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Medallion Financial Corp. (Nasdaq: TAXI), a specialty finance company with a leading position servicing the taxicab industry and other niche markets, announced that earnings, or net increase in net assets resulting from operations was $4,667,000 or $0.27 per diluted common share in the 2010 fourth quarter, compared to a loss of $5,759,000 or $0.33 per share in the 2009 fourth quarter. The 2009 loss was primarily the result of establishing valuation allowances of $9,342,000 for the Company’s investments in special purpose acquisition corporations (SPAC), which ceased operations in early 2010. Excluding these reserves, earnings would have been $3,583,000 or $0.20 per diluted common share for the 2009 fourth quarter, and on that basis, the 2010 fourth quarter increased 30% over 2009.
Net investment income after taxes was $2,333,000 or $0.13 per diluted common share in the 2010 fourth quarter, compared to $2,154,000 or $0.12 per share for the 2009 quarter, reflecting lower noninterest and net interest income, offset by lower operating expenses, much of which related to 2009 SPAC-related adjustments.
For the 2010 full year, net investment income after taxes was $9,873,000 or $0.56 per diluted common share, compared to $8,180,000 or $0.46 per share for 2009. On a combined basis with Medallion Bank, the Company’s unconsolidated wholly-owned portfolio company, net investment income after taxes was $28,671,000, or $1.63 per share for 2010, compared to $24,726,000, or $1.40 per share for 2009. As the Company continues to use Medallion Bank as a primary funding source, it refers more loans to Medallion Bank for origination to take advantage of current short term borrowing rates as low as 0.45%.
Medallion Financial’s net interest margin was 4.81% for the year, up from 4.60% in 2009. However, on a combined basis with Medallion Bank, the net interest margin increased to 6.59% in 2010, up from 6.10% in 2009, reflecting the reduced cost of funds at the bank, and was the highest net interest margin in the history of the Company.