MEDALLION FINANCIAL CORP, 10-Q filed on 08 Aug 22
 | XBRL Documents
v3.22.2
Document and Entity Information - shares
 6 Months Ended
Jun. 30, 2022
Aug. 05, 2022
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Jun. 30, 2022  
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q2  
Entity Registrant Name MEDALLION FINANCIAL CORP  
Entity Central Index Key 0001000209  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   24,238,939
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Shell Company false  
Entity Incorporation, State or Country Code DE  
Entity File Number 001-37747  
Entity Tax Identification Number 04-3291176  
Entity Address, Address Line One 437 MADISON AVENUE, 38th Floor  
Entity Address, City or Town NEW YORK  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10022  
City Area Code 212  
Local Phone Number 328-2100  
Title of 12(b) Security Common Stock, par value $0.01 per share  
Trading Symbol MFIN  
Security Exchange Name NASDAQ  
v3.22.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Assets    
Cash and cash equivalents [1] $ 33,796 $ 64,482
Federal funds sold 92,534 60,002
Investment securities 50,358 44,772
Equity investments 10,942 9,726
Loans 1,734,621 1,488,924
Allowance for loan losses (59,152) [2],[3] (50,166)
Net loans receivable 1,675,469 1,438,758
Goodwill 150,803 150,803
Loan collateral in process of foreclosure [4] 26,974 37,430
Intangible assets, net 22,759 23,480
Property, equipment, and right-of-use lease asset, net 12,565 11,762
Accrued interest receivable 11,534 10,621
Income tax receivable 1,362 833
Other assets 23,035 20,388
Total assets 2,112,131 1,873,057
Liabilities    
Deposits [5] 1,469,241 1,250,880
Long-term debt [6] 219,377 219,973
Deferred tax liabilities, net 24,048 18,210
Operating lease liabilities 9,078 9,053
Accrued interest payable 3,548 3,395
Accounts payable and accrued expenses [7] 23,998 15,718
Total liabilities 1,749,290 1,517,229
Commitments and contingencies
Stockholders’ equity    
Preferred stock (1,000,000 shares of $0.01 par value stock authorized-none outstanding) 0 0
Common stock (50,000,000 shares of $0.01 par value stock authorized - 28,530,373 shares at June 30, 2022 and 28,124,629 shares at December 31, 2021 issued) 285 281
Additional paid in capital 281,647 280,038
Treasury stock (4,291,053 shares at June 30, 2022 and 2,951,243 shares at December 31, 2021) (35,510) (24,919)
Accumulated other comprehensive income (loss) (2,101) 1,034
Retained earnings 49,732 30,606
Total stockholders’ equity 294,053 287,040
Non-controlling interest in consolidated subsidiaries 68,788 68,788
Total equity 362,841 355,828
Total liabilities and equity $ 2,112,131 $ 1,873,057
Number of shares outstanding 24,239,320 25,173,386
Book value per share $ 12.13 $ 11.40
[1] Includes no restricted cash requirement as of June 30, 2022 and $3.0 million as of December 31, 2021.
[2] As of June 30, 2022 and June 30, 2021, there were no allowance for loan losses and net charge-offs related to the strategic partnership loans.
[3] As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
[4] Includes financed sales of this collateral to third parties that are reported separately from the loan portfolio, of $7.7 million as of June 30, 2022 and $7.4 million as of December 31, 2021
[5] Includes $3.8 million and $3.2 million of deferred financing costs as of June 30, 2022 and December 31, 2021. Refer to Note 5 for more details.
[6] Includes $3.6 million and $4.0 million of deferred financing costs as of June 30, 2022 and December 31, 2021. Refer to Note 5 for more details.
[7] Includes the short-term portion of lease liabilities of $2.1 million and $2.2 million as of June 30, 2022 and December 31, 2021. Refer to Note 6 for more details.
v3.22.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2022
Dec. 31, 2021
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares outstanding 0 0
Common stock, shares authorized 50,000,000 50,000,000
Common stock, par value $ 0.01 $ 0.01
Common stock, shares issued 28,530,373 28,124,629
Treasury stock,shares 4,291,053 2,951,243
Restricted cash $ 0.0 $ 3.0
Loan collateral in process of foreclosure, financed sales collateral to third parties 7.7 7.4
Short term lease liabilities 2.1 2.2
Deposits [Member]    
Deferred financing costs 3.8 3.2
Long-Term Debt [Member]    
Deferred financing costs $ 3.6 $ 4.0
v3.22.2
Consolidated Statements of Operations - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Income Statement [Abstract]        
Interest and fees on loans $ 46,740 $ 37,132 $ 89,804 $ 73,987
Interest and dividends on investment securities 371 243 610 468
Total interest income [1] 47,111 37,375 90,414 74,455
Interest on deposits 4,912 4,465 9,066 9,176
Interest on long-term debt 3,318 3,173 6,539 6,467
Interest on short-term borrowings 0 246 0 649
Total interest expense 8,230 7,884 15,605 16,292
Net interest income (loss) 38,881 29,491 74,809 58,163
Provision (benefit) for loan losses 7,759 (682) 10,999 2,336
Net interest income (loss) after loss provision 31,122 30,173 63,810 55,827
Other income (loss)        
Gain on equity investments 4,241 3,205 4,108 3,205
Write-down of loan collateral in process of foreclosure (128) (2,162) (514) (4,947)
Gain on extinguishment of debt 0 2,859 0 4,626
Sponsorship and race winnings, net 0 4,345 0 6,818
Other income (loss) 3,245 (480) 5,293 1
Total other income net 7,358 7,767 8,887 9,703
Other expenses        
Salaries and employee benefits 7,730 7,901 15,298 13,586
Professional fees 4,392 2,224 8,384 2,730
Loan servicing fees 2,119 1,731 4,072 3,378
Collection costs 999 1,641 2,342 2,874
Rent expense 490 624 1,135 1,299
Regulatory fees 560 456 1,011 895
Amortization of intangible assets 363 361 721 722
Race team related expenses 0 2,674 0 4,796
Other expenses 2,160 2,208 3,882 4,182
Total other expenses 18,813 19,820 36,845 34,462
Income before income taxes 19,667 18,120 35,852 31,068
Income tax provision 4,856 6,528 9,687 10,406
Net income after taxes 14,811 11,592 26,165 20,662
Less: income attributable to the non-controlling interest 1,511 1,325 3,024 1,964
Total net income attributable to Medallion Financial Corp. $ 13,300 $ 10,267 $ 23,141 $ 18,698
Basic net income per share $ 0.55 $ 0.42 $ 0.95 $ 0.76
Diluted net income per share $ 0.54 $ 0.41 $ 0.93 $ 0.75
Weighted average common shares outstanding        
Basic 24,153,015 24,595,822 24,459,870 24,557,511
Diluted 24,421,867 24,950,512 24,751,012 24,923,023
[1] Included in interest income is $0.2 million and $0.3 million of paid-in-kind interest for the three and six months ended June 30, 2022 and $0.2 million and $0.5 million for the three and six months ended June 30, 2021.
v3.22.2
Consolidated Statements of Operations (Parenthetical) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Income Statement [Abstract]        
Interest paid-in-kind $ 0.2 $ 0.2 $ 0.3 $ 0.5
v3.22.2
Consolidated Statements of Other Comprehensive Income - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Statement of Comprehensive Income [Abstract]        
Net income after taxes $ 14,811 $ 11,592 $ 26,165 $ 20,662
Other comprehensive (loss) income, net of tax (1,418) 27 (3,135) (578)
Total comprehensive income 13,393 11,619 23,030 20,084
Less comprehensive income attributable to the non-controlling interest 1,511 1,325 3,024 1,964
Total comprehensive income attributable to Medallion Financial Corp. $ 11,882 $ 10,294 $ 20,006 $ 18,120
v3.22.2
Consolidated Statement of Changes in Stockholders' Equity - USD ($)
$ in Thousands
Total
Common Stock [Member]
Capital in Excess of Par [Member]
Treasury Stock [Member]
Retained Earnings (Accumulated Deficit) [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Parent [Member]
Noncontrolling Interest [Member]
Balance at Dec. 31, 2020 $ 304,561 $ 278 $ 277,539 $ (24,919) $ (23,502) $ 2,012 $ 231,408 $ 73,153
Balance, shares at Dec. 31, 2020   27,828,871   (2,951,243)        
Net income 9,071       8,431   8,431 640
Distributions to non-controlling interest (1,511)             (1,511)
Stock-based compensation expense 498 $ 2 496       498  
Issuance of restricted stock, net, shares   163,561            
Forfeiture of restricted stock, net, shares   (7,602)            
Exercise of stock options, shares   768            
Other comprehensive (loss) income, net of tax (605)         (605) (605)  
Ending balance at Mar. 31, 2021 312,014 $ 280 278,035 $ (24,919) (15,071) 1,407 239,732 72,282
Ending balance, shares at Mar. 31, 2021   27,985,598   (2,951,243)        
Balance at Dec. 31, 2020 304,561 $ 278 277,539 $ (24,919) (23,502) 2,012 231,408 73,153
Balance, shares at Dec. 31, 2020   27,828,871   (2,951,243)        
Net income 20,662              
Other comprehensive (loss) income, net of tax (578)              
Ending balance at Jun. 30, 2021 322,814 $ 280 278,727 $ (24,919) (4,804) 1,434 250,718 72,096
Ending balance, shares at Jun. 30, 2021   28,013,007   (2,951,243)        
Balance at Dec. 31, 2020 $ 304,561 $ 278 277,539 $ (24,919) (23,502) 2,012 231,408 73,153
Balance, shares at Dec. 31, 2020   27,828,871   (2,951,243)        
Exercise of stock options, shares [1] 44,070              
Net change in unrealized gains (losses) on investments, net of tax $ (1,000)              
Ending balance at Dec. 31, 2021 $ 355,828 $ 281 280,038 $ (24,919) 30,606 1,034 287,040 68,788
Ending balance, shares at Dec. 31, 2021 25,173,386 28,124,629   (2,951,243)        
Balance at Mar. 31, 2021 $ 312,014 $ 280 278,035 $ (24,919) (15,071) 1,407 239,732 72,282
Balance, shares at Mar. 31, 2021   27,985,598   (2,951,243)        
Net income 11,592       10,267   10,267 1,325
Distributions to non-controlling interest (1,511)             (1,511)
Stock-based compensation expense 576   576       576  
Issuance of restricted stock, net, shares   15,514            
Forfeiture of restricted stock, net, shares   (10,332)            
Exercise of stock options 116   116       116  
Exercise of stock options, shares   22,227            
Other comprehensive (loss) income, net of tax 27              
Net change in unrealized gains (losses) on investments, net of tax 27         27 27  
Ending balance at Jun. 30, 2021 322,814 $ 280 278,727 $ (24,919) (4,804) 1,434 250,718 72,096
Ending balance, shares at Jun. 30, 2021   28,013,007   (2,951,243)        
Balance at Dec. 31, 2021 $ 355,828 $ 281 280,038 $ (24,919) 30,606 1,034 287,040 68,788
Balance, shares at Dec. 31, 2021 25,173,386 28,124,629   (2,951,243)        
Net income $ 11,353       9,841   9,841 1,512
Distributions to non-controlling interest (1,512)             (1,512)
Stock-based compensation expense 598 $ 4 594       598  
Issuance of restricted stock, net, shares   383,925            
Forfeiture of restricted stock, net, shares   (5,730)            
Exercise of stock options $ 152   152       152  
Exercise of stock options, shares 23,192 [1] 23,192            
Purchase of common stock (in Shares)       (67,660)        
Purchase of common stock $ (617)     $ (617)     (617)  
Dividend paid on common stock (2,044)       (2,044)   (2,044)  
Other comprehensive (loss) income, net of tax (1,717)         (1,717) (1,717)  
Ending balance at Mar. 31, 2022 362,041 $ 285 280,784 $ (25,536) 38,403 (683) 293,253 68,788
Ending balance, shares at Mar. 31, 2022   28,526,016   (3,018,903)        
Balance at Dec. 31, 2021 $ 355,828 $ 281 280,038 $ (24,919) 30,606 1,034 287,040 68,788
Balance, shares at Dec. 31, 2021 25,173,386 28,124,629   (2,951,243)        
Net income $ 26,165              
Other comprehensive (loss) income, net of tax (3,135)              
Net change in unrealized gains (losses) on investments, net of tax (3,100)              
Ending balance at Jun. 30, 2022 $ 362,841 $ 285 281,647 $ (35,510) 49,732 (2,101) 294,053 68,788
Ending balance, shares at Jun. 30, 2022 24,239,320 28,530,373   (4,291,053)        
Balance at Mar. 31, 2022 $ 362,041 $ 285 280,784 $ (25,536) 38,403 (683) 293,253 68,788
Balance, shares at Mar. 31, 2022   28,526,016   (3,018,903)        
Net income 14,811       13,300   13,300 1,511
Distributions to non-controlling interest (1,511)             (1,511)
Stock-based compensation expense $ 863   863       863  
Issuance of restricted stock, net, shares   4,944            
Forfeiture of restricted stock, net, shares (587)              
Exercise of stock options, shares 0              
Purchase of common stock (in Shares)       (1,272,150)        
Purchase of common stock $ (9,974)     $ (9,974)     (9,974)  
Dividend paid on common stock (1,971)       (1,971)   (1,971)  
Other comprehensive (loss) income, net of tax (1,418)         (1,418) (1,418)  
Net change in unrealized gains (losses) on investments, net of tax (1,400)              
Ending balance at Jun. 30, 2022 $ 362,841 $ 285 $ 281,647 $ (35,510) $ 49,732 $ (2,101) $ 294,053 $ 68,788
Ending balance, shares at Jun. 30, 2022 24,239,320 28,530,373   (4,291,053)        
[1] The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was $0 and less than $0.1 million for the three and six months ended June 30, 2022 and was $0.2 million for the year ended December 31, 2021.
v3.22.2
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) - $ / shares
Jun. 30, 2022
Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]    
Dividends payable, amount per share $ 0.08 $ 0.08
v3.22.2
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income $ 26,165 $ 20,662
Adjustments to reconcile net income resulting from operations to net cash provided by operating activities:    
Provision for loan losses 10,999 2,336
Paid-in-kind interest income (347) (495)
Depreciation and amortization 2,844 4,082
Amortization of origination fees, net 4,670 3,723
Increase in deferred and other tax liabilities, net 5,309 8,469
Net change in value of loan collateral in process of foreclosure 2,487 7,243
Net realized gains on sale of investments (4,108) (3,205)
Stock-based compensation expense 1,461 1,072
Gain on extinguishment of debt 0 (4,626)
(Increase) decrease in accrued interest receivable (913) 813
Increase in other assets (5,470) (574)
Increase in accounts payable and accrued expenses 8,186 1,109
(Decrease) increase in accrued interest payable 153 (790)
Net cash provided by operating activities 51,436 39,819
CASH FLOWS FROM INVESTING ACTIVITIES    
Loans originated (528,139) (365,416)
Proceeds from principal receipts, sales, and maturities of loans 270,009 225,976
Purchases of investments (15,809) (15,318)
Proceeds from principal receipts, sales, and maturities of investments 9,937 14,006
Proceeds from the sale and principal payments on loan collateral in process of foreclosure 13,766 8,942
Net cash used for investing activities (250,236) (131,810)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from time deposits and funds borrowed 506,158 409,810
Repayments of time deposits and funds borrowed (288,154) (335,403)
Cash dividend paid on common stock (3,896) 0
Distributions to non-controlling interests (3,023) (3,019)
Treasury stock repurchased (10,591) 0
Proceeds from the exercise of stock options 152 116
Net cash provided by financing activities 200,646 71,504
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,846 (20,487)
Cash, and cash equivalents beginning of period [1] 124,484 112,040
Cash and cash equivalents, end of period (1) [1] 126,330 91,553
SUPPLEMENTAL INFORMATION    
Cash paid during the period for interest 14,123 15,769
Cash paid during the period for income taxes 3,175 1,688
NON-CASH INVESTING    
Loans transferred to loan collateral in process of foreclosure, net $ 5,797 $ 10,663
[1] Includes Federal Funds Sold.
v3.22.2
Organization of Medallion Financial Corp. and its Subsidiaries
 6 Months Ended
Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization of Medallion Financial Corp. and its Subsidiaries

(1) ORGANIZATION OF MEDALLION FINANCIAL CORP. AND ITS SUBSIDIARIES

Medallion Financial Corp., or the Company, is a specialty finance company organized as a Delaware corporation that reports as a bank holding company, but is not a bank holding company for regulatory purposes. The Company conducts its business through various wholly-owned subsidiaries including its primary operating company, Medallion Bank, or the Bank, a Federal Deposit Insurance Corporation, or FDIC, insured industrial bank that originates consumer loans, raises deposits, and conducts other banking activities. The Bank is subject to competition from other financial institutions and to the regulations of certain federal and state agencies, and undergoes examinations by those agencies. The Bank was formed in May 2002 for the purpose of obtaining an industrial bank charter pursuant to the laws of the State of Utah. The Bank originates consumer loans on a national basis for the purchase of recreational vehicles (“RVs”), boats and other consumer recreational equipment and to finance home improvements such as replacement windows and roofs. Prior to 2014, the Bank originated commercial loans to finance the purchase of taxi medallions, all of which are serviced by the Company. The loans are financed primarily with time certificates of deposits which are originated nationally through a variety of brokered deposit relationships. In 2019, the Bank began building a strategic partnership program that targets relationships with financial technology, or fintech, companies to offer loans and other financial services to customers. The Bank entered into an initial partnership in 2020, a second partnership in 2021, and a third partnership in 2022. The Bank continues to explore opportunities with additional fintech companies.

