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 $4,416,000 or $0.25 per diluted common share in the 2011 second quarter, up $1,381,000 or 45% from $3,035,000 or $0.17 per diluted common share in the 2010 second quarter.
Medallion Bank, the Company’s unconsolidated wholly-owned portfolio company, had net income of $4,132,000 for the 2011 second quarter, compared to $3,204,000 in the 2010 second quarter, an increase of $929,000 or 29%, primarily reflecting improved net interest income and reduced loan losses from the prior year. 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, which averaged 0.97% for the quarter, with new borrowing rates as low as 0.40%.
Andrew Murstein, President of Medallion Financial stated, “We are extremely pleased with the quarter’s results. This was the highest our EPS has been in three years. Profits are rising, and we continued to see strong loan demand in all of our lines of business. Additionally, we continue to experience zero losses on any taxi medallion loan we have originated in the history of the company, and our loan to value ratio on our entire medallion portfolio is under 50%.”
Medallion Financial’s net interest margin was 4.33% for the 2011 second quarter, compared to 4.81% in the 2010 second quarter. On a combined basis with Medallion Bank, the net interest margin was 6.40%, compared to 6.69% a year ago, reflecting the continued low cost of funds at the bank, and the Bank’s higher-yielding loan portfolio. Net investment income after income taxes was $1,479,000 or $0.08 per diluted common share in the 2011 quarter, down $1,461,000 from $2,940,000 or $0.17 per diluted common share in the 2010 quarter, primarily as a result of the Company referring additional loans for origination to Medallion Bank whose earnings are not consolidated in Net Investment Income, but whose results and fair value are shown through the Company’s Net Increase in Net Assets.