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 $4,835,000 or $0.27 per diluted common share in the 2011 third quarter, up $1,367,000 or 39% from $3,468,000 or $0.20 per diluted common share in the 2010 third quarter.
Medallion Bank, the Company’s unconsolidated wholly-owned portfolio company, had net income of $4,581,000 in the 2011 third quarter, compared to $3,212,000 in the 2010 third quarter, an increase of $1,369,000 or 43%, primarily reflecting improved net interest income and reduced loan losses compared to 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. For the quarter, the Bank’s cost of funds was 1.07%, compared to 1.68% a year ago, and new deposits are being placed at coupon rates as low as 0.15%.
Andrew Murstein, President of Medallion Financial stated, “We are extremely pleased with the quarter’s results, continuing a recent string of sequential and year over year profit growth. Profits are rising, and business remains strong in all of our lines of business. Additionally, our loan to value ratio on our entire medallion portfolio is under 50%.”
Medallion Financial’s net interest margin remained strong at 3.97% for the 2011 third quarter, compared to 4.77% in the 2010 quarter, reflecting portfolio repricing. On a combined basis with Medallion Bank, the net interest margin was 6.47%, compared to 6.55% 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 $1,376,000 or $0.08 per diluted common share in the 2011 quarter, down $992,000 from $2,368,000 or $0.13 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 included in net investment income after taxes, but whose results, which approximate our fair value adjustment on the Bank, are reflected in our net increase in net assets resulting from operations.