The Company also conducts business through its subsidiaries Medallion Capital, Inc., or MCI, a Small Business Investment Company, or SBIC, which conducts a mezzanine financing business; Medallion Funding LLC, or MFC, an SBIC, which originates and services medallion and commercial loans; and Freshstart Venture Capital Corp., or FSVC, an SBIC that originated and services medallion and commercial loans. MCI, MFC, and FSVC, as SBICs, are regulated by the Small Business Administration, or SBA. MCI and FSVC are financed in part by the SBA.

The Company established a wholly-owned subsidiary, Medallion Financing Trust I, or Fin Trust, for the purpose of issuing unsecured preferred securities to investors. Fin Trust is a separate legal and corporate entity with its own creditors who, in any liquidation of Fin Trust, will be entitled to be satisfied out of Fin Trust’s assets prior to any value in Fin Trust becoming available to Fin Trust’s equity holders. The assets of Fin Trust, aggregating $34.0 million at June 30, 2022, are not available to pay obligations of its affiliates or any other party, and the assets of affiliates or any other party are not available to pay obligations of Fin Trust.

MFC, through several wholly-owned subsidiaries, together, Medallion Chicago, purchased $8.7 million of City of Chicago taxi medallions out of foreclosure. These 159 taxi medallions are carried at a net realizable value of $1.0 million in other assets on the Company’s consolidated balance sheet at June 30, 2022 and December 31, 2021.
v3.22.2
Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S., or GAAP, requires management to make estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes. Accounting estimates and assumptions are those that management considers to be the most critical to an understanding of the consolidated financial statements because they inherently involve significant judgments and uncertainties. All of these estimates reflect management’s best judgment about current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements. If such conditions change, it is reasonably possible that the judgments and estimates could change, which may result in future impairments of loans and loan collateral in process of foreclosure, goodwill and intangible assets, and investments, among other effects.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its wholly-owned and controlled subsidiaries. All significant intercompany transactions, balances, and profits (losses) have been eliminated in consolidation.

The consolidated financial statements have been prepared in accordance with GAAP. The Company consolidates all entities it controls through a majority voting interest, a controlling interest through other contractual rights, or as being identified as the primary beneficiary of VIEs. The primary beneficiary is the party who has both (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (2) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third-party’s holding is recorded as non-controlling interest.

 

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original purchased maturity of three months or less to be cash equivalents. Cash balances are generally held in accounts at large national or regional banking organizations in amounts that exceed the federally insured limits. As of June 30, 2022, cash includes $1.3 million of interest-bearing funds deposited in other banks, that are mainly callable, with original terms of 4 to 7 years.

Fair Value of Assets and Liabilities

The Company follows the Financial Accounting Standards Board, or FASB, FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, or FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB ASC 820 defines fair value as an exit price (i.e. a price that would be received to sell, as opposed to acquire, an asset or transfer a liability), and emphasizes that fair value is a market-based measurement. It establishes a fair value hierarchy that distinguishes between assumptions developed based on market data obtained from independent external sources and the reporting entity’s own assumptions. Further, it specifies that fair value measurement should consider adjustment for risk, such as the risk inherent in the valuation technique or its inputs. See also Notes 12 and 13 to the consolidated financial statements.

Equity Investments

The Company follows FASB ASC Topic 321, Investments – Equity Securities, or ASC 321, which requires all applicable investments in equity securities with a readily determinable fair value to be valued as such, and those without a readily determinable fair value, are measured at cost, less any impairment plus or minus any observable price changes. Equity investments of $10.9 million and $9.7 million at June 30, 2022 and December 31, 2021, comprised mainly of nonmarketable stock and stock warrants, are recorded at cost less any impairment plus or minus observable price changes. As of June 30, 2022, the Company determined that there was no impairment or observable price change.

During 2021, the Company purchased $2.0 million of equity securities with a readily determinable fair value. As a result, all unrealized gains and losses are included in gain (loss) on equity investments. As of June 30, 2022 and December 31, 2021, the fair value of these securities were $1.8 million and $2.0 million and are included in other assets on the consolidated balance sheet.

The table below presents the unrealized portion related to the equity securities held.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net losses recognized during the period on equity securities

 

$

(63

)

 

$

(3

)

 

$

(154

)

 

$

(31

)

Less: Net gains (losses) recognized during the period on equity
   securities sold during the period

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Unrealized losses recognized during the reporting period on
   equity securities still held at the reporting date

 

$

(63

)

 

$

(3

)

 

$

(154

)

 

$

(31

)

Investment Securities

The Company follows FASB ASC Topic 320, Investments – Debt Securities, or ASC 320, which requires that all applicable investments in debt securities be classified as trading securities, available-for-sale securities, or held-to-maturity securities. Investment securities are purchased from time-to-time in the open market at prices that are greater or lesser than the par value of the investment. The resulting premium or discount is deferred and recognized on a level yield basis as an adjustment to the yield of the related investment. The net premium on investment securities totaled $0.1 million at June 30, 2022 and $0.3 million at December 31, 2021, and less than $0.1 million was amortized to interest income for the three and six months ended June 30, 2022 and less than $0.1 million for the three and six months ended June 30, 2021. ASC 320 further requires that held-to-maturity securities be reported at amortized cost and available-for-sale securities be reported at fair value, with unrealized gains and losses excluded from earnings at the date of the consolidated financial statements, and reported in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity, net of the effect of income taxes, until they are sold. At the time of sale, any gains or losses, calculated by the specific identification method, will be recognized as a component of operating results and any amounts previously included in stockholders’ equity, which were recorded net of the income tax effect, will be reversed.

 

Loans

The Company’s loans are currently reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, and which is amortized to interest income over the life of the loan.

Loan origination fees and certain direct origination costs are deferred and recognized as an adjustment to the yield of the related loans. At June 30, 2022 and December 31, 2021, net loan origination costs were $31.6 million and $26.1 million. Net amortization to income for the three and six months ended June 30, 2022 was $2.4 million and $4.5 million and was $2.1 million and $3.7 million for the three and six months ended June 30, 2021.

Interest income is recorded on the accrual basis. Medallion and commercial loans are placed on nonaccrual status, and all uncollected accrued interest is reversed, when there is doubt as to the collectability of interest or principal, or if loans are 90 days or more past due, unless management has determined that they are both well-secured and in the process of collection. Interest income on nonaccrual loans is generally recognized when cash is received, unless a determination has been made to apply all cash receipts to principal. The consumer loan portfolio has different characteristics, typified by a larger number of smaller dollar loans that have similar characteristics. A loan is considered to be impaired, or nonperforming, when based on current information and events, it is unlikely the Company will be able to collect all amounts due according to the contractual terms of the original loan agreement. Management considers loans that are in bankruptcy status, but have not been charged-off, to be impaired. Consumer loans are placed on nonaccrual when they become 90 days past due, or earlier if they enter bankruptcy, and are charged-off in their entirety when deemed uncollectible, or when they become 120 days past due, whichever occurs first, at which time appropriate recovery efforts against both the borrower and the underlying collateral are initiated. For the recreation loan portfolio, the process to repossess the collateral is typically started at 60 days past due. If the collateral is not located and the account reaches 120 days delinquent, the account is charged-off. If the collateral is repossessed, a loss is recorded by writing the collateral down to its fair value less selling costs, and the collateral is sent to auction. When the collateral is sold, the net auction proceeds are applied to the account, and any remaining balance is written off. Proceeds collected on charged-off accounts are recorded as recoveries. Total loans 90 days or more past due were $4.3 million at June 30, 2022, or 0.25% of the total loan portfolio, compared to $4.0 million, or 0.28%, at December 31, 2021.

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants concessions to the borrower for other than an insignificant period of time that the Company would not otherwise consider, the related loan is classified as a troubled debt restructuring, or TDR. The Company strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before they reach nonaccrual status. These modified terms may include rate reductions, principal forgiveness, term extensions, payment forbearance and other actions intended to minimize the economic loss to the Company and to avoid foreclosure or repossession of the collateral. For modifications where the Company forgives principal, the entire amount of such principal forgiveness is immediately charged off. Loans classified as TDRs are considered impaired loans. All consumer loans which are party to a Chapter 13 bankruptcy are immediately classified as TDRs. The Company’s policy with regard to bankrupt recreation loans is to take an immediate 40% write down of the loan balance.

Loan collateral in process of foreclosure primarily includes medallion loans that have reached 120 days past due and have been charged-down to their net realizable value, in addition to consumer repossessed collateral in the process of being sold. For New York City medallion loans in the process of foreclosure, although market prices fluctuate and may exceed the internally determined value, the Company continued to utilize a net value of $79,500 when assessing net realizable value for the medallion loans, despite fluctuating current transfer prices which may exceed that level from time to time. The "loan collateral in the process of foreclosure" designation reflects that the collection activities on these loans have transitioned from working with the borrower, to the liquidation of the collateral securing the loans. The Company accounts for its sales of loans in accordance with FASB Accounting Standards Codification Topic 860, Transfers and Servicing, or FASB ASC 860, which provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. In accordance with FASB ASC 860, the Company had elected the fair value measurement method for its servicing assets and liabilities. The principal portion of loans serviced for others by the Company and its affiliates was $19.7 million and $20.5 million at June 30, 2022 and December 31, 2021. The Company has evaluated the servicing aspect of its business in accordance with FASB ASC 860 and determined that no material servicing asset or liability existed as of June 30, 2022 and December 31, 2021.

Allowance for Loan Losses

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions, and excess concentration risks. In analyzing the adequacy of the allowance for loan losses, the Company uses historical delinquency and actual loss rates with a one-year lookback period for consumer loans. For commercial loans deemed nonperforming, the historical loss experience and other projections are looked at. For medallion loans, delinquent nonperforming loans are valued at collateral value for the most recent quarter. Collateral value for the medallion loans is generally determined utilizing factors deemed relevant under the circumstances of the market including but not limited to: actual transfers, pending transfers, median and average sales prices, discounted cash flows, market direction and sentiment, and general economic trends for the industry and economy. This evaluation is inherently subjective, as

it requires estimates that are susceptible to significant revision as more information becomes available. As a result of COVID-19, the Company determined that anticipated payment activity on the medallion portfolio was impossible to quantify upon exit of the six-month deferral period with borrowers, and therefore deemed all such loans as impaired in the third quarter of 2020. As a result, all medallion loans were placed on nonaccrual and reserved down to collateral value, net of liquidation costs, which was $79,500 for New York City medallions. The Company continued to use $79,500 as its internally determined value for assessing net realizable value for these medallion loans, despite fluctuating current transfer prices which may exceed that level from time to time. The Company continues to monitor the impact of COVID-19 on the consumer, commercial, and medallion loans. Credit losses are deducted from the allowance and subsequent recoveries are added back to the allowance.

Goodwill and Intangible Assets

The Company’s goodwill and intangible assets arose as a result of the excess of fair value over book value for several of the Company’s previously unconsolidated portfolio investment companies as of April 2, 2018. This fair value was brought forward under the Company’s new reporting, and was subject to a purchase price accounting allocation process conducted by an independent third-party expert to arrive at the current categories and amounts. Goodwill is not amortized, but is subject to quarterly review by management to determine whether additional impairment testing is needed, and such testing is performed at least on an annual basis. Intangible assets are amortized over their useful life of approximately 20 years. As of June 30, 2022 and December 31, 2021, the Company had goodwill of $150.8 million, all of which related to the Bank. As of June 30, 2022 and December 31, 2021, the Company had intangible assets of $22.8 million and $23.5 million. Amortization expense on the intangible assets for the three and six months ended June 30, 2022 and 2021 was $0.4 million and $0.7 million. Additionally, loan portfolio premiums of $12.4 million were determined as of April 2, 2018, of which $0.2 million and $0.5 million were outstanding as of June 30, 2022 and December 31, 2021, and of which $0.2 million and $0.3 million was amortized to interest income for the three and six months ended June 30, 2022 and $1.7 million and $1.9 million was amortized to interest income for the three and six months ended June 30, 2021. Management performed a step 0 analysis in assessing the goodwill and intangibles for impairment at December 31, 2021, concluding that there was no impairment of these assets. The Company has reviewed these assets, all of which relate to the Bank, and concluded that no impairment exists as of June 30, 2022.

The table below shows the details of the intangible assets as of the dates presented.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Brand-related intellectual property

 

$

17,325

 

 

$

17,874

 

Home improvement contractor relationships

 

 

5,434

 

 

 

5,606

 

Total intangible assets

 

$

22,759

 

 

$

23,480

 

Fixed Assets

Fixed assets are carried at cost less accumulated depreciation and amortization, and are depreciated on a straight-line basis over their estimated useful lives of 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated economic useful life of the improvement. Depreciation and amortization expense was $0.1 million and $0.2 million for the three and six months ended June 30, 2022 and 2021.

Deferred Costs

Deferred financing costs represent costs associated with obtaining the Company’s borrowing facilities, and are amortized on a straight-line basis over the lives of the related financing agreements and life of the respective pool. Amortization expense was $0.7 million and $1.3 million for the three and six months ended June 30, 2022 and was $0.6 million and $1.2 million for the three and six months ended June 30, 2021. In addition, the Company capitalizes certain costs for transactions in the process of completion (other than business combinations), including those for potential investments, and the sourcing of other financing alternatives. Upon completion or termination of the transaction, any accumulated amounts will be amortized against income over an appropriate period, or written off. The amount on the Company’s balance sheet for all of these purposes were $7.4 million and $7.1 million as of June 30, 2022 and December 31, 2021.

Income Taxes

Income taxes are accounted for using the asset and liability approach in accordance with FASB ASC Topic 740, Income Taxes, or ASC 740. Deferred tax assets and liabilities reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred tax assets are also recorded for net operating losses, capital losses and any tax credit carryforwards. A valuation allowance is provided against a deferred tax asset when it is more likely than not that some or all of the deferred tax assets will not be realized. All available evidence, both positive and negative, is considered to determine whether a valuation allowance for deferred tax assets is needed. Items considered in determining the Company’s valuation allowance include expectations of future earnings of the appropriate tax character, recent historical financial results, tax planning strategies, the length of statutory carryforward periods and the expected timing of the reversal of temporary differences. The Company recognizes tax benefits of uncertain tax positions only when the position is more likely than not to be sustained assuming examination by tax authorities. The Company records income tax related interest and penalties, if applicable, within current income tax expense.

