8-K: Medallion Financial Reports Strong Q3 2025 Results

Medallion Financial Corp. announced robust third-quarter 2025 financial results, driven by record net interest income and significant loan origination growth, despite a non-recurring charge.

Summary

• Net income attributable to stockholders for the third quarter of 2025 was $7.8 million, or $0.32 per share, which includes a non-recurring charge of $3.5 million related to the redemption of Medallion Bank's series F preferred stock.
• Excluding this non-recurring charge, net income for the third quarter was $11.3 million, a 31% increase compared to $8.6 million, or $0.37 per share, in the prior year quarter.
• Net interest income grew 6% to $55.7 million from $52.7 million in the prior year quarter.
• Net interest margin (NIM) on gross loans was 8.21%, up from 8.11% in the prior year quarter, and NIM on net loans was 8.56%, up from 8.42%.
• Loan originations grew to $427.4 million, compared to $275.6 million in the prior year quarter, including $208.4 million from strategic partnership loans.
• The loan portfolio as of September 30, 2025, was $2.559 billion, up 3% from $2.485 billion a year ago.
• Credit loss provision was $18.6 million, a decrease from $20.2 million in the prior year quarter.
• Net book value per share as of September 30, 2025, was $17.07, up 9% from $15.70 a year ago.
• A quarterly cash dividend of $0.12 per share was declared and paid, representing a 20% increase over the same quarter last year.
• Nine months earnings increased 20% year over year.
• Collected over $6 million from taxi medallion-related assets, resulting in net recoveries and gains of $3.4 million for the period, with total net taxi medallion-related assets declining 42% to $5.1 million.

Sentiment

Score: 8

Explanation: The company reported strong financial performance with record highs in key metrics, significant growth in loan originations, improved net interest margin, and increased book value per share. The impact of a non-recurring charge was clearly identified, and operational performance showed substantial year-over-year growth, indicating robust health and strategic success.

Positives

• Net income attributable to stockholders, excluding a non-recurring charge, increased 31% year-over-year to $11.3 million.
• Achieved record highs in net interest income ($55.7 million), loan volume ($427.4 million), and total assets ($2.900 billion).
• Net interest income grew 6% to $55.7 million from $52.7 million in the prior year quarter.
• Net interest margin improved on both gross loans (8.21% vs. 8.11%) and net loans (8.56% vs. 8.42%).
• Loan originations surged to $427.4 million, a significant increase from $275.6 million in the prior year quarter.
• Strategic partnership loan originations grew substantially to $208.4 million from $39.9 million a year ago, demonstrating platform appeal and growth potential.
• The overall loan portfolio grew 3% to $2.559 billion.
• Credit loss provision decreased to $18.6 million from $20.2 million in the prior year quarter.
• Net book value per share increased 9% to $17.07 from $15.70 a year ago.
• Quarterly dividend maintained at $0.12 per share, which is 20% higher than the same quarter last year.
• Nine months earnings increased 20% year-over-year.
• Successfully collected $6.1 million from taxi medallion-related assets, resulting in net recoveries and gains of $3.4 million.
• Recreation Lending segment saw originations increase to $141.7 million and interest income grow 4% to $53.6 million, with an average interest rate of 15.17%.
• Home Improvement Lending segment's interest income grew 8% to $20.5 million, with an average interest rate of 9.87%, and 90+ days past due loans decreased.
• Commercial Lending segment loans grew to $135.1 million with an average interest rate of 13.71%.
• Fees generated from strategic partnerships increased to $1.0 million from $0.4 million a year ago.

Negatives

• Reported net income attributable to stockholders was impacted by a non-recurring charge of $3.5 million related to the redemption of Medallion Bank's series F preferred stock.
• Cash and cash equivalents, including investment securities, decreased to $212.1 million at September 30, 2025, from $244.7 million at September 30, 2024.
• Home Improvement Lending originations decreased to $59.7 million during the quarter, compared to $96.5 million a year ago.
• Recreation loans 90 days or more past due increased to $8.9 million, or 0.57% of gross recreation loans, as of September 30, 2025, compared to $7.5 million, or 0.50%, a year ago.
• Allowance for credit loss for recreation loans held for investment increased to 5.10% at quarter-end, compared to 4.53% a year ago.

