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MF

MEDALLION FINANCIAL CORP (MFIN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered record net interest income and strong NIM expansion, but GAAP EPS of $0.32 was slightly below S&P Global consensus $0.345; excluding a non-recurring $3.5M Series F preferred redemption, operating EPS would have been $0.46, implying a beat on a normalized basis . S&P Global consensus: EPS $0.345, revenue $53.8M; actual revenue $83.8M, a clear top-line beat* [*].
  • Net interest income grew 6% YoY to $55.7M; NIM on gross loans improved to 8.21% (net loans 8.56%); average deposit cost remained contained at 3.82% at quarter-end .
  • Strategic Partnerships scaled to a record $208.4M of originations (fees $1.0M; 5-day average hold), diversifying fee income; recreation/home improvement credit quality remained solid despite seasonal upticks in delinquencies .
  • Capital return supported by an unchanged $0.12 dividend for Q4 and $14.4M buyback authorization remaining; book value per share rose to $17.07 .
  • Management expects further NIM expansion with Fed cuts and sees accelerated loan growth with potential loan sales and new partner onboarding—near-term catalysts alongside leadership transition to Andrew Murstein as CEO effective Jan 31, 2026 .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest income reached a record $55.7M (+6% YoY); NIM on gross loans improved to 8.21% and on net loans to 8.56%, reflecting higher asset yields and stable funding costs .
    • Strategic Partnerships posted a record $208.4M of originations (fees $1.0M; 5-day average hold), up sharply YoY, demonstrating scalable, capital-light growth .
    • Taxi medallion runoff generated $6.1M cash collections and $3.4M net recoveries; book value per share increased to $17.07; management emphasized data-driven underwriting and platform analytics as competitive advantages (“record highs in net interest income, loan volume and total assets”) .

  • What Went Wrong

    • GAAP diluted EPS of $0.32 missed S&P consensus $0.345 owing to a $3.5M non-recurring redemption charge; operating EPS ex-charge was $0.46 but Street may not have fully normalized this [*].
    • Operating expenses rose to $20.7M (technology platform investments and talent), and recreation/home improvement allowances ticked up (Rec ACL 5.10%, HI ACL 2.55%) alongside seasonal delinquency increases .
    • Home improvement originations declined YoY to $59.7M; commercial equity gains were modest at $0.3M vs stronger prior periods, tempering non-interest income contribution this quarter .

Financial Results

P&L and Margins – Sequential Trend (USD)

MetricQ1 2025Q2 2025Q3 2025
Revenue (Total interest income + other income)$87.024M $86.651M $83.819M
Net Interest Income$51.412M $53.370M $55.686M
Provision for Credit Losses$22.014M $21.562M $18.556M
Total Other Income (net)$11.599M $9.209M $3.048M
Total Other Expenses$20.758M $21.545M $20.702M
Net Income Attributable to Stockholders$12.014M $11.069M $7.763M
Diluted EPS$0.50 $0.46 $0.32
NIM on Gross Loans7.94% 8.09% 8.21%
NIM on Net Loans8.25% 8.42% 8.56%

Q3 2025 vs Estimates (S&P Global)

MetricActualS&P Global ConsensusSurprise
Revenue$83.819M $53.755M*+$30.064M (Beat)*
Diluted EPS (GAAP)$0.32 $0.345*-$0.025 (Miss)*
Operating EPS ex non-recurring$0.46 (ex-$0.14 from $3.5M redemption) —Context: normalized beat vs $0.345*

Values marked with * retrieved from S&P Global.

Segment and Program Snapshot – Q3 2025

MetricRecreationHome ImprovementCommercialStrategic Partnerships
Originations$141.7M $59.7M $17.5M $208.4M
Portfolio Balance$1.603B (63% of total loans) $804.0M (31%) $135.1M Loans held $15.3M
Interest Income (Quarter)$53.6M $20.5M —Fees $1.0M; avg hold 5 days
Avg Rate (Portfolio)15.17% (15.15% ex-HFS) 9.87% 13.71% —
90+ DPD0.57% of gross 0.16% of gross ——
ACL5.10% 2.55% ——