 

Earnings Per Share (EPS)

Basic earnings per share are computed by dividing net income resulting from operations available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if option contracts to issue common stock were exercised, or if restricted stock vests, and has been computed after considering to the weighted average dilutive effect of the Company’s stock options and restricted stock. The Company uses the treasury stock method to calculate diluted EPS, which is a method of recognizing the use of proceeds that could be obtained upon exercise of options and warrants, including unvested compensation expense related to the shares, in computing diluted EPS. It assumes that any proceeds would be used to purchase common stock at the average market price during the period. The table below shows the calculation of basic and diluted EPS.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income available to common stockholders

 

$

13,300

 

 

$

10,267

 

 

$

23,141

 

 

$

18,698

 

Weighted average common shares outstanding applicable
   to basic EPS

 

 

24,153,015

 

 

 

24,595,822

 

 

 

24,459,870

 

 

 

24,557,511

 

Effect of dilutive stock options

 

 

84,232

 

 

 

127,493

 

 

 

86,869

 

 

 

74,331

 

Effect of restricted stock grants

 

 

184,620

 

 

 

227,197

 

 

 

204,273

 

 

 

291,181

 

Adjusted weighted average common shares outstanding
   applicable to diluted EPS

 

 

24,421,867

 

 

 

24,950,512

 

 

 

24,751,012

 

 

 

24,923,023

 

Basic net income per share

 

$

0.55

 

 

$

0.42

 

 

$

0.95

 

 

$

0.76

 

Diluted net income per share

 

 

0.54

 

 

 

0.41

 

 

 

0.93

 

 

 

0.75

 

Potentially dilutive common shares excluded from the above calculations aggregated 832,895 and 396,373 shares as of June 30, 2022 and 2021.

Stock Compensation

The Company follows FASB ASC Topic 718, or ASC 718, Compensation – Stock Compensation, for its equity incentive, stock option, and restricted stock plans, and accordingly, the Company recognizes the expense of these grants as required. Stock-based employee compensation costs pertaining to stock options are reflected in net income resulting from operations for any new grants using the fair values established by usage of the Black-Scholes option pricing model, expensed over the vesting period of the underlying option. Stock-based employee compensation costs pertaining to restricted stock are reflected in net income resulting from operations for any new grants using the grant date fair value of the shares granted, expensed over the vesting period of the underlying stock.

During the six months ended June 30, 2022 and 2021, the Company issued 383,925 and 163,561 restricted shares of stock-based compensation awards, issued 0 and 317,398 shares of other stock-based compensation awards, issued 0 and 16,803 restricted stock units. The Company recognized $0.9 million and $1.5 million, or $0.04 and $0.06 per share, for the three and six months ended June 30, 2022, and $0.6 million and $1.1 million, or $0.02 and $0.04 per share, for the three and six months ended June 30, 2021, of non-cash stock-based compensation expense related to the grants. As of June 30, 2022, the total remaining unrecognized compensation cost related to unvested stock options and restricted stock was $4.2 million, which is expected to be recognized over the next 11 quarters.

Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the FDIC and the Utah Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the bank regulators about components, risk weightings, and other factors.

FDIC-insured banks, including the Bank, are subject to certain federal laws, which impose various legal limitations on the extent to which banks may finance or otherwise supply funds to certain of their affiliates. In particular, the Bank is subject to certain restrictions on any extensions of credit to, or other covered transactions with, such as certain purchases of assets, the Company or its affiliates.

 

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios as defined in the regulations (set forth in the table below). Additionally, as conditions of granting the Bank’s application for federal deposit insurance, the FDIC ordered that the Tier 1 leverage capital to total assets ratio, as defined, be not less than 15%, a level which could preclude its ability to pay dividends to the Company, and that an adequate allowance for loan losses be maintained. As of June 30, 2022, the Bank’s Tier 1 leverage ratio was 17.0%. The Bank’s actual capital amounts and ratios, and the regulatory minimum ratios are presented in the following table.

 

 

Regulatory

 

 

 

 

 

 

 

(Dollars in thousands)

 

Minimum

 

 

Well-Capitalized

 

 

June 30, 2022

 

 

December 31, 2021

 

Common equity tier 1 capital

 

 

 

 

 

 

 

$

217,079

 

 

$

193,459

 

Tier 1 capital

 

 

 

 

 

 

 

 

285,867

 

 

 

262,247

 

Total capital

 

 

 

 

 

 

 

 

307,653

 

 

 

281,211

 

Average assets

 

 

 

 

 

 

 

 

1,681,043

 

 

 

1,495,726

 

Risk-weighted assets

 

 

 

 

 

 

 

 

1,706,568

 

 

 

1,482,678

 

Leverage ratio (1)

 

 

4.0

%

 

 

5.0

%

 

 

17.0

%

 

 

17.5

%

Common equity tier 1 capital ratio (2)

 

 

7.0

 

 

 

6.5

 

 

 

12.7

 

 

 

13.1

 

Tier 1 capital ratio (3)

 

 

8.5

 

 

 

8.0

 

 

 

16.8

 

 

 

17.7

 

Total capital ratio (3)

 

 

10.5

 

 

 

10.0

 

 

 

18.0

 

 

 

19.0

 
(1)
Calculated by dividing Tier 1 capital by average assets.
(2)
Calculated by subtracting preferred stock or non-controlling interest from Tier 1 capital and dividing by risk-weighted assets.
(3)
Calculated by dividing Tier 1 or total capital by risk-weighted assets.

In the table above, the minimum risk-based ratios as of June 30, 2022 and December 31, 2021 reflect the capital conservation buffer of 2.5%. The minimum regulatory requirements, inclusive of the capital conservation buffer, were the binding requirements for the risk-based requirements, and the “well-capitalized” requirements were the binding requirements for Tier 1 leverage capital as of both June 30, 2022 and December 31, 2021.

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, or Topic 326: Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. The main objective of this new standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial assets and other commitments to extend credit held by a reporting entity at each reporting date. Under the FASB’s new standard, the concepts used by entities to account for credit losses on financial instruments will fundamentally change. The existing “probable” and “incurred” loss recognition threshold is removed. Loss estimates are based upon lifetime “expected” credit losses. The use of past and current events must now be supplemented with “reasonable and supportable” expectations about the future to determine the amount of credit loss. The collective changes to the recognition and measurement accounting standards for financial instruments and their anticipated impact on the allowance for credit losses modeling have been universally referred to as the CECL (current expected credit loss) model. ASU 2016-13 applies to all entities and is effective for fiscal years beginning after December 15, 2019 for public entities, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10 to defer implementation of the standard for smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022. The Company is assessing the impact the update will have on the accompanying financial statements, and expects the update to have a material impact on the Company’s accounting for estimated credit losses on its loans.

In August 2021, the FASB issued ASU 2021-06, Presentation of Financial Statements, or Topic 205: Depository and Lending, or Topic 942: and Financial Services – Investment Companies, or Topic 946: Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. This new standard amends certain SEC paragraphs from the Codification in response to the issuance of SEC Final Rule No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses and SEC Rule No. 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants. The Company has assessed the impact the update and determined it does not have a material impact on the accompanying financial statements.

 

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses, or Topic 326: Troubled Debt Restructurings and Vintage Disclosures, or ASU 2022-02. The main objective of this new standard is to amend ASU 2016-13 in response to feedback received from the post-implementation review process. The amendments update ASU 2016-13 to require that an entity measure and record the lifetime expected credit losses on an asset upon origination or acquisition, and, as a result, credit losses from loans modified as troubled debt restructurings (TDRs) have been incorporated into the allowance for credit losses. The amendments also require the disclosure of current period gross write-offs, by year of origination, for financing receivables. ASU 2022-02 is effective upon the adoption of ASU 2016-13. The Company is assessing the impact the update will have on the accompanying financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement, or Topic 820: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, or ASU 2016-13. This new standard clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The Company has assessed the impact the update and determined it does not have a material impact on the accompanying financial statements.

Reclassifications

Certain reclassifications have been made to prior year balances to conform with the current year presentation. These reclassifications have no effect on the previously reported results of operations.
v3.22.2
Investment Securities
 6 Months Ended
Jun. 30, 2022
Schedule of Investments [Abstract]  
Investment Securities

(3) INVESTMENT SECURITIES

Fixed maturity securities available for sale at June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 2022
(Dollars in thousands)

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

44,155

 

 

$

4

 

 

$

(3,680

)

 

$

40,479

 

State and municipalities

 

 

10,280

 

 

 

73

 

 

 

(474

)

 

 

9,879

 

Total

 

$

54,435

 

 

$

77

 

 

$

(4,154

)

 

$

50,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021
(Dollars in thousands)

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

35,469

 

 

$

672

 

 

$

(403

)

 

$

35,738

 

State and municipalities

 

 

9,025

 

 

 

60

 

 

 

(51

)

 

 

9,034

 

Total

 

$

44,494

 

 

$

732

 

 

$

(454

)

 

$

44,772

 

The amortized cost and estimated market value of investment securities at June 30, 2022 by contractual maturity are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

June 30, 2022
(Dollars in thousands)

 

Amortized
Cost

 

 

Fair
Value

 

Due in one year or less

 

$

22

 

 

$

22

 

Due after one year through five years

 

 

9,435

 

 

 

9,241

 

Due after five years through ten years

 

 

9,568

 

 

 

8,737

 

Due after ten years

 

 

35,410

 

 

 

32,358

 

Total

 

$

54,435

 

 

$

50,358

 

The following tables show information pertaining to securities with gross unrealized losses at June 30, 2022 and December 31, 2021, aggregated by investment category and length of time that individual securities have been in a continuous loss position.

 

 

Less than Twelve Months

 

 

Twelve Months and Over

 

June 30, 2022
(Dollars in thousands)

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

(1,861

)

 

$

26,941

 

 

$

(1,819

)

 

$

10,263

 

State and municipalities

 

 

(47

)

 

 

3,543

 

 

 

(427

)

 

 

3,246

 

Total

 

$

(1,908

)

 

$

30,484

 

 

$

(2,246

)

 

$

13,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than Twelve Months

 

 

Twelve Months and Over

 

December 31, 2021
(Dollars in thousands)

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

(403

)

 

$

16,330

 

 

$

—

 

 

$

—

 

State and municipalities

 

 

(9

)

 

 

2,124

 

 

 

(42

)

 

 

(1,956

)

Total

 

$

(412

)

 

$

18,454

 

 

$

(42

)

 

$

(1,956

)

 

The Company had 54 and 15 securities at June 30, 2022 and December 31, 2021, with unrealized losses that have not been recognized in income because the issuers’ bonds are of high credit quality, and the Company has the intent and ability to hold the securities for the foreseeable future. The fair value is expected to recover as the bonds approach the maturity date.

v3.22.2
Loans and Allowance for Loan Losses
 6 Months Ended
Jun. 30, 2022
Text Block [Abstract]  
Loans and Allowance for Loan Losses

(4) LOANS AND ALLOWANCE FOR LOAN LOSSES

The following table shows the major classification of loans, inclusive of capitalized loan origination costs, at June 30, 2022 and December 31, 2021.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Amount

 

 

As a
Percent of
Gross Loans

 

 

Amount

 

 

As a
Percent of
Gross Loans

 

Recreation

 

$

1,096,670

 

 

 

63

%

 

$

961,320

 

 

 

65

%

Home improvement

 

 

526,278

 

 

 

30

 

 

 

436,772

 

 

 

29

 

Commercial

 

 

96,928

 

 

 

6

 

 

 

76,696

 

 

 

5

 

Medallion

 

 

14,152

 

 

 

1

 

 

 

14,046

 

 

 

1

 

Strategic partnership

 

 

593

 

 

*

 

 

 

90

 

 

*

 

Total gross loans

 

 

1,734,621

 

 

 

100

%

 

 

1,488,924

 

 

 

100

%

Allowance for loan losses

 

 

(59,152

)

 

 

 

 

 

(50,166

)

 

 

 

Total net loans

 

$

1,675,469

 

 

 

 

 

$

1,438,758

 

 

 

 

(*) Less than 1%

The following tables show the activity of the gross loans for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – March 31, 2022

 

$

1,004,091

 

 

$

473,408

 

 

$

77,867

 

 

$

13,849

 

 

$

226

 

 

$

1,569,441

 

Loan originations

 

 

170,207

 

 

 

105,172

 

 

 

19,272

 

 

 

472

 

 

 

9,830

 

 

 

304,953

 

Principal payments, sales, maturities, and recoveries

 

 

(73,114

)

 

 

(51,006

)

 

 

(386

)

 

 

(30

)

 

 

(9,463

)

 

 

(133,999

)

Charge-offs

 

 

(5,074

)

 

 

(1,108

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,182

)

Transfer to loan collateral in process of foreclosure, net

 

 

(2,618

)

 

 

—

 

 

 

—

 

 

 

(139

)

 

 

—

 

 

 

(2,757

)

Amortization of origination costs

 

 

(2,931

)

 

 

380

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,551

)

Amortization of loan premium

 

 

(60

)

 

 

(90

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(150

)

FASB origination costs, net

 

 

6,169

 

 

 

(478

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,691

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

175

 

 

 

—

 

 

 

—

 

 

 

175

 

Gross loans – June 30, 2022

 

$

1,096,670

 

 

$

526,278

 

 

$

96,928

 

 

$

14,152

 

 

$

593

 

 

$

1,734,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – December 31, 2021

 

$

961,320

 

 

$

436,772

 

 

$

76,696

 

 

$

14,046

 

 

$

90

 

 

$

1,488,924

 

Loan originations

 

 

284,613

 

 

 

194,992

 

 

 

23,672

 

 

 

564

 

 

 

14,839

 

 

 

518,680

 

Principal payments, sales, maturities, and recoveries

 

 

(138,230

)

 

 

(103,170

)

 

 

(2,203

)

 

 

(115

)

 

 

(14,336

)

 

 

(258,054

)

Charge-offs

 

 

(10,141

)

 

 

(2,168

)

 

 

(1,584

)

 

 

(75

)

 

 

—

 

 

 

(13,968

)

Transfer to loan collateral in process of foreclosure, net

 

 

(5,529

)

 

 

—

 

 

 

—

 

 

 

(268

)

 

 

—

 

 

 

(5,797

)

Amortization of origination costs

 

 

(5,370

)

 

 

700

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,670

)

Amortization of loan premium

 

 

(120

)

 

 

(180

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(300

)

FASB origination costs, net

 

 

10,127

 

 

 

(668

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,459

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

347

 

 

 

—

 

 

 

—

 

 

 

347

 

Gross loans – June 30, 2022

 

$

1,096,670

 

 

$

526,278

 

 

$

96,928

 

 

$

14,152

 

 

$

593

 

 

$

1,734,621

 

 

Three Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – March 31, 2021

 

$

822,932

 

 

$

342,121

 

 

$

58,854

 

 

$

35,250

 

 

$

58

 

 

$

1,259,215

 

Loan originations

 

 

134,467

 

 

 

62,992

 

 

 

11,059

 

 

 

—

 

 

 

2,426

 

 

 

210,944

 

Principal payments, sales, maturities, and recoveries

 

 

(67,084

)

 

 

(36,171

)

 

 

(564

)

 

 

(467

)

 

 

(2,414

)

 

 

(106,700

)

Charge-offs

 

 

(2,672

)

 

 

(786

)

 

 

—

 

 

 

(12,791

)

 

 

—

 

 

 

(16,249

)

Transfer to loan collateral in process of foreclosure, net

 

 

(2,980

)

 

 

—

 

 

 

—

 

 

 

(3,933

)

 

 

—

 

 

 

(6,913

)

Amortization of origination costs

 

 

(2,477

)

 

 

410

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,067

)

Amortization of loan premium

 

 

(60

)

 

 

(90

)

 

 

—

 

 

 

(1,545

)

 

 

—

 

 