Risks

• Risks and uncertainties relating to business performance, cash flow, net interest income and expenses, other expenses, earnings, growth, and growth strategy.
• Statements about the effects of the current economy, including inflation or the risk of recession, are subject to the risk that actual impacts may differ materially.
• The effects of tariffs could impact financial performance.
• Actual results may differ significantly from forward-looking statements due to factors and future developments that are uncertain, unpredictable, and beyond Medallion's control.
• General risks discussed under the heading 'Risk Factors' in Medallion's 2024 Annual Report on Form 10-K.

Future Outlook

The company anticipates continued strong momentum in its strategic partnership loan program and intends to expand it further. Management is committed to strengthening its analytical and data-driven approach to lending, utilizing digital tools to enhance underwriting, origination, servicing, and portfolio management. These capabilities, combined with strong leadership and business line momentum, are expected to position Medallion for sustainable growth and continued strong returns for stockholders. The company also has expectations regarding its loan portfolio, including collections on taxi medallion loans, potential for future asset growth, and market share opportunities.

Management Comments

• Andrew Murstein, President and Chief Operating Officer, stated, "We are very pleased with our continued strong results. This quarter we reached record highs in net interest income, loan volume and total assets."
• Murstein highlighted, "We had a 31% increase in net income year-over-year when excluding the $3.5 million non-recurring charges related to the redemption of the Bank's series F preferred stock, and continued momentum across our core lending businesses."
• Murstein noted, "Our strategic partnership loan program continues to scale, with $208 million in originations this quarter, up significantly from $169 million in the prior quarter and $40 million a year ago, further demonstrating the appeal and growth potential of this platform."
• Murstein emphasized, "We continue to benefit from strong portfolio diversification, disciplined underwriting, consistently high credit performance, and stable, attractive yields generated by our lending platform."

Industry Context

Medallion Financial Corp.'s strong Q3 2025 results, particularly the significant growth in strategic partnership loan originations, indicate a successful adaptation to the evolving financial services landscape, leveraging fintech collaborations for expanded reach and diversified revenue streams. The improvement in net interest margin suggests effective asset-liability management in a dynamic interest rate environment. The continued reduction of legacy taxi medallion-related assets reflects a successful wind-down of a historically challenging segment, allowing the company to focus on higher-growth, diversified consumer and commercial lending. This performance positions Medallion favorably within the specialty finance sector, demonstrating resilience and strategic agility compared to traditional lenders.

Stakeholder Impact

• **Shareholders:** Positive impact due to increased net book value per share, a maintained quarterly dividend (20% higher than the prior year quarter), and an ongoing stock repurchase program, indicating strong returns and capital allocation.
• **Customers (Borrowers):** Continued high loan originations in recreation and home improvement, and through strategic partnerships, suggest ongoing access to financing options.
• **Employees:** No direct impact mentioned, but strong company performance generally supports employee stability and potential for growth.
• **Creditors:** Total liabilities decreased, and robust financial performance suggests improved creditworthiness and ability to meet obligations.

Next Steps

• Host a conference call on Thursday, October 30, 2025, at 9:00 a.m. Eastern time to discuss the third quarter financial results.
• Continue expanding the strategic partnership loan program.
• Strengthen analytical and data-driven approach to lending, supported by digital tools.
• Continue generating strong returns for stockholders.
• Pay the declared quarterly dividend of $0.12 per share on November 24, 2025, to stockholders of record on November 12, 2025.

Key Dates

Recommendation

Medallion Financial Corp. delivered exceptional Q3 2025 results, marked by record net interest income, loan volume, and total assets. Excluding a non-recurring charge, net income surged 31% year-over-year. The explosive growth in strategic partnership originations demonstrates successful diversification and a strong growth engine. The company's improving net interest margin, increasing book value per share, consistent dividend payments (up 20% year-over-year), and active stock repurchase program underscore robust capital management and commitment to shareholder returns. While recreation loan delinquencies saw a slight uptick, the overall credit loss provision decreased, and management is actively enhancing credit risk management. These factors collectively indicate strong operational health, strategic success, and significant future growth potential, making it a highly attractive investment.

Keywords

Specialty finance, Consumer loans, Commercial loans, Recreation lending, Home improvement lending, Strategic partnerships, Loan originations, Net interest income, Net interest margin, Book value, Dividends, Taxi medallions, Credit performance, Underwriting, Digital tools