KPIs and Credit Metrics

KPIQ2 2025Q3 2025
Total Loans & Loans HFS$2.485B $2.559B
Average Deposit Rate (end of period)—3.82%
Total Interest Yield (YoY change)—11.92% (+17 bps YoY)
Avg Yield on Total Loan Portfolio (YoY change)—12.39% (+27 bps YoY)
Consumer 90+ DPD (Amount / % of consumer loans)—$10.2M / 0.43%
Recreation Net Charge-offs (annualized)—3.36%
Home Improvement Net Charge-offs (annualized)—1.03%
Book Value per Share$16.77 $17.07
Dividend Declared$0.12 $0.12 (Q4 payout schedule)
Buyback Authorization Remaining$14.4M $14.4M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (trend)Near-termNot specifiedExpect further expansion with Fed cuts and higher asset yields; COF to decline over next couple of quarters Qualitative raise
Loan GrowthNext several quartersNot specifiedExpect acceleration; added experienced HI team; potential new partners (1–2) in next 1–2 quarters Positive
Recreation Loan SalesNext 1–2 quartersNot specifiedMay sell; decision depends on capital levels and economics Under evaluation
Non-controlling Preferred Dividend Run-rate (Bank)Ongoing~lower prior run-rate~$2.33M per quarter going forward at 9% (Series G) Higher run-rate
Dividend per ShareQ4 2025$0.12$0.12 declared; payable 11/24/25 (record 11/12/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
Strategic PartnershipsScaled rapidly: $136.2M (Q1) and $168.6M (Q2) originations; channel momentum Record $208.4M originations; $1.0M fees; avg 5-day hold; expect 1–2 new partners in next 1–2 quarters Accelerating
NIM / Funding CostsNIM stable to up: gross 7.94% (Q1) → 8.09% (Q2) Gross 8.21%, net 8.56%; deposit rate 3.82%; expect further expansion as COF declines post Fed cuts Improving
Credit & DelinquenciesDelinquencies improved Q1; provisions elevated Q1/Q2 Seasonal uptick but muted; Rec 90+ 0.57%, HI 90+ 0.16%; rec NCO 3.36%, HI 1.03% Stable to mixed (seasonal)
Home ImprovementQ1/Q2 originations down YoY but balances/interest income growing Originations $59.7M (down YoY); new HI team expected to “supercharge” growth Inflecting ahead
Commercial/Equity GainsStrong gains in prior quarters (e.g., $6.1M in Q2) Modest $0.3M this quarter; $15.8M YTD Volatile/episodic
Taxi Medallion RunoffContinued collections and gains; assets <0.5% of total $6.1M cash collections; $3.4M gains; assets $5.1M (<0.2%) De minimis/runoff
Leadership Transition—Andrew Murstein to become CEO 1/31/2026 Transition underway

Management Commentary

  • “We are very pleased with our continued strong results. This quarter we reached record highs in net interest income, loan volume and total assets.” — Andrew Murstein, President & COO .
  • “Net income was $7.8 million, $11.3 million when excluding a non-recurring $3.5 million charge related to the redemption of Series F preferred stock at Medallion Bank.” — Prepared remarks .
  • “Our net interest margin was 8.21%… total interest yield…11.92%… average interest rate on deposits was 3.82% at the end of September.” — CFO .
  • “Strategic partnership loan program… reached a record level of $208.4 million this quarter.” — Prepared remarks .
  • “The Board… appointed me… CEO starting January 31, 2026.” — Closing remarks .

Q&A Highlights

  • EPS normalization: “$0.32 and $0.14 on that $3.5 million charge… would get you to $0.46” operating EPS .
  • Loan sales: Recreation loans may be sold in the next couple of quarters, contingent on capital and returns; could also be retained given strong capital .
  • Non-controlling interest run-rate: Preferred dividends at the bank expected at ~$2.33M per quarter going forward at 9% coupon (Series G) .
  • Margins outlook: Expect further NIM expansion as COF declines post-Fed cuts; current production yields exceed WACC .
  • Growth: Expect accelerated loan growth; added experienced home improvement team; targeting 1–2 new strategic partners .

Estimates Context

  • Q3 revenue beat: $83.819M actual vs $53.755M S&P Global consensus; EPS slightly missed: $0.32 vs $0.345; on an operating basis ex the $0.14 non-recurring charge, EPS $0.46 implies a beat relative to consensus normalization practices [*].
  • Coverage remains thin (two estimates for EPS and revenue), increasing potential for future estimate volatility as the Strategic Partnerships program scales* [*].
  • Estimate revisions are likely to move higher on revenue/NIM strength and lower provisions; however, some may stay conservative on non-interest income trajectory (equity gains lumpy) and opex run-rate as platform investments continue .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue and NIM strength are the near-term drivers; management expects further margin expansion with lower COF and above-WACC originations—constructive for earning power .
  • The Strategic Partnerships channel is a scaling, capital-light growth vector (record originations, rising fees) that broadens revenue beyond spread income .
  • Normalized EPS ($0.46) vs GAAP ($0.32) highlights the impact of one-time bank preferred redemption; focus on core earnings trajectory rather than GAAP noise .
  • Credit remains manageable with seasonal dynamics; watch recreation NCOs and allowance levels as leading indicators into 2026 .
  • Home improvement growth could reaccelerate with the new team; partner additions present upside to originations and fee income in 1–2 quarters .
  • Capital return remains supportive (unchanged $0.12 dividend, $14.4M buyback capacity); rising BVPS to $17.07 underpins valuation .
  • Potential catalysts: loan sale execution, new partner signings, continued NIM expansion, and leadership transition clarity (effective 1/31/2026) .