 

(1,695

)

FASB origination costs, net

 

 

4,080

 

 

 

(219

)

 

 

1

 

 

 

—

 

 

 

—

 

 

 

3,862

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

170

 

 

 

—

 

 

 

—

 

 

 

170

 

Gross loans – June 30, 2021

 

$

886,206

 

 

$

368,257

 

 

$

69,520

 

 

$

16,514

 

 

$

70

 

 

$

1,340,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – December 31, 2020

 

$

792,686

 

 

$

334,033

 

 

$

65,327

 

 

$

37,768

 

 

$

24

 

 

$

1,229,838

 

Loan originations

 

 

228,317

 

 

 

111,051

 

 

 

15,216

 

 

 

—

 

 

 

4,370

 

 

 

358,954

 

Principal payments, sales, maturities, and recoveries

 

 

(123,043

)

 

 

(75,807

)

 

 

(11,541

)

 

 

(1,102

)

 

 

(4,324

)

 

 

(215,817

)

Charge-offs

 

 

(7,725

)

 

 

(1,467

)

 

 

—

 

 

 

(13,905

)

 

 

—

 

 

 

(23,097

)

Transfer to loan collateral in process of foreclosure, net

 

 

(6,033

)

 

 

—

 

 

 

—

 

 

 

(4,630

)

 

 

—

 

 

 

(10,663

)

Amortization of origination costs

 

 

(4,639

)

 

 

907

 

 

 

11

 

 

 

(2

)

 

 

—

 

 

 

(3,723

)

Amortization of loan premium

 

 

(101

)

 

 

(166

)

 

 

—

 

 

 

(1,615

)

 

 

—

 

 

 

(1,882

)

FASB origination costs, net

 

 

6,744

 

 

 

(294

)

 

 

12

 

 

 

—

 

 

 

—

 

 

 

6,462

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

495

 

 

 

—

 

 

 

—

 

 

 

495

 

Gross loans – June 30, 2021

 

$

886,206

 

 

$

368,257

 

 

$

69,520

 

 

$

16,514

 

 

$

70

 

 

$

1,340,567

 

The following table sets forth the activity in the allowance for loan losses for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Allowance for loan losses – beginning balance

 

$

50,686

 

 

$

57,809

 

 

$

50,166

 

 

$

57,548

 

Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

(5,074

)

 

 

(2,672

)

 

 

(10,141

)

 

 

(7,725

)

Home improvement

 

 

(1,108

)

 

 

(786

)

 

 

(2,168

)

 

 

(1,467

)

Commercial

 

 

—

 

 

 

—

 

 

 

(1,584

)

 

 

—

 

Medallion

 

 

—

 

 

 

(12,791

)

 

 

(75

)

 

 

(13,905

)

Total charge-offs

 

 

(6,182

)

 

 

(16,249

)

 

 

(13,968

)

 

 

(23,097

)

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

3,615

 

 

 

3,588

 

 

 

7,125

 

 

 

6,057

 

Home improvement

 

 

585

 

 

 

558

 

 

 

1,144

 

 

 

990

 

Commercial

 

 

13

 

 

 

—

 

 

 

47

 

 

 

—

 

Medallion

 

 

2,676

 

 

 

1,922

 

 

 

3,639

 

 

 

3,112

 

Total recoveries

 

 

6,889

 

 

 

6,068

 

 

 

11,955

 

 

 

10,159

 

Net recoveries (charge-offs) (1)

 

 

707

 

 

 

(10,181

)

 

 

(2,013

)

 

 

(12,938

)

Provision (benefit) for loan losses

 

 

7,759

 

 

 

(682

)

 

 

10,999

 

 

 

2,336

 

Allowance for loan losses – ending balance (2)

 

$

59,152

 

 

$

46,946

 

 

$

59,152

 

 

$

46,946

 
(1)
As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
(2)
As of June 30, 2022 and June 30, 2021, there were no allowance for loan losses and net charge-offs related to the strategic partnership loans.

 

The following tables set forth the allowance for loan losses by type as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Amount

 

 

Percentage
of Allowance

 

 

Allowance as
a Percent of
Loan Category

 

 

Allowance as
a Percent of
Nonaccrual

 

Recreation

 

$

37,772

 

 

 

64

%

 

 

3.44

%

 

 

113.48

%

Home improvement

 

 

9,234

 

 

 

16

 

 

 

1.75

 

 

 

27.74

 

Commercial

 

 

2,720

 

 

 

4

 

 

 

2.81

 

 

 

8.17

 

Medallion

 

 

9,426

 

 

 

16

 

 

 

66.61

 

 

 

28.32

 

Total

 

$

59,152

 

 

 

100

%

 

 

3.41

%

 

 

177.71

%

 

December 31, 2021
(Dollars in thousands)

 

Amount

 

 

Percentage
of Allowance

 

 

Allowance as
a Percent of
Loan Category

 

 

Allowance as
a Percent of
Nonaccrual

 

Recreation

 

$

32,435

 

 

 

64

%

 

 

3.37

%

 

 

91.18

%

Home improvement

 

 

7,356

 

 

 

15

 

 

 

1.68

 

 

20.68

 

Commercial

 

 

1,141

 

 

 

2

 

 

 

1.49

 

 

 

3.21

 

Medallion

 

 

9,234

 

 

 

19

 

 

 

65.74

 

 

 

25.96

 

Total

 

$

50,166

 

 

 

100

%

 

 

3.37

%

 

 

141.03

%

The following table presents total nonaccrual loans and foregone interest. The fluctuation in nonaccrual interest foregone is due to past due loans and market conditions.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Total nonaccrual loans

 

$

33,285

 

 

$

35,571

 

Interest foregone quarter to date

 

 

536

 

 

 

466

 

Amount of foregone interest applied to principal in the quarter

 

 

104

 

 

 

114

 

Interest foregone year to date

 

 

1,224

 

 

 

1,620

 

Amount of foregone interest applied to principal for the year

 

 

216

 

 

 

432

 

Interest foregone life-to-date

 

 

2,877

 

 

 

3,623

 

Amount of foregone interest applied to principal life-to-date

 

 

1,110

 

 

 

942

 

Percentage of nonaccrual loans to gross loan portfolio

 

 

2

%

 

 

2

%

Percentage of allowance for loan losses to nonaccrual loans

 

 

178

%

 

 

141

%

The following tables present the performance status of loans as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Performing

 

 

Nonperforming

 

 

Total

 

 

Percentage of
Nonperforming
to Total

 

Recreation

 

$

1,091,093

 

 

$

5,577

 

 

$

1,096,670

 

 

 

0.51

%

Home improvement

 

 

525,883

 

 

 

395

 

 

 

526,278

 

 

 

0.08

 

Commercial

 

 

83,411

 

 

 

13,517

 

 

 

96,928

 

 

 

13.95

 

Medallion

 

 

—

 

 

 

14,152

 

 

 

14,152

 

 

 

100.00

 

Strategic partnership

 

 

593

 

 

 

—

 

 

 

593

 

 

 

—

 

Total

 

$

1,700,980

 

 

$

33,641

 

 

$

1,734,621

 

 

 

1.94

%

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021
(Dollars in thousands)

 

Performing

 

 

Nonperforming

 

 

Total

 

 

Percentage of
Nonperforming
to Total

 

Recreation

 

$

955,763

 

 

$

5,557

 

 

$

961,320

 

 

 

0.58

%

Home improvement

 

 

436,640

 

 

 

132

 

 

 

436,772

 

 

 

0.03

 

Commercial

 

 

60,366

 

 

 

16,330

 

 

 

76,696

 

 

 

21.29

 

Medallion

 

 

—

 

 

 

14,046

 

 

 

14,046

 

 

 

100.00

 

Strategic partnership

 

 

90

 

 

 

—

 

 

 

90

 

 

 

—

 

Total

 

$

1,452,859

 

 

$

36,065

 

 

$

1,488,924

 

 

 

2.42

%

For those loans aged under 90 days past due, there is a possibility that their delinquency status will continue to deteriorate and they will subsequently be placed on nonaccrual status and be reserved for, and as such, deemed nonperforming.

 

The following tables provide additional information on attributes of the nonperforming loan portfolio as of June 30, 2022 and December 31, 2021, all of which had an allowance recorded against the principal balance.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Recorded
Investment

 

 

Unpaid
Principal
Balance

 

 

Related
Allowance

 

 

Recorded
Investment

 

 

Unpaid
Principal
Balance

 

 

Related
Allowance

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

$

5,577

 

 

$

5,577

 

 

$

192

 

 

$

5,557

 

 

$

5,557

 

 

$

188

 

Home improvement

 

 

395

 

 

 

395

 

 

 

7

 

 

 

132

 

 

 

132

 

 

 

2

 

Commercial

 

 

13,517

 

 

 

13,577

 

 

 

2,720

 

 

 

16,330

 

 

 

16,360

 

 

 

1,141

 

Medallion

 

 

14,152

 

 

 

15,202

 

 

 

9,426

 

 

 

14,046

 

 

 

14,958

 

 

 

8,837

 

Total nonperforming loans with an allowance

 

$

33,641

 

 

$

34,751

 

 

$

12,345

 

 

$

36,065

 

 

$

37,007

 

 

$

10,168

 

 

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

$

5,197

 

 

$

119

 

 

$

4,799

 

 

$

180

 

Home improvement

 

 

396

 

 

 

—

 

 

 

74

 

 

 

—

 

Commercial

 

 

13,577

 

 

 

—

 

 

 

19,210

 

 

 

—

 

Medallion

 

 

16,095

 

 

 

—

 

 

 

18,517

 

 

 

—

 

Total nonperforming loans with an allowance

 

$

35,265

 

 

$

119

 

 

$

42,600

 

 

$

180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

$

5,265

 

 

$

223

 

 

$

4,912

 

 

$

323

 

Home improvement

 

 

388

 

 

 

—

 

 

 

75

 

 

 

—

 

Commercial

 

 

13,561

 

 

 

—

 

 

 

19,788

 

 

 

—

 

Medallion

 

 

16,798

 

 

 

—

 

 

 

18,568

 

 

 

—

 

Total nonperforming loans with an allowance

 

$

36,012

 

 

$

223

 

 

$

43,343

 

 

$

323

 

The following tables show the aging of all loans as of June 30, 2022 and December 31, 2021.

June 30, 2022

 

Days Past Due

 

 

 

 

 

 

 

 

 

 

 

Recorded
Investment
90 Days and

 

(Dollars in thousands)

 

30-59

 

 

60-89

 

 

90 +

 

 

Total

 

 

Current

 

 

Total (1)

 

 

Accruing

 

Recreation

 

$

19,813

 

 

$

7,453

 

 

$

3,810

 

 

$

31,076

 

 

$

1,031,497

 

 

$

1,062,573

 

 

$

—

 

Home improvement

 

 

1,725

 

 

 

546

 

 

 

396

 

 

 

2,667

 

 

 

525,918

 

 

 

528,585

 

 

 

—

 

Commercial

 

 

1,765

 

 

 

—

 

 

 

74

 

 

 

1,839

 

 

 

95,089

 

 

 

96,928

 

 

 

—

 

Medallion

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,152

 

 

 

14,152

 

 

 

—

 

Strategic partnership

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

593

 

 

 

593

 

 

 

—

 

Total

 

$

23,303

 

 

$

7,999

 

 

$

4,280

 

 

$

35,582

 

 

$

1,667,249

 

 

$

1,702,831

 

 

$

—

 
(1)
Excludes loan premiums of $0.2 million and $31.6 million of capitalized loan origination costs.

 December 31, 2021

 

Days Past Due

 

 

 

 

 

 

 

 

 

 

 

Recorded
Investment
90 Days and

 

(Dollars in thousands)

 

30-59

 

 

60-89

 

 

90 +

 

 

Total

 

 

Current

 

 

Total (1)

 

 

Accruing

 

Recreation

 

$

20,037

 

 

$

6,569

 

 

$

3,818

 

 

$

30,424

 

 

$

901,435

 

 

$

931,859

 

 

$

—

 

Home improvement

 

 

1,517

 

 

 

479

 

 

 

132

 

 

 

2,128

 

 

 

436,803

 

 

 

438,931

 

 

 

—

 

Commercial

 

 

1,795

 

 

 

—

 

 

 

74

 

 

 

1,869

 

 

 

74,827

 

 

 

76,696

 

 

 

—

 

Medallion

 

 

215

 

 

 

7,125

 

 

 

—

 

 

 

7,340

 

 

 

6,706

 

 

 

14,046

 

 

 

—

 

Strategic partnership

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

90

 

 

 

90

 

 

 

—

 

Total

 

$

23,564

 

 

$

14,173

 

 

$

4,024

 

 

$

41,761

 

 

$

1,419,861

 

 

$

1,461,622

 

 

$

—

 
(1)
Excludes loan premiums of $0.5 million and $26.8 million of capitalized loan origination costs.

 

The Company estimates that the weighted average loan-to-value ratio of the medallion loans was approximately 320% and 295% as of June 30, 2022 and December 31, 2021.

The following table shows the TDRs which the Company entered into during the three and six months ended June 30, 2022.

(Dollars in thousands)

 

Number of Loans

 

 

Pre-
Modification
Investment

 

 

Post-
Modification
Investment

 

Three months ended June 30, 2022

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

12

 

 

$

147

 

 

$

147

 

Medallion loans

 

 

—

 

 

 

—

 

 

 

—

 

Six months ended June 30, 2022

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

22

 

 

$

276

 

 

$

276

 

Medallion loans

 

 

2

 

 

 

252

 

 

 

252

 

As of June 30, 2022, no medallion or commercial loans modified as TDRs in the previous 12 months were in default. As of June 30, 2022, 20 recreation loans modified as TDRs were in default and had an investment value of $0.2 million.

The following table shows the TDRs which the Company entered into during the three and six months ended June 30, 2021.

(Dollars in thousands)

 

Number of Loans

 

 

Pre-
Modification
Investment

 

 

Post-
Modification
Investment

 

Three months ended June 30, 2021

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

21

 

 

$

302

 

 

$

302

 

Medallion loans

 

 

2

 

 

 

256

 

 

 

256

 

Six months ended June 30, 2021

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

39

 

 

$

474

 

 

$

468

 

Medallion loans

 

 

10

 

 

 

2,994

 

 

 

2,994

 

As of June 30, 2021, 43 medallion loans modified as TDRs in the previous 12 months were in default. As of June 30, 2021 37 recreation loans modified as TDRs in the previous 12 months were in default and had an investment value of $0.4 million.

The following tables show the activity of loan collateral in process of foreclosure, which relate only to the recreation and medallion loans, for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – March 31, 2022

 

$

1,369

 

 

$

32,465

 

 

$

33,834

 

Transfer from loans, net

 

 

2,618

 

 

 

139

 

 

 

2,757

 

Sales

 

 

(2,146

)

 

 

(1,999

)

 

 

(4,145

)

Cash payments received

 

 

—

 

 

 

(4,381

)

 

 

(4,381

)

Collateral valuation adjustments

 

 

(963

)

 

 

(128

)

 

 

(1,091

)

Loan collateral in process of foreclosure – June 30, 2022

 

$

878

 

 

$

26,096

 

 

$

26,974

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – December 31, 2021

 

$

1,720

 

 

$

35,710

 

 

$

37,430

 

Transfer from loans, net

 

 

5,529

 

 

 

268

 

 

 

5,797

 

Sales

 

 

(4,398

)

 

 

(2,115

)

 

 

(6,513

)

Cash payments received

 

 

—

 

 

 

(7,253

)

 

 

(7,253

)

Collateral valuation adjustments

 

 

(1,973

)

 

 

(514

)

 

 

(2,487

)

Loan collateral in process of foreclosure – June 30, 2022

 

$

878

 

 

$

26,096

 

 

$

26,974

 

 

Three Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – March 31, 2021

 

$

970

 

 

$

49,763

 

 

$

50,733

 

Transfer from loans, net

 

 

2,980

 

 

 

3,933

 

 

 

6,913

 

Sales

 

 

(1,989

)

 

 

(231

)

 

 

(2,220

)

Cash payments received

 

 

—

 

 

 

(3,146

)

 

 

(3,146

)

Collateral valuation adjustments

 

 

(1,079

)

 

 

(2,162

)

 

 

(3,241

)

Loan collateral in process of foreclosure – June 30, 2021

 

$

882

 

 

$

48,157

 

 

$

49,039

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – December 31, 2020

 

$

1,432

 

 

$

53,128

 

 

$

54,560

 

Transfer from loans, net

 

 

6,033

 

 

 

4,630

 

 

 

10,663

 

Sales

 

 

(4,288

)

 

 

(231

)

 

 

(4,519

)

Cash payments received

 

 

—

 

 

 

(4,423

)

 

 

(4,423

)

Collateral valuation adjustments

 

 

(2,295

)

 

 

(4,947

)

 

 

(7,242

)

Loan collateral in process of foreclosure – June 30, 2021

 

$

882

 

 

$

48,157

 

 

$

49,039

 

 

As of June 30, 2022, medallion loans in the process of foreclosure included 462 medallions in the New York City market, 335 medallions in the Chicago market, 61 medallions in the Newark market, and 47 medallions in other markets.

