%	5.00%	5.05%
Home Improvement Originations ($USD Millions)	$68.0	$48.8	$54.3
Home Improvement Loans ($USD Millions)	$773.2	$812.4	$803.5
Home Improvement Interest Income ($USD Millions)	$17.7	$19.8	$20.1
Home Improvement 90+ Day Delinquency (%)	0.17%	0.19%	0.16%
Home Improvement Allowance for Credit Loss (%)	2.38%	2.49%	2.54%

Other segments and programs

Metric	Q2 2024	Q1 2025	Q2 2025
Commercial Loans ($USD Millions)	$110.2	$116.1	$121.4
Commercial Avg Interest Rate (%)	13.05%	13.14%	13.43%
Commercial Net Equity Gains ($USD Millions)	n/a	$9.43	$6.10
Strategic Partnership Originations ($USD Millions)	$24.3	$136.2	$168.6
Strategic Partnership Fees ($USD Millions)	$0.5	$0.69	$0.8
Taxi Medallion Cash Collected ($USD Millions)	n/a	$2.6	$2.3
Net Taxi Medallion Assets ($USD Millions)	n/a	$6.8	$5.9

KPIs and balance sheet context

KPI	Q4 2024	Q1 2025	Q2 2025
Total Originations ($USD Millions)	$285.7	$281.6	$375.0
Strategic Partnership Originations ($USD Millions)	$124.0	$136.2	$168.6
Consumer 90+ Delinquencies ($USD Millions / %)	$11.4 / 0.49%	$8.7 / 0.37%	$8.6 / 0.37%
Allowance for Credit Losses ($USD Millions)	$97.4	$100.4	$106.9
Deposits Avg Rate (%)	3.71%	3.75%	3.81%
Net Book Value/Share ($)	$16.00	$16.36	$16.77

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin (“NIM”)	Next few quarters	“Stick around here… not significantly lower” (Q4 call)	“Around ~8% (‘eight-ish’) with potential expansion when rates fall” (Q2 call)	Maintained
Loan Growth	FY 2025 / LT	Mid- to high single digits (Q4 call)	High single-digit long-term; growth to improve with added capital (Q2 call)	Maintained (bias higher)
Operating Expenses Run-rate	Near term	~$21–21.5M/quarter (Q4 call)	~$21.5M in Q2; expected elevated as tech platform expands (Q2 remarks)	Maintained
Dividend per Share	Q3 2025	$0.12 declared in Q2	$0.12 declared for Q3 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Technology/servicing platform investments	Elevated costs, platform customization and analytics build-out (Q4, Q1)	Operating costs up to $21.5M; investments to improve self-service/customer experience	Ongoing elevated spend; efficiency focus
Strategic partnerships	Q4 ramp to $124M; Q1 >$125M quarters durable	Record $168.6M originations; fees $0.8M; 5-day hold	Accelerating volumes
Credit quality & underwriting	Tightened standards mid-2023; better recent vintages (Q4/Q1)	Rec delinquencies reflect older vintages; allowances increased; standards maintained	Quality improving in new vintages; cautious provisioning
Loan sale activity	Q1 guided ~half of $124.7M; premium gains expected	$53M rec loan sale closed; $1.3M gain; appetite remains	Occasional sales to manage growth/funding
Regulatory/legal	SEC settlement charge/insurance benefit (Q4) ; mention in Q1 PR	No new updates in Q2 materials	De-emphasized; monitoring

Management Commentary

“Net interest income grew 7% to $53.4 million… net interest margin on gross loans was 8.09%… average interest rate on deposits was 3.81% at the end of June.” — CFO Anthony Cutrone (prepared) .
“Equity gains have now generated a total of $27.6 million of income over the past eight quarters.” — President Andrew Murstein (prepared) .
“We think we’ve got ample capital to continue growth now… raising $77.5 million perpetual preferred stock.” — CFO Anthony Cutrone (Q&A) .
“We would expect [NIM] to remain in that realm… with some expansion coming when we start to see interest rates eventually fall.” — CFO Anthony Cutrone (Q&A) .

Q&A Highlights

Recreation loan sale and gains: Company sold ~$53M of recreation loans in April, booking ~$1.3M gain; expects more sales opportunistically to support origination engine .
Strategic partnership unit economics: ~20–50 bps fee plus ~5-day float; yields ~20% on float; durable volumes with additional partners targeted .
Credit/delinquency: Recreation delinquencies higher on older vintages; newer vintages improved after mid-2023 underwriting step-up; allowances raised accordingly .
Margins/competition: NIM “around eight-ish”; mindful of competition and pricing; margin expansion tied to eventual rate declines .
Capital/reserves: Bank capital bolstered by preferred; flexibility to manage growth; allowance driven by economic outlook and portfolio performance .

Estimates Context

EPS and revenue beats signal upside to models: Q2 2025 EPS $0.46 vs $0.315 consensus (+$0.145); revenue $86.7M vs $53.0M consensus (+63%); 2 estimates contributed to both EPS and revenue* [values retrieved from S&P Global]*.
Implications: Magnitude of beat, recurring equity gains, and scaling strategic partnership program suggest upward revisions to revenue/EPS. Watch for sustained NIM ~8%, deposit costs trajectory, and credit provisions’ run-rate to calibrate forward estimates .

Key Takeaways for Investors

Clear beat versus consensus in Q2 2025 with EPS $0.46 and revenue $86.7M, supported by net interest income strength and other income; likely positive estimate revisions* [values retrieved from S&P Global]*.
Strategic partnerships are scaling rapidly ($168.6M originations, $0.8M fees), diversifying income and providing low-duration balance sheet exposure .
Commercial equity gains remain a meaningful lever ($6.1M in Q2; $27.6M over eight quarters), though inherently timing-uncertain; model conservatively .
Credit stance is appropriately cautious: provisions at $21.6M, recreation delinquencies at 0.49%, allowances up; newer vintages performing better under tightened underwriting .
Margin outlook steady: NIM on gross loans ~8.09% and net loans 8.42%; margin expansion contingent on lower rates and deposit cost trends .
Capital deployment supports returns: $0.12 dividend declared for Q3 and opportunistic buybacks; NBV/share rose to $16.77 .
Trading lens: Near-term catalysts include recurring loan sales gains ($1.3M booked), continued strategic partnership growth, and potential additional commercial exits; monitor provisioning cadence and delinquency mix for risk sentiment .

Notes: Revenue herein reflects total interest income plus total other income reported. Values retrieved from S&P Global for consensus estimates.*

MEDALLION FINANCIAL CORP (MFIN)·Q2 2025 Earnings Summary