8-K: Medallion Bank Prices $75 Million Series G Preferred Stock Offering

Medallion Bank, a subsidiary of Medallion Financial Corp., has announced the pricing of a $75 million public offering of its Series G Preferred Stock.

Summary

• Medallion Bank has priced a public offering of 3,000,000 shares of its Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series G, with a liquidation amount of $25 per share, totaling $75 million.
• The Series G Preferred Stock will have a fixed dividend rate of 9.00% per annum until July 1, 2030.
• After July 1, 2030, the dividend rate will reset to the five-year U.S. Treasury rate plus 4.94% per annum.
• Dividends will be payable quarterly on January 1, April 1, July 1, and October 1, starting October 1, 2025, subject to board approval and available funds.
• The Series G Preferred Stock is expected to trade on the Nasdaq Capital Market under the ticker symbol MBNKO.
• Underwriters have a 30-day option to purchase up to an additional 450,000 shares to cover over-allotments.
• Medallion Bank intends to use the net proceeds for general corporate purposes, including increasing capital levels, growing its consumer loan portfolios, or potentially redeeming its Series F Preferred Stock, subject to FDIC approval.
• The offering is expected to close on May 22, 2025, pending customary closing conditions.

Sentiment

Score: 7

Explanation: The announcement is generally positive as it provides Medallion Bank with additional capital. The terms of the offering appear reasonable, and the intended use of proceeds is consistent with standard banking practices.

Positives

• The offering provides Medallion Bank with additional capital for general corporate purposes.
• The fixed dividend rate of 9.00% until July 1, 2030, may be attractive to investors.
• The potential redemption of Series F Preferred Stock could simplify the bank's capital structure.
• The offering is exempt from registration requirements under the Securities Act of 1933.

Negatives

• Dividends are not guaranteed and are subject to board approval and the availability of funds.
• The dividend rate after July 1, 2030, is variable and dependent on the five-year U.S. Treasury rate.
• The use of proceeds is subject to the discretion of Medallion Bank and FDIC approval.

Risks

• The completion of the offering is subject to customary closing conditions.
• The use of proceeds is subject to change based on Medallion Bank's needs and regulatory approval.
• Forward-looking statements are subject to risks and uncertainties, as detailed in Medallion Bank's SEC filings.
• There is no guarantee that Medallion Bank will redeem its Series F Preferred Stock.

Future Outlook

Medallion Bank intends to use the net proceeds from this offering for general corporate purposes, which may include increasing capital levels, growing its consumer loan portfolios, or redeeming some or all of its outstanding Series F Non-Cumulative Perpetual Preferred Stock, subject to the prior approval of the Federal Deposit Insurance Corporation.

Industry Context

This offering is in line with other banks raising capital to support growth and meet regulatory requirements. Preferred stock offerings are a common method for banks to raise Tier 1 capital.

Comparison to Industry Standards

• Other banks, such as Citigroup and Bank of America, have issued preferred stock with similar terms to manage their capital structure.
• The dividend rate of 9.00% is competitive with other preferred stock offerings in the current market environment.
• The use of proceeds for general corporate purposes is a standard practice in the banking industry.

Stakeholder Impact

• Shareholders may benefit from the increased capital base of Medallion Bank.
• Employees may benefit from the potential growth of the bank's loan portfolios.
• Customers may benefit from the bank's ability to provide more loans.
• Creditors may benefit from the increased financial stability of the bank.

Next Steps

• The offering is expected to close on May 22, 2025, subject to customary closing conditions.
• The Series G Preferred Stock is expected to begin trading on the Nasdaq Capital Market under the ticker symbol MBNKO.
• Medallion Bank will decide how to allocate the net proceeds from the offering.

Key Dates

Keywords

Medallion Bank, Preferred Stock, Series G, Public Offering, Dividends, Capital, MBNKO, Finance