(5) FUNDS BORROWED

The outstanding balances of funds borrowed were as follows:

 

 

Payments Due for the Twelve Months Ending June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

2023

 

 

2024

 

 

2025

 

 

2026

 

 

2027

 

 

Thereafter

 

 

June 30, 2022(1)

 

 

December 31, 2021(1)

 

 

Interest
Rate (2)

 

Deposits (3)

 

$

394,619

 

 

$

347,548

 

 

$

412,380

 

 

$

131,077

 

 

$

186,452

 

 

$

—

 

 

$

1,472,076

 

 

$

1,253,288

 

 

 

1.46

%

Privately placed notes

 

 

—

 

 

 

36,000

 

 

 

—

 

 

 

31,250

 

 

 

—

 

 

 

53,750

 

 

 

121,000

 

 

 

121,000

 

 

 

7.66

 

SBA debentures and borrowings

 

 

5,000

 

 

 

10,429

 

 

 

12,500

 

 

 

15,500

 

 

 

4,500

 

 

 

21,000

 

 

 

68,929

 

 

 

69,963

 

 

 

2.94

 

Preferred securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,000

 

 

 

33,000

 

 

 

33,000

 

 

 

3.75

 

Total

 

$

399,619

 

 

$

393,977

 

 

$

424,880

 

 

$

177,827

 

 

$

190,952

 

 

$

107,750

 

 

$

1,695,005

 

 

$

1,477,251

 

 

 

2.00

%
(1)
Excludes deferred financing costs of $7.4 million and $7.1 million as of June 30, 2022 and December 31, 2021.
(2)
Weighted average contractual rate as of June 30, 2022.
(3)
Balance excludes $1.0 million and $0.8 million of strategic partner reserve deposits as of June 30, 2022 and December 31, 2021.

(A) DEPOSITS

Substantially all deposits are raised through the use of investment brokerage firms that package time deposits in denominations of less than $250,000 qualifying for FDIC insurance into larger pools that are sold to the Bank. The rates paid on the deposits are highly competitive with market rates paid by other financial institutions. Additionally, a brokerage fee is paid, depending on the maturity of the deposits, which averages less than 0.15%. Interest on the deposits is accrued daily and paid monthly, quarterly, semiannually, or at maturity. The Bank did not have any uninsured deposits as of June 30, 2022 and December 31, 2021. In October 2020, the Bank began to originate time deposits through an internet listing service. These deposits are from other financial institutions and, as of June 30, 2022 and December 31, 2021, the Bank had $8.7 million in listing service deposit balances. The following table presents the maturity of the deposit pools, which excludes strategic partner reserve deposits, as of June 30, 2022.

(Dollars in thousands)

 

June 30, 2022

 

Three months or less

 

$

83,985

 

Over three months through six months

 

 

85,568

 

Over six months through one year

 

 

225,066

 

Over one year

 

 

1,077,457

 

Total deposits

 

$

1,472,076

 

(B) PRIVATELY PLACED NOTES

In February 2021, the Company completed a private placement to certain institutional investors of $25.0 million aggregate principal amount of 7.25% unsecured senior notes due February 2026, with interest payable semiannually. In March 2021, an additional $3.3 million principal amount of such notes was issued to certain institutional investors. Subsequently in April 2021, an additional $3.0 million principal amount of such notes was issued to certain institutional investors. The Company used the net proceeds from the offering for general corporate purposes, including repayment of outstanding debt.

In December 2020, the Company completed a private placement to certain institutional investors of $33.6 million aggregate principal amount of 7.50% unsecured senior notes due December 2027, with interest payable semiannually. In February and March 2021, an additional $8.5 million principal amount of such notes was issued to certain institutional investors. Subsequently in April 2021, an additional $11.7 million principal amount of such notes was issued to certain institutional investors. The Company used the net proceeds from the offering for general corporate purposes, including repayment of outstanding debt.

In March 2019, the Company completed a private placement to certain institutional investors of $30.0 million aggregate principal amount of 8.25% unsecured senior notes due 2024, with interest payable semiannually. The Company used the net proceeds from the offering for general corporate purposes, including repaying certain borrowings under its notes payable to banks at a discount which led to a gain of $4.1 million in 2019. In August 2019, an additional $6.0 million principal amount of such notes was issued to certain institutional investors.

(C) SBA DEBENTURES AND BORROWINGS

Over the years, the SBA has approved commitments for MCI and FSVC, typically for a four and half year term and a 1% fee, which fee was paid. During 2017, the SBA restructured FSVC’s debentures with SBA totaling $33.5 million in principal into a new loan by the SBA to FSVC in the principal amount of $34.0 million, or the SBA Loan. In connection with the SBA Loan, FSVC executed a Note, or the SBA Note, with an effective date of March 1, 2017, in favor of SBA, in the principal amount of $34.0 million. The SBA Loan bears interest at a rate of 3.25% and all remaining unpaid principal and interest are due on April 30, 2024, the maturity date. As of June 30, 2022, there were $9.5 million commitments available, and $68.9 million was outstanding, including $7.9 million under the SBA Note.

On July 31, 2020, MCI accepted a commitment from the SBA for $25.0 million in debenture financing. As part of the acceptance, MCI paid the SBA a 1% commitment fee. The commitment expires September 24, 2024. As of June 30, 2022, $15.5 million of the commitment had been drawn, including $8.5 million to replace debentures which matured in 2021 and $9.5 million remains drawable.

(D) PREFERRED SECURITIES

In June 2007, the Company issued and sold $36.1 million aggregate principal amount of unsecured junior subordinated notes to Fin Trust which, in turn, sold $35.0 million of preferred securities to Merrill Lynch International and issued 1,083 shares of common stock to the Company. The notes bear a variable rate of interest of 90 day LIBOR (2.29% at June 30, 2022) plus 2.13%. The notes mature in September 2037 and are prepayable at par. Interest is payable quarterly in arrears. The terms of the preferred securities and the notes are substantially identical. In December 2007, $2.0 million of the preferred securities were repurchased from a third-party investor. As of June 30, 2022, $33.0 million was outstanding on the preferred securities.

(E) COVENANT COMPLIANCE

From time to time the Company may enter into debt agreements which may contain restrictions that require the Company and its subsidiaries to maintain certain financial ratios, including minimum net worth. As of June 30, 2022, the Company did not have any borrowing agreements that contained any such restrictions.

(6) LEASES

The Company has leased premises that expire at various dates through November 30, 2027 subject to various operating leases. The Company has implemented ASC Topic 842 under a modified retrospective approach in which no adjustments have been made to the prior year balances.

The following table presents the operating lease costs and additional information for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating lease costs

 

$

590

 

 

$

572

 

 

$

1,179

 

 

$

1,144

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

 

435

 

 

 

590

 

 

 

1,080

 

 

 

1,265

 

Right-of-use asset obtained in exchange for lease liability

 

 

(40

)

 

 

(18

)

 

 

(85

)

 

 

(36

)

The following table presents the breakout of the operating leases as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Operating lease right-of-use assets

 

$

10,156

 

 

$

10,045

 

Other current liabilities

 

 

2,103

 

 

 

2,159

 

Operating lease liabilities

 

 

9,078

 

 

 

9,053

 

Total operating lease liabilities

 

 

11,181

 

 

 

11,212

 

Weighted average remaining lease term

 

5.9 years

 

 

5.4 years

 

Weighted average discount rate

 

 

5.54

%

 

 

5.54

%

At June 30, 2022, maturities of the lease liabilities were as follows:

(Dollars in thousands)

 

 

 

Remainder of 2022

 

$

1,259

 

2023

 

 

2,506

 

2024

 

 

2,526

 

2025

 

 

2,505

 

2026

 

 

2,440

 

Thereafter

 

 

2,502

 

Total lease payments

 

 

13,738

 

Less imputed interest

 

 

2,557

 

Total operating lease liabilities

 

$

11,181

 

 

(7) INCOME TAXES

The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C of the Internal Revenue Code, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries, in which it holds 80% or more of the outstanding equity interest measured by both vote and fair value.

 

The following table sets forth the significant components of our deferred and other tax assets and liabilities as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Goodwill and other intangibles

 

$

(43,637

)

 

$

(43,894

)

Provision for loan losses

 

 

11,065

 

 

 

11,057

 

Net operating loss carryforwards (1)

 

 

4,661

 

 

 

12,167

 

Accrued expenses, compensation, and other assets

 

 

2,961

 

 

 

2,579

 

Unrealized gains on other investments

 

 

3,197

 

 

 

2,176

 

Total deferred tax liability

 

 

(21,753

)

 

 

(15,915

)

Valuation allowance

 

 

(2,295

)

 

 

(2,295

)

Deferred tax liability, net

 

$

(24,048

)

 

$

(18,210

)
(1)
As of June 30, 2022, the Company and its subsidiaries had an estimated $22.5 million of net operating loss carryforwards, $1.7 million of which expires at various dates between December 31, 2026 and December 31, 2035, which had a net carrying value of $2.4 million as of June 30, 2022.

The components of our tax provision for the three and six months ended June 30, 2022 and 2021 was as follows:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

984

 

 

$

795

 

 

$

1,488

 

 

$

795

 

State

 

 

447

 

 

 

100

 

 

 

769

 

 

 

270

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

2,378

 

 

 

3,001

 

 

 

5,598

 

 

 

6,054

 

State

 

 

1,047

 

 

 

2,632

 

 

 

1,832

 

 

 

3,287

 

Net provision for income taxes

 

$

4,856

 

 

$

6,528

 

 

$

9,687

 

 

$

10,406

 

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Statutory Federal income tax provision at 21%

 

$

4,130

 

 

$

3,805

 

 

$

7,529

 

 

$

6,524

 

State and local income taxes, net of federal income tax

 

 

808

 

 

 

743

 

 

 

1,473

 

 

 

1,275

 

Change in state income tax accruals

 

 

—

 

 

 

1,833

 

 

 

—

 

 

 

1,833

 

Change in effective state income tax rates and accrual

 

 

—

 

 

 

1,399

 

 

 

—

 

 

 

1,369

 

Income attributable to non-controlling interest

 

 

—

 

 

 

(47

)

 

 

—

 

 

 

(266

)

Non deductible expenses

 

 

362

 

 

 

(385

)

 

 

1,075

 

 

 

(213

)

Other

 

 

(444

)

 

 

(820

)

 

 

(390

)

 

 

(116

)

Total income tax provision

 

$

4,856

 

 

$

6,528

 

 

$

9,687

 

 

$

10,406

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. Based upon these considerations, the Company determined the necessary valuation allowance as of June 30, 2022.

The Company has filed tax returns in many states and jurisdictions. Federal, New York State, New York City, and Utah tax filings of the Company for the tax years 2018 through the present are the more significant filings that are open for examination.

(8) STOCK OPTIONS AND RESTRICTED STOCK

The Company’s Board of Directors approved the 2018 Equity Incentive Plan, or the 2018 Plan, which was approved by the Company’s stockholders on June 15, 2018. The terms of 2018 Plan provide for grants of a variety of different type of stock awards to the Company’s employees and non-employee directors, including options, restricted stock, restricted stock units, and stock appreciation rights, etc. On April 22, 2020, the Company’s Board of Directors approved an amendment to the 2018 Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 19, 2020, and subsequently on April 26, 2022, the Company’s Board of Directors approved an additional amendment to the 2018 Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 14, 2022. A total of 5,710,968 shares of the Company’s common stock are issuable under the 2018 Plan, and 3,528,019 remained issuable as of June 30, 2022. Awards under the 2018 Plan are subject to certain limitations as set forth in the 2018 Plan, which will terminate when all shares of common stock authorized for delivery have been delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the 2018 Plan, whichever occurs first.

The Company’s Board of Directors approved the 2015 Employee Restricted Stock Plan, or the 2015 Restricted Stock Plan, on February 13, 2015, which was approved by the Company’s shareholders on June 5, 2015. The 2015 Restricted Stock Plan became

effective upon the Company’s receipt of exemptive relief from the SEC on March 1, 2016. The terms of 2015 Restricted Stock Plan provided for grants of restricted stock awards to the Company’s employees. A grant of restricted stock is a grant of shares of the Company’s common stock which, at the time of issuance, is subject to certain forfeiture provisions, and thus is restricted as to transferability until such forfeiture restrictions have lapsed. A total of 700,000 shares of the Company’s common stock were issuable under the 2015 Restricted Stock Plan, and 241,919 remained issuable as of June 15, 2018. Effective June 15, 2018, the 2018 Plan was approved, and these remaining shares were rolled into the 2018 Plan. Awards under the 2015 Restricted Stock Plan are subject to certain limitations as set forth in the 2015 Restricted Stock Plan. The 2015 Restricted Stock Plan will terminate when all shares of common stock authorized for delivery under the 2015 Restricted Stock Plan have been delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the 2015 Restricted Stock Plan, whichever occurs first.

The Company had a stock option plan, the 2006 Stock Option Plan, available to grant both incentive and nonqualified stock options to employees. The 2006 Stock Option Plan, which was approved by the Board of Directors on February 15, 2006 and shareholders on June 16, 2006, provided for the issuance of a maximum of 800,000 shares of common stock of the Company. No additional shares are available for issuance under the 2006 Stock Option Plan. The 2006 Stock Option Plan was administered by the Compensation Committee of the Board of Directors. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. The term and vesting periods of the options were determined by the Compensation Committee, provided that the maximum term of an option could not exceed a period of ten years.

The Company’s Board of Directors approved the 2015 Non-Employee Director Stock Option Plan, or the 2015 Director Plan, on March 12, 2015, which was approved by the Company’s shareholders on June 5, 2015, and on which exemptive relief to implement the 2015 Director Plan was received from the SEC on February 29, 2016. A total of 300,000 shares of the Company’s common stock were issuable under the 2015 Director Plan, and 258,334 remained issuable as of June 15, 2018. Effective June 15, 2018, the 2018 Plan was approved, and these remaining shares were rolled into the 2018 Plan. Under the 2015 Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the 2015 Director Plan, the Company granted options to purchase 12,000 shares of the Company’s common stock to a non-employee director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the 2015 Director Plan are exercisable annually, as defined in the 2015 Director Plan. The term of the options could not exceed ten years.

The Company’s Board of Directors approved the First Amended and Restated 2006 Director Plan, or the Amended Director Plan, on April 16, 2009, which was approved by the Company’s shareholders on June 5, 2009, and on which exemptive relief to implement the Amended Director Plan was received from the SEC on July 17, 2012. A total of 200,000 shares of the Company’s common stock were issuable under the Amended Director Plan. No additional shares are available for issuance under the Amended Director Plan. Under the Amended Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the Amended Director Plan, the Company would grant options to purchase 9,000 shares of the Company’s common stock to an Eligible Director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the Amended Director Plan are exercisable annually, as defined in the Amended Director Plan. The term of the options could not exceed ten years.

Additional shares are only available for future issuance under the 2018 Plan. At June 30, 2022, 1,081,609 options on the Company’s common stock were outstanding under the Company’s plans, of which 552,381 options were exercisable. Additionally, there were 744,687 unvested shares under the Company’s restricted common stock plan, 0 unvested restricted stock units, and 60,391 vested restricted stock units under the Company’s restricted stock plans.

The fair value of each restricted stock grant is determined on the date of grant by the closing market price of the Company’s common stock on the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average fair value of options granted was $3.50 per share for the six months ended June 30, 2022. The following assumption categories are used to determine the value of any option grants. There were no grants issued during the six months ended June 30, 2022.

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Risk free interest rate

 

 

—

 

 

 

0.97

%

Expected dividend yield

 

 

—

 

 

 

—

 

Expected life of option in years (1)

 

 

—

 

 

 

6.25

 

Expected volatility (2)

 

 

—

 

 

 

53.98

%
(1)
Expected life is calculated using the simplified method.
(2)
We determine our expected volatility based on our historical volatility.

The following table presents the activity for the stock option programs for the 2022 first and second quarters and the 2021 full year.

 

 

Number of
Options

 

 

 

Exercise
Price Per
Share

 

 

Weighted
Average
Exercise Price

 

Outstanding at December 31, 2020 (2)

 

 

951,669

 

 

$

2.14 - 12.55

 

$

 

6.41

 

Granted

 

 

317,398

 

 

 

 

6.79

 

 

 

6.79

 

Cancelled

 

 

(113,310

)

 

 

4.89 - 11.53

 

 

 

6.64

 

Exercised (1)

 

 

(44,070

)

 

 

5.21 - 7.25

 

 

 

5.58

 

Outstanding at December 31, 2021

 

 

1,111,687

 

 

$

2.14 - 12.55

 

$

 

6.41

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(4,783

)

 

 

4.89 - 7.25

 

 

 

5.69

 

Exercised (1)

 

 

(23,192

)

 

 

4.89 - 7.25

 

 

 

6.53

 

Outstanding at March 31, 2022 (2)

 

 

1,083,712

 

 

$

2.14 - 12.55

 

 

$

6.53

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(2,103

)

 

 

4.89 - 7.25

 

 

 

6.37

 

Exercised (1)

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022 (2)

 

 

1,081,609

 

 

$

2.14 - 12.55

 

 

$

6.53

 

Options exercisable at:

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

320,922

 

 

$

2.14 - 12.55

 

 

$

6.53

 

June 30, 2022

 

 

552,381

 

 

$

2.14 - 12.55

 

 

$

6.54

 
(1)
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was $0 and less than $0.1 million for the three and six months ended June 30, 2022 and was $0.2 million for the year ended December 31, 2021.
(2)
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at June 30, 2022 and the related exercise price of the underlying options, was $0.2 million for outstanding options and $0.1 million for exercisable options as of June 30, 2022. The remaining contractual life was 7.5 years for outstanding options and 7.1 years for exercisable options at June 30, 2022.

The following table presents the activity for the restricted stock programs for the 2022 first and second quarters and the 2021 full year.

 

 

Number of
Shares

 

 

 

Grant
Price Per
Share

 

 

Weighted
Average
Grant Price

 

Outstanding at December 31, 2020

 

 

416,140

 

 

$

4.39 - 7.25

 

 

$

6.24

 

Granted

 

 

258,120

 

 

 

6.79 - 8.40

 

 

 

7.38

 

Cancelled

 

 

(21,940

)

 

 

4.89 - 7.25

 

 

 

5.98

 

Vested (1)

 

 

(158,994

)

 

 

4.39 - 7.25

 

 

 

6.16

 

Outstanding at December 31, 2021(2)

 

 

493,326

 

 

$

4.89 - 8.40

 

 

$

6.87

 

Granted

 

 

383,925

 

 

 

 

7.68

 

 

 

7.68

 

Cancelled

 

 

(5,747

)

 

 

4.89 - 8.40

 

 

 

7.33

 

Vested (1)

 

 

(126,234

)

 

 

4.89 - 7.25

 

 

 

6.55

 

Outstanding at March 31, 2022(2)

 

 

745,270

 

 

$

4.89 - 8.40

 

 

$

7.34

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(583

)

 

 

4.89 - 8.40

 

 

 

7.58

 

Vested (1)

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022(2)

 

 

744,687

 

 

$

4.89 - 8.40

 

 

$

7.34

 
(1)
The aggregate fair value of the restricted stock vested was $0 and $1.0 million for the three and six months ended June 30, 2022 and was $0 and $0.8 million for the three and six months ended June 30, 2021.
(2)
The aggregate fair value of the restricted stock was $4.8 million as of June 30, 2022. The remaining vesting period was 2.7 years at June 30, 2022.

During the three and six months ended June 30, 2022, the Company granted no restricted stock units (RSUs) and during the year ended December 31, 2021, granted 16,803 RSUs that vest on June 17, 2022 with a grant price of $8.87. For the RSUs granted in 2021, unitholders had the option of deferring settlement until a future date if the recipient makes a formal election under the guidelines of IRC Section 409A. As of June 30, 2022, there were 60,391 RSUs outstanding, all of which were vested.

The following table presents the activity for the unvested options outstanding under the plans for the 2022 first and second quarters.

 

 

Number of
Options

 

 

 

Exercise Price
Per Share

 

 

Weighted
Average
Exercise Price

 

Outstanding at December 31, 2021

 

 

790,765

 

 

$

4.89 - 7.25

 

 

$

6.52

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(4,200

)

 

 

4.89 - 7.25

 

 

 

5.48

 

Vested

 

 

(256,972

)

 

 

4.89 - 7.25

 

 

 

6.55

 

Outstanding at March 31, 2022

 

 

529,593

 

 

$

4.89 - 7.25

 

 

$

6.52

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(365

)

 

 

4.89 - 7.25

 

 

 

5.78

 

Vested

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022

 

 

529,228

 

 

$

4.89 - 7.25

 

 

$

6.52

 

The intrinsic value of the options vested was $0 and $0.1 million for the three and six months ended June 30, 2022.

(9) SEGMENT REPORTING

The Company currently has five business segments, which include four lending and a non-operating segment, which are reflective of how Company management makes decisions about its business and operations.

The four lending segments reflect the main types of lending performed at the Company, which are recreation, home improvement, commercial, and medallion. The recreation and home improvement lending segments are operated by the Bank and include loans in all fifty states. The highest concentrations of recreation loans are in Texas and Florida at 16% and 10% of loans outstanding and with no other states over 10% as of June 30, 2022. The recreation lending segment is a consumer finance business that works with third-party dealers and financial service providers for the purpose of financing RVs, boats, and other consumer recreational equipment, of which RVs, boats, and trailers make up 59%, 20%, and 13% of the segment portfolio as of June 30, 2022. The home improvement lending segment works with contractors and financial service providers to finance residential home improvements concentrated in roofs, swimming pools, and windows at 36%, 25%, and 12% of total home improvement loans outstanding, and with no other product lines over 10% as of June 30, 2022. The highest concentrations of home improvement loans are in Texas and Florida at 11% and 10% of loans outstanding and with no other states over 10% as of June 30, 2022. The commercial lending segment focuses on enterprise wide industries, including manufacturing services, and various other industries, and 47% of these loans are made in the Midwest. The medallion lending segment arose in connection with the financing of taxi medallions, taxis, and related assets, substantially all of which are located in the New York City metropolitan area as of June 30, 2022.

Our corporate and other investments segment is a non-operating segment that includes items not allocated to our operating segments such as investment securities, equity investments, intercompany eliminations, and other corporate elements. Additionally, through December 1, 2021, the date of disposition, the Company had another non-operating segment, RPAC, a race car team.

As part of segment reporting, capital ratios for all operating segments have been normalized as a percentage of consolidated total equity divided by total assets, with the net adjustment applied to corporate and other investments. In addition, the commercial segment primarily represents the mezzanine lending business, with certain legacy commercial loans (immaterial to total) allocated to corporate and other investments.

The following tables present segment data as of and for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

33,514

 

 

$

10,587

 

 

$

2,278

 

 

 

$

231

 

 

$

501

 

 

$

47,111

 

Total interest expense

 

 

4,096

 

 

 

1,625

 

 

 

785

 

 

 

 

140

 

 

 

1,584

 

 

 

8,230

 

Net interest income (loss)

 

 

29,418

 

 

 

8,962

 

 

 

1,493

 

 

 

 

91

 

 

 

(1,083

)

 

 

38,881

 

Provision (recoveries) for loan losses

 

 

6,674

 

 

 

1,697

 

 

 

1,879

 

 

 

 

(2,675

)

 

 

184

 

 

 

7,759

 

Net interest income (loss) after loss provision

 

 

22,744

 

 

 

7,265

 

 

 

(386

)

 

 

 

2,766

 

 

 

(1,267

)

 

 

31,122

 

Other income (expense), net

 

 

(7,551

)

 

 

(3,210

)

 

 

3,263

 

 

 

 

(760

)

 

 

(3,197

)

 

 

(11,455

)

Net income (loss) before taxes

 

 

15,193

 

 

 

4,055

 

 

 

2,877

 

 

 

 

2,006

 

 

 

(4,464

)

 

 

19,667

 

Income tax (provision) benefit

 

 

(3,567

)

 

 

(975

)

 

 

(817

)

 

 

 

(541

)

 

 

1,044

 

 

 

(4,856

)

Net income (loss) after taxes

 

$

11,626

 

 

$

3,080

 

 

$

2,060

 

 

 

$

1,465

 

 

$

(3,420

)

 

$

14,811

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, net

 

$

1,058,898

 

 

$

517,044

 

 

$

94,208

 

 

 

$

4,726

 

 

$

593

 

 

$

1,675,469

 

Total assets

 

 

1,072,356

 

 

 

521,931

 

 

 

103,643

 

 

 

 

31,258

 

 

 

382,943

 

 

 

2,112,131

 

Total funds borrowed

 

 

861,083

 

 

 

419,101

 

 

 

83,223

 

 

 

 

25,099

 

 

 

307,499

 

 

 

1,696,005

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

4.53

%

 

 

2.49

%

 

 

8.06

%

 

 

 

17.05

%

 

 

(3.56

)%

 

 

2.63

%

Return on average stockholders' equity

 

 

25.52

 

 

 

14.02

 

 

 

49.17

 

 

 

 

95.49

 

 

 

(20.01

)

 

 

18.11

 

Interest yield

 

 

13.27

 

 

 

8.65

 

 

 

10.60

 

 

 

 

19.61

 

 

N/A

 

 

 

11.00

 

Net interest margin

 

 

11.65

 

 

 

7.33

 

 

 

6.95

 

 

 

 

7.78

 

 

N/A

 

 

 

9.07

 

Reserve coverage

 

 

3.44

 

 

 

1.75

 

 

 

2.81

 

(1)

 

 

66.61

 

 

N/A

 

 

 

3.41

 

Delinquency status(2)

 

 

0.36

 

 

 

0.07

 

 

 

0.08

 

(1)

 

 

—

 

 

N/A

 

 

 

0.25

 

Charge-off (recovery) ratio(4)

 

 

0.43

 

 

 

0.58

 

 

 

(0.00

)

(3)

 

 

(232.80

)

 

N/A

 

 

 

(0.18

)
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Six Months Ended June 30, 2022

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

64,650

 

 

$

20,288

 

 

$

4,208

 

 

 

$

377

 

 

$

891

 

 

$

90,414

 

Total interest expense

 

 

7,697

 

 

 

2,967

 

 

 

1,507

 

 

 

 

293

 

 

 

3,141

 

 

 

15,605

 

Net interest income (loss)

 

 

56,953

 

 

 

17,321

 

 

 

2,701

 

 

 

 

84

 

 

 

(2,250

)

 

 

74,809

 

Provision (recoveries) for loan losses

 

 

8,354

 

 

 

2,902

 

 

 

3,134

 

 

 

 

(3,544

)

 

 

153

 

 

 

10,999

 

Net interest income (loss) after loss provision

 

 

48,599

 

 

 

14,419

 

 

 

(433

)

 

 

 

3,628

 

 

 

(2,403

)

 

 

63,810

 

Other income (expense), net

 

 

(14,371

)

 

 

(6,106

)

 

 

1,932

 

 

 

 

(1,566

)

 

 

(7,847

)

 

 

(27,958

)

Net income (loss) before taxes

 

 

34,228

 

 

 

8,313

 

 

 

1,499

 

 

 

 

2,062

 

 

 

(10,250

)

 

 

35,852

 

Income tax (provision) benefit

 

 

(9,248

)

 

 

(2,246

)

 

 

(405

)

 

 

 

(557

)

 

 

2,769

 

 

 

(9,687

)

Net income (loss) after taxes

 

$

24,980

 

 

$

6,067

 

 

$

1,094

 

 

 

$

1,505

 

 

$

(7,481

)

 

$

26,165

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, net

 

$

1,058,898

 

 

$

517,044

 

 

$

94,208

 

 

 

$

4,726

 

 

$

593

 

 

$

1,675,469

 

Total assets

 

 

1,072,356

 

 

 

521,931

 

 

 

103,643

 

 

 

 

31,258

 

 

 

382,943

 

 

 

2,112,131

 

Total funds borrowed

 

 

861,083

 

 

 

419,101

 

 

 

83,223

 

 

 

 

25,099

 

 

 

307,499

 

 

 

1,696,005

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

5.04

%

 

 

2.56

%

 

 

2.15

%

 

 

 

5.86

%

 

 

(4.24

)%

 

 

2.37

%

Return on average stockholders' equity

 

 

27.27

 

 

 

13.87

 

 

 

12.21

 

 

 

 

30.74

 

 

 

(24.85

)

 

 

15.93

 

Interest yield

 

 

13.29

 

 

 

8.72

 

 

 

10.28

 

 

 

 

16.07

 

 

N/A

 

 

 

11.04

 

Net interest margin

 

 

11.71

 

 

 

7.45

 

 

 

6.60

 

 

 

 

3.58

 

 

N/A

 

 

 

9.15

 

Reserve coverage

 

 

3.44

 

 

 

1.75

 

 

 

2.81

 

(1)

 

 

66.61

 

 

N/A

 

 

 

3.41

 

Delinquency status(2)

 

 

0.36

 

 

 

0.07

 

 

 

0.08

 

(1)

 

 

—

 

 

N/A

 

 

 

0.25

 

Charge-off (recovery) ratio(4)

 

 

0.44

 

 

 

0.62

 

 

 

3.75

 

(3)

 

 

(153.24

)

 

N/A

 

 

 

0.26

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Three Months Ended June 30, 2021

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

RPAC

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

28,886

 

 

$

8,228

 

 

$

1,383

 

 

 

$

(1,475

)

 

$

—

 

 

$

353

 

 

$

37,375

 

Total interest expense

 

 

2,863

 

 

 

1,143

 

 

 

716

 

 

 

 

2,524

 

 

 

34

 

 

 

604

 

 

 

7,884

 

Net interest income (loss)

 

 

26,023

 

 

 

7,085

 

 

 

667

 

 

 

 

(3,999

)

 

 

(34

)

 

 

(251

)

 

 

29,491

 

Provision for loan losses

 

 

1,017

 

 

 

756

 

 

 

—

 

 

 

 

(2,943

)

 

 

—

 

 

 

488

 

 

 

(682

)

Net interest income (loss) after loss provision

 

 

25,006

 

 

 

6,329

 

 

 

667

 

 

 

 

(1,056

)

 

 

(34

)

 

 

(739

)

 

 

30,173

 

Sponsorship and race winnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

4,345

 

 

 

—

 

 

 

4,345

 

Race team related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

(2,674

)

 

 

—

 

 

 

(2,674

)

Other income (expense), net

 

 

(7,455

)

 

 

(2,638

)

 

 

(69

)

 

 

 

(1,157

)

 

 

(1,862

)

 

 

(543

)

 

 

(13,724

)

Net income (loss) before taxes

 

 

17,551

 

 

 

3,691

 

 

 

598

 

 

 

 

(2,213

)

 

 

(225

)

 

 

(1,282

)

 

 

18,120

 

Income tax (provision) benefit

 

 

(4,519

)

 

 

(951

)

 

 

(150

)

 

 

 

556

 

 

 

57

 

 

 

(1,521

)

 

 

(6,528

)

Net income (loss) after taxes

 

$

13,032

 

 

$

2,740

 

 

$

448

 

 

 

$

(1,657

)

 

$

(168

)

 

$

(2,803

)

 

$

11,592

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans net

 

$

855,900

 

 

$

362,370

 

 

$

66,236

 

 

 

$

5,764

 

 

$

—

 

 

$

3,351

 

 

$

1,293,621

 

Total assets

 

 

868,709

 

 

 

375,189

 

 

 

90,563

 

 

 

 

101,205

 

 

 

31,877

 

 

 

272,204

 

 

 

1,739,747

 

Total funds borrowed

 

 

712,777

 

 

 

295,887

 

 

 

72,450

 

 

 

 

80,959

 

 

 

8,016

 

 

 

212,020

 

 

 

1,382,109

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

6.24

%

 

 

3.04

%

 

 

2.36

%

 

 

 

(6.10

)%

 

 

(1.05

)%

 

 

(3.85

)%

 

 

2.43

%

Return on average equity

 

 

31.19

 

 

 

15.19

 

 

 

11.78

 

 

 

 

(30.51

)

 

 

(39.70

)

 

 

(1.95

)

 

 

12.90

 

Interest yield

 

 

14.03

 

 

 

9.48

 

 

 

9.16

 

 

 

 

(70.71

)

 

N/A

 

 

N/A

 

 

 

11.17

 

Net interest margin

 

 

12.64

 

 

 

8.16

 

 

 

4.42

 

 

 

 

(189.15

)

 

N/A

 

 

N/A

 

 

 

8.84

 

Reserve coverage

 

 

3.42

 

 

 

1.60

 

 

 

—

 

(1)

 

 

65.11

 

 

N/A

 

 

N/A

 

 

 

3.50

 

Delinquency status(2)

 

 

0.32

 

 

 

0.02

 

 

 

0.11

 

(1)

 

 

—

 

 

N/A

 

 

N/A

 

 

 

0.22

 

Charge-off (recovery) ratio(4)

 

 

(0.44

)

 

 

0.26

 

 

 

—

 

(3)

 

 

513.86

 

 

N/A

 

 

N/A

 

 

 

3.28

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Six Months Ended June 30, 2021

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

RPAC

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

56,328

 

 

$

16,146

 

 

$

2,865

 

 

 

$

(1,544

)

 

$

—

 

 

$

660

 

 

$

74,455

 

Total interest expense

 

 

5,657

 

 

 

2,351

 

 

 

1,288

 

 

 

 

3,894

 

 

 

75

 

 

 

3,027

 

 

 

16,292

 

Net interest income (loss)

 

 

50,671

 

 

 

13,795

 

 

 

1,577

 

 

 

 

(5,438

)

 

 

(75

)

 

 

(2,367

)

 

 

58,163

 

Provision for loan losses

 

 

4,630

 

 

 

1,206

 

 

 

—

 

 

 

 

(3,987

)

 

 

—

 

 

 

487

 

 

 

2,336

 

Net interest income (loss) after loss provision

 

 

46,041

 

 

 

12,589

 

 

 

1,577

 

 

 

 

(1,451

)

 

 

(75

)

 

 

(2,854

)

 

 

55,827

 

Sponsorship and race winnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

6,818

 

 

 

—

 

 

 

6,818

 

Race team related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

(4,796

)

 

 

—

 

 

 

(4,796

)

Other income (expense), net

 

 

(12,918

)

 

 

(4,552

)

 

 

(529

)

 

 

 

(3,301

)

 

 

(3,623

)

 

 

(1,858

)

 

 

(26,781

)

Net income (loss) before taxes

 

 

33,123

 

 

 

8,037

 

 

 

1,048

 

 

 

 

(4,752

)

 

 

(1,676

)

 

 

(4,712

)

 

 

31,068

 

Income tax (provision) benefit

 

 

(8,529

)

 

 

(2,070

)

 

 

(263

)

 

 

 

1,193

 

 

 

421

 

 

 

(1,158

)

 

 

(10,406

)

Net income (loss) after taxes

 

$

24,594

 

 

$

5,967

 

 

$

785

 

 

 

$

(3,559

)

 

$

(1,255

)

 

$

(5,870

)

 

$

20,662

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans net

 

$

855,900

 

 

$

362,370

 

 

$

66,236

 

 

 

$

5,764

 

 

$

—

 

 

$

3,351

 

 

$

1,293,621

 

Total assets

 

 

868,709

 

 

 

375,189

 

 

 

90,563

 

 

 

 

101,205

 

 

 

31,877

 

 

 

272,204

 

 

 

1,739,747

 

Total funds borrowed

 

 

712,777

 

 

 

295,887

 

 

 

72,450

 

 

 

 

80,959

 

 

 

8,016

 

 

 

212,020

 

 

 

1,382,109

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

6.06

%

 

 

3.39

%

 

 

1.95

%

 

 

 

(6.29

)%

 

 

(7.72

)%

 

 

(4.08

)%

 

 

2.08

%

Return on average equity

 

 

30.32

 

 

 

16.96

 

 

 

9.77

 

 

 

 

(31.44

)

 

 

(244.87

)

 

 

(30.46

)

 

 

11.09

 

Interest yield

 

 

14.18

 

 

 

9.56

 

 

 

9.66

 

 

 

 

(30.90

)

 

N/A

 

 

N/A

 

 

 

11.50

 

Net interest margin

 

 

12.76

 

 

 

8.17

 

 

 

5.32

 

 

 

 

(108.84

)

 

N/A

 

 

N/A

 

 

 

9.01

 

Reserve coverage

 

 

3.42

 

 

 

1.60

 

 

 

—

 

(1)

 

 

65.11

 

 

N/A

 

 

N/A

 

 

 

3.50

 

Delinquency status(2)

 

 

0.32

 

 

 

0.02

 

 

 

0.11

 

(1)

 

 

—

 

 

N/A

 

 

N/A

 

 

 

0.22

 

Charge-off (recovery) ratio

 

 

0.12

 

 

 

0.99

 

 

 

—

 

(3)

 

 

216.01

 

 

N/A

 

 

N/A

 

 

 

2.15

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.

(10) COMMITMENTS AND CONTINGENCIES

(A) EMPLOYMENT AGREEMENTS

The Company has employment agreements with certain key officers for either a one-, two-, three- or five-year term. Annually, the contracts with a five-year term will renew for new five-year terms unless prior to the end of the first year of each five-year term, either the Company or the executive provides notice to the other party of its intention not to extend the employment period beyond the current five-year term. Typically, the contracts with a one- or two-year term will renew for new one- or two-year terms unless prior to the term either the Company or the executive provides notice to the other party of its intention not to extend the employment period beyond the current one or two-year term (as applicable); however, there is currently one agreement that renews after two years for additional one-year terms and one agreement with a three-year term that does not have a renewal period. In the event of a change in control, as defined, during the employment period, the agreements provide for severance compensation to the executive in an amount equal to the balance of the salary, bonus, and value of fringe benefits which the executive would be entitled to receive for the remainder of the employment period.

Employment agreements expire at various dates through 2026, with future minimum payments under these agreements of approximately $13.9 million.

(B) OTHER COMMITMENTS

As of June 30, 2022, the Company had one commitment to extend credit of up to $1.8 million with an expiration date of January 1, 2025. Generally, any commitments would be on the same terms as loans to or investments in existing borrowers or investees, and generally have fixed expiration dates. Since some commitments would be expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

(C) SEC LITIGATION

On December 29, 2021, the SEC filed a civil complaint in the U.S. District Court for the Southern District of New York against the Company and its President and Chief Operating Officer alleging certain violations of the antifraud, books and records, internal controls and anti-touting provisions of the federal securities laws. The litigation relates to certain issues that occurred during the period 2015 to 2017, including (i) the Company’s retention of third parties in 2015 and 2016 concerning posting information about the Company on certain financial websites and (ii) the Company’s financial reporting and disclosures concerning certain assets, including Medallion Bank, in 2016 and 2017, a period when the Company had previously reported as a business development company (BDC) under the Investment Company Act of 1940. Since April 2018, the Company does not report as a BDC, and has not worked with such third parties

since 2016. The Company does not expect to change previously reported financial results. The Company filed a motion to dismiss the complaint on March 22, 2022, the SEC filed an amended complaint on April 26, 2022 and the Company filed a motion to dismiss the amended complaint on August 5, 2022.

The SEC is seeking injunctive relief, disgorgement plus pre-judgment interest and civil penalties in amounts unspecified, as well as an officer and director bar against the Company’s President and Chief Operating Officer. The Company and its President and Chief Operating Officer intend to defend themselves vigorously and believe that the SEC will not prevail on its claims. Nevertheless, depending on the outcome of the litigation, the Company could incur a loss and other penalties that could be material to the Company, its results of operations and/or financial condition, as well as a bar against its President and Chief Operating Officer. In addition, the Company has and expects to further incur significant legal fees and expenses in defending such charges by the SEC and the Company may be subject to shareholder litigation relating to these SEC matters.

(D) OTHER LITIGATION AND REGULATORY MATTERS

The Company and its subsidiaries are subject to inquiries from certain regulators and are currently involved in various legal proceedings incident to the normal course of business, including collection matters with respect to certain loans. We intend to vigorously defend any outstanding claims and pursue our legal rights. In the opinion of management, based on the advice of legal counsel, except for the pending SEC litigation, as described above, there is no proceeding pending, or to the knowledge of management threatened, which in the event of an adverse decision could result in a material adverse impact on the financial condition or results of operations of the Company.

(11) RELATED PARTY TRANSACTIONS

Certain directors, officers, and stockholders of the Company are also directors and officers of its main consolidated subsidiaries, MFC, MCI, FSVC, and the Bank, as well as other subsidiaries. Officer salaries are set by the Board of Directors of the Company.

Jeffrey Rudnick, the son of one of the Company’s directors, serves as the Company’s Senior Vice President at a salary of $239,000 per year, an increase from $195,000 per year in 2021. Mr. Rudnick received an annual cash bonus of $75,000 and $32,500 as well as an equity bonus in the amount of $45,019 and $30,000, during the six months ended June 30, 2022 and 2021.

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC Topic 825, “Financial Instruments,” requires disclosure of fair value information about certain financial instruments, whether assets, liabilities, or off-balance-sheet commitments, if practicable. The following methods and assumptions were used to estimate the fair value of each class of financial instrument. Fair value estimates that were derived from broker quotes cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.

(a) Cash—Book value equals fair value.

(b) Equity investments and securities—The Company’s equity securities are recorded at cost less any impairment plus or minus observable price changes.

(c) Investment securities—The Company’s investments are recorded at the estimated fair value of such investments.

(d) Loans receivable—The Company’s loans are recorded at book value which approximated fair value.

(e) Floating rate borrowings—Due to the short-term nature of these instruments, the carrying amount approximated fair value.

(f) Commitments to extend credit—The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, considering the remaining terms of the agreements and present creditworthiness of the counter parties. For fixed rate loan commitments, fair value also includes a consideration of the difference between the current levels of interest rates and the committed rates. At June 30, 2022 and December 31, 2021, the estimated fair value of these off-balance-sheet instruments was not material.

(g) Fixed rate borrowings—The fair value of the debentures payable to the SBA is estimated based on current market interest rates for similar debt.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Carrying
Amount

 

 

Fair
Value

 

 

Carrying
Amount

 

 

Fair
Value

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents, and federal funds sold (1)

 

$

126,330

 

 

$

126,330

 

 

$

124,484

 

 

$

124,484

 

Equity investments

 

 

10,942

 

 

 

10,942

 

 

 

9,726

 

 

 

9,726

 

Investment securities

 

 

50,358

 

 

 

50,358

 

 

 

44,772

 

 

 

44,772

 

Loans receivable

 

 

1,675,469

 

 

 

1,675,469

 

 

 

1,438,758

 

 

 

1,438,758

 

Accrued interest receivable (2)

 

 

11,534

 

 

 

11,534

 

 

 

10,621

 

 

 

10,621

 

Equity securities(3)

 

 

1,796

 

 

 

1,796

 

 

 

1,950

 

 

 

1,950

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Funds borrowed

 

 

1,696,005

 

 

 

1,696,005

 

 

 

1,478,001

 

 

 

1,478,001

 

Accrued interest payable (2)

 

 

3,548

 

 

 

3,548

 

 

 

3,395

 

 

 

3,395

 
(1)
Categorized as level 1 within the fair value hierarchy, excluding $1.3 million in interest bearing deposits categorized as level 2 as of June 30, 2022 and December 31, 2021. See Note 13.
(2)
Categorized as level 3 within the fair value hierarchy. See Note 13.
(3)
Included within other assets on the balance sheet.

(13) FAIR VALUE OF ASSETS AND LIABILITIES

The Company follows the provisions of FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements.

In accordance with FASB ASC 820, the Company has categorized its assets and liabilities measured at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). Our assessment and classification of an investment within a level can change over time based upon maturity or liquidity of the investment and would be reflected at the beginning of the quarter in which the change occurred.

As required by FASB ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a level 3 fair value measurement may include inputs that are observable (levels 1 and 2) and unobservable (level 3). Therefore, gains and losses for such assets and liabilities categorized within the level 3 table below may include changes in fair value that are attributable to both observable inputs (levels 1 and 2) and unobservable inputs (level 3).

 

Assets and liabilities measured at fair value, recorded on the consolidated balance sheets, are categorized based on the inputs to the valuation techniques as follows:

Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, most U.S. Government and agency securities, and certain other sovereign government obligations).

Level 2. Assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

a)
Quoted prices for similar assets or liabilities in active markets (for example, restricted stock);
b)
Quoted price for identical or similar assets or liabilities in non-active markets (for example, corporate and municipal bonds, which trade infrequently);
c)
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and
d)
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability (examples include certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).

Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the assets or liability (examples include certain private equity investments, and certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).

A review of fair value hierarchy classification is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain assets or liabilities. Reclassifications impacting level 3 of the fair value hierarchy are reported as transfers in/out of the level 3 category as of the beginning of the quarter in which the reclassifications occur.

Equity investments were recorded at cost less impairment plus or minus observable price changes. Commencing in 2020, the Company elected to measure equity investments at fair value on a non-recurring basis, which have been adjusted for all periods presented.

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

—

 

 

$

1,250

 

 

$

—

 

 

$

1,250

 

Available for sale investment securities

 

 

—

 

 

 

50,358

 

 

 

—

 

 

 

50,358

 

Equity securities

 

 

1,796

 

 

 

—

 

 

 

—

 

 

 

1,796

 

Total(1)

 

$

1,796

 

 

$

51,608

 

 

$

—

 

 

$

53,404

 
(1)
Total unrealized losses of $1.4 million and $3.1 million, net of tax, was included in accumulated other comprehensive loss for the three and six months ended June 30, 2022 related to these assets.

December 31, 2021
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

—

 

 

$

1,250

 

 

$

—

 

 

$

1,250

 

Available for sale investment securities

 

 

—

 

 

 

44,772

 

 

 

—

 

 

 

44,772

 

Equity securities

 

 

1,950

 

 

 

—

 

 

 

—

 

 

 

1,950

 

Total(1)

 

$

1,950

 

 

$

46,022

 

 

$

—

 

 

$

47,972

 
(1)
Total unrealized losses of $1.0 million, net of tax, was included in accumulated other comprehensive income (loss) for the year ended December 31, 2021 related to these assets.

 

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

—

 

 

$

—

 

 

$

10,942

 

 

$

10,942

 

Impaired loans

 

 

—

 

 

 

—

 

 

 

33,285

 

 

 

33,285

 

Loan collateral in process of foreclosure

 

 

—

 

 

 

—

 

 

 

26,974

 

 

 

26,974

 

Total

 

$

—

 

 

$

—

 

 

$

71,201

 

 

$

71,201

 

 

December 31, 2021
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

—

 

 

$

—

 

 

$

9,726

 

 

$

9,726

 

Impaired loans

 

 

—

 

 

 

—

 

 

 

35,571

 

 

 

35,571

 

Loan collateral in process of foreclosure

 

 

—

 

 

 

—

 

 

 

37,430

 

 

 

37,430

 

Total

 

$

—

 

 

$

—

 

 

$

82,727

 

 

$

82,727

 

Significant Unobservable Inputs

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as level 3 within the fair value hierarchy. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

The valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

Fair Value
at June 30, 2022

 

 

Valuation Techniques

 

Unobservable Inputs

 

Range
(Weighted Average)

Equity investments

 

$

10,669

 

 

Investee financial analysis

 

Financial condition and operating performance of the borrower (1)

 

N/A

 

 

 

 

 

 

 

Collateral support

 

N/A

 

 

 

273

 

 

Precedent market transaction

 

Offering price

 

$8.73 / share

Impaired loans

 

 

33,285

 

 

Market approach

 

Historical and actual loss experience

 

0.00% - 5.52%

 

 

 

 

 

 

 

 

 

60% of balance

 

 

 

 

 

 

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value

 

N/A

Loan collateral in process of foreclosure

 

 

26,974

 

 

Market approach

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value (3)

 

$1.8 - 34.2
(1)
Includes projections based on revenue, EBITDA, leverage, and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry, and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(2)
Represents amount net of liquidation costs.
(3)
Relates to the recreation portfolio.

(Dollars in thousands)

 

Fair Value
at December 31, 2021

 

 

Valuation Techniques

 

Unobservable Inputs

 

Range
(Weighted Average)

Equity investments

 

$

9,453

 

 

Investee financial analysis

 

Financial condition and operating performance of the borrower (1)

 

N/A

 

 

 

 

 

 

 

Collateral support

 

N/A

 

 

 

273

 

 

Precedent market transaction

 

Offering price

 

$8.73 / share

Impaired loans

 

 

35,571

 

 

Market approach

 

Historical and actual loss experience

 

1.50% - 6.00%

 

 

 

 

 

 

 

 

 

60% of balance

 

 

 

 

 

 

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value

 

N/A

Loan collateral in process of foreclosure

 

 

37,430

 

 

Market approach

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value (3)

 

$3.6 - 49.8
(1)
Includes projections based on revenue, EBITDA, leverage, and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry, and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(2)
Represents amount net of liquidation costs.
(3)
Relates to the recreation portfolio.

 

(14) MEDALLION BANK PREFERRED STOCK (Non-controlling interest)

On December 17, 2019, the Bank closed an initial public offering of 1,840,000 shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, with a $46.0 million aggregate liquidation amount, yielding net proceeds of $42.5 million, which were recorded in the Bank’s shareholders’ equity. Dividends are payable quarterly from the date of issuance to, but excluding April 1, 2025, at a rate of 8% per annum, and from and including April 1, 2025, at a floating rate equal to a benchmark rate (which is expected to be three-month Secured Overnight Financing Rate, or SOFR) plus a spread of 6.46% per annum.

On July 21, 2011, the Bank issued, and the U.S. Treasury purchased, 26,303 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series E, or Series E, for an aggregate purchase price of $26.3 million under the Small Business Lending Fund Program, or SBLF, with a liquidation amount of $1,000 per share. The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified smaller banks at favorable rates. The Bank pays a dividend rate of 9% on the Series E.

(15) SUBSEQUENT EVENTS

The Company has evaluated the effects of events that have occurred subsequent to June 30, 2022 through the date of financial statement issuance. As of such date, there were no subsequent events that required disclosure.

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the three and six months ended June 30, 2022 and the year ended December 31, 2021. This section is intended to provide management’s perspective of our financial condition and results of operations. In addition, this section contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are described in the Risk Factors in our Annual Report on Form 10-K.

COMPANY BACKGROUND

We are a specialty finance company whose focus and growth has been our consumer finance and commercial lending businesses operated by Medallion Bank, or the Bank, and Medallion Capital, Inc., or Medallion Capital. The Bank is a wholly-owned subsidiary, that originates consumer loans for the purchase of recreational vehicles, boats, motorcycles, and home improvements, and provides loan origination and other services to fintech partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of June 30, 2022, our consumer loans represented 94% of our gross loan portfolio, and commercial loans represented 6%. Total assets were $2.1 billion and $1.9 billion as of June 30, 2022 and December 31, 2021.

Our loan-related earnings depend primarily on our level of net interest income. Net interest income is the difference between the total yield on our loan portfolio and the average cost of borrowed funds. We fund our operations through a wide variety of interest-bearing sources, including bank certificates of deposit issued to customers, debentures issued to and guaranteed by the SBA, privately placed notes, and preferred securities. Net interest income fluctuates with changes in the yield on our loan portfolios and changes in the cost of borrowed funds, as well as changes in the amount of interest-earning assets and interest-bearing liabilities held by us. Net interest income is also affected by economic, regulatory, and competitive factors that influence interest rates, loan demand, and the availability of funding to finance our lending activities. We, like other financial institutions, are subject to interest rate risk to the degree that our interest-earning assets reprice, either due to inflation or other factors, on a different basis than our interest-bearing liabilities. We continue to monitor global supply chain disruptions, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation.

We also provide debt, mezzanine, and equity investment capital to companies in a variety of commercial industries. These investments may be venture capital style investments which may not be fully collateralized. Our investments are typically in the form of secured debt instruments with fixed interest rates accompanied by an equity stake or warrants to purchase an equity interest for a nominal exercise price (such warrants are included in equity investments on the consolidated balance sheets). Interest income is earned on the debt instruments.

The Bank is an industrial bank regulated by the FDIC and the Utah Department of Financial Institutions that originates consumer loans, raises deposits, and conducts other banking activities. The Bank generally provides us with our lowest cost of funds which it raises through bank certificates of deposit. To take advantage of this low cost of funds, historically we referred a portion of our medallion and commercial loans to the Bank, which originated these loans, and have since been serviced by Medallion Servicing Corp., or MSC. However, other than in connection with dispositions of existing medallion assets, the Bank has not originated any new medallion loans since 2014 (and Medallion Financial Corp. has not originated any new medallion loans since 2015) and is working with MSC to service its remaining portfolio, as it winds down. MSC earns referral and servicing fees for these activities. In 2019, the Bank started building a strategic partnership program to provide lending and other services to financial technology, or fintech, companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans, then entered into a second and third strategic partnership in 2021 and 2022. The Bank continues to explore opportunities with additional fintech companies.

We continue to consider various alternatives for the Bank, which may include an initial public offering of its common stock, the sale of all or part of the Bank, a spin-off or other potential transaction. We do not have a deadline for its consideration of these alternatives, and there can be no assurance that this process will result in any transaction being announced or consummated.

CRITICAL ACCOUNTING POLICIES

Our accounting policies are fundamental to understanding management's discussion and analysis of its financial condition and results of operations. At June 30, 2022, we identified our policies on the allowance for loan loss, goodwill and intangible assets, and deferred taxes, to be critical accounting policies because management has to make subjective and/or complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. Our critical accounting policies are described in detail in Part I, Item 7 in Medallion Financial Corp.'s Annual Report on Form 10-K for the year ended December 31, 2021, and there have been no material changes in such policies and estimates since the date of such report.

 

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, or Topic 326: Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. The main objective of this new standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial assets and other commitments to extend credit held by a reporting entity at each reporting date. Under the new standard, the concepts used by entities to account for credit losses on financial instruments will fundamentally change. The existing “probable” and “incurred” loss recognition threshold is removed. Loss estimates are based upon lifetime “expected” credit losses. The use of past and current events must now be supplemented with “reasonable and supportable” expectations about the future to determine the amount of credit loss. The collective changes to the recognition and measurement accounting standards for financial instruments and their anticipated impact on the allowance for credit losses modeling have been universally referred to as the CECL (current expected credit loss) model. ASU 2016-13 applies to all entities and is effective for fiscal years beginning after December 15, 2019 for public entities, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10 to defer implementation of the standard for smaller reporting companies, such as us, to fiscal years beginning after December 15, 2022. We are assessing the impact the update will have on our financial statements, and expect the update to have a material impact on our accounting for estimated credit losses on our loans.

In August 2021, the FASB issued ASU 2021-06, Presentation of Financial Statements, or Topic 205: Depository and Lending, or Topic 942: and Financial Services – Investment Companies, or Topic 946: Measurement of Credit Losses on Financial Instruments, or ASU 2021-06. This new standard amends certain SEC paragraphs from the Codification in response to the issuance of SEC Final Rule No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses and SEC Rule No. 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants. We have assessed the impact the update and determined it does not have a material impact on our financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses, or Topic 326: Troubled Debt Restructurings and Vintage Disclosures, or ASU 2022-02. The main objective of this new standard is to amend ASU 2016-13 in response to feedback received from the post-implementation review process. The amendments update ASU 2016-13 to require that an entity measure and record the lifetime expected credit losses on an asset upon origination or acquisition, and, as a result, credit losses from loans modified as troubled debt restructurings (TDRs) have been incorporated into the allowance for credit losses. The amendments also require the disclosure of current period gross write-offs, by year of origination, for financing receivables. ASU 2022-02 is effective upon the adoption of ASU 2016-13. We are assessing the impact the update will have on our financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement, or Topic 820: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, or ASU 2016-13. This new standard clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. We have assessed the impact the update and determined it does not have a material impact on our financial statements.

CONTROL STATUTES

Because the Bank is an “insured depository institution” within the meaning of the Federal Deposit Insurance Act and the Change in Bank Control Act and we are a “financial institution holding company” within the meaning of the Utah Financial Institutions Act, federal and Utah law and regulations prohibit any person or company from acquiring control of us and, indirectly, the Bank, without, in most cases, prior written approval of the FDIC or the Commissioner of Utah Department of Financial Institutions, as applicable. Under the Change in Bank Control Act, control is conclusively presumed if, among other things, a person or company acquires 25% or more of any class of our voting stock. A rebuttable presumption of control arises if a person or company acquires 10% or more of any class of voting stock and is subject to a number of specified “control factors” as set forth in the applicable regulations. Although the Bank is an “insured depository institution” within the meaning of the Federal Deposit Insurance Act and the Change in Bank Control Act, your investment in the Company is not insured or guaranteed by the FDIC, or any other agency, and is subject to loss. Under the Utah Financial Institutions Act, control is defined as the power directly or indirectly or through or in concert with one or more persons to (1) direct or exercise a controlling influence over the management or policies of us or the election of a majority of the directors of us, or (2) to vote 20% or more of any class of our voting securities by an individual or to vote more than 10% of any class of our voting securities by a person other than an individual. If any holder of any series of the Bank’s preferred stock is or becomes entitled to vote for the election of the Bank’s directors, such series will be deemed a class of voting stock, and any other person will be required to obtain the non-objection of the FDIC under the Change in Bank Control Act to acquire or maintain 10% or more of that series. Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of our common stock in excess of the amount which can be acquired without regulatory approval.

 

In addition to the regulations detailed above, our operations are subject to supervision and regulation by other federal, state, and local laws and regulations. Additionally, our operations may be subject to various laws and judicial and administrative decisions. This oversight may serve to:

•
regulate credit granting activities, including establishing licensing requirements, if any, in various jurisdictions;
•
establish maximum interest rates, finance charges and other charges;
•
require disclosures to customers;
•
govern secured transactions;
•
set collection, foreclosure, repossession, and claims handling procedures and other trade practices;
•
prohibit discrimination in the extension of credit and administration of loans; and
•
regulate the use and reporting of information related to a borrower’s credit experience and other data collection.

Changes to laws of states in which we do business could affect the operating environment in substantial and unpredictable ways. We cannot predict whether such changes will occur or, if they occur, the ultimate effect they would have upon our financial condition or results of operations.

COVID-19

In March 2020, in response to the COVID-19 pandemic, we adjusted the payment policies and procedures with our consumer and medallion businesses, and allowed borrowers to defer payments up to 180 days. As of June 30, 2022, no consumer or medallion loans remained on deferral related to COVID-19. For our medallion portfolio, we determined that anticipated payment activity on our medallion portfolio was impossible to quantify upon the end of the deferral moratorium, and therefore all medallion loans were deemed impaired, placed on nonaccrual status, and written down to each market’s net collateral value in the 2020 third quarter, with additional write-offs taken during 2021. We will continue to monitor our medallion portfolio and related assets, which may result in additional write-downs, charge-offs or impairments.

In addition to modifying payment policies, we have taken steps to accommodate remote work and implemented several cost-cutting measures, such as reducing employee headcount at our parent company, Medallion Financial Corp., and closing satellite offices in Long Island City, New York; Chicago, Illinois; and Boston, Massachusetts.

With COVID-19 continuing and new variants emerging, the potential future effects of COVID-19 on our consumer loan portfolio and consumer businesses remain uncertain, and we could suffer potential losses on our consumer loan portfolios as a result of the effects on the ability of our borrowers to repay their loans as well as on the economy and on demand for our loans.

 

AVERAGE BALANCES AND RATES

The following table shows our consolidated average balance sheet, interest income and expense, and the average interest earning/bearing assets and liabilities, and which reflects the average yield on assets and average costs on liabilities for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Average
Balance

 

 

Interest

 

 

Average
Yield/Cost

 

 

Average
Balance

 

 

Interest

 

 

Average
Yield/Cost

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning cash equivalents

 

$

4,278

 

 

$

40

 

 

 

3.75

%

 

$

2,993

 

 

$

14

 

 

 

1.88

%

Federal funds sold

 

 

74,285

 

 

 

88

 

 

 

0.48

 

 

 

48,557

 

 

 

4

 

 

 

0.03

 

Investment securities

 

 

47,705

 

 

 

281

 

 

 

2.36

 

 

 

44,119

 

 

 

225

 

 

 

2.05

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

1,013,037

 

 

 

33,515

 

 

 

13.27

 

 

 

825,695

 

 

 

28,877

 

 

 

14.03

 

Home improvement

 

 

490,662

 

 

 

10,588

 

 

 

8.66

 

 

 

348,066

 

 

 

8,228

 

 

 

9.48

 

Commercial

 

 

86,455

 

 

 

2,338

 

 

 

10.85

 

 

 

63,855

 

 

 

1,516

 

 

 

9.52

 

Medallion

 

 

4,633

 

 

 

232

 

 

 

20.09

 

 

 

8,480

 

 

 

(1,495

)

 

 

(70.71

)

Strategic partnerships

 

 

373

 

 

 

29

 

 

 

31.18

 

 

 

60

 

 

 

6

 

 

 

40.11

 

Total loans

 

 

1,595,160

 

 

 

46,702

 

 

 

11.74

 

 

 

1,246,156

 

 

 

37,132

 

 

 

11.95

 

Total interest-earning assets

 

 

1,721,428

 

 

 

47,111

 

 

 

11.00

 

 

 

1,341,825

 

 

 

37,375

 

 

 

11.17

 

Non-interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

41,820

 

 

 

 

 

 

 

 

 

45,257

 

 

 

 

 

 

 

Equity investments

 

 

10,762

 

 

 

 

 

 

 

 

 

9,714

 

 

 

 

 

 

 

Loan collateral in process of foreclosure(1)

 

 

30,806

 

 

 

 

 

 

 

 

 

50,678

 

 

 

 

 

 

 

Goodwill and intangible assets

 

 

173,744

 

 

 

 

 

 

 

 

 

201,354

 

 

 

 

 

 

 

Other assets

 

 

45,899

 

 

 

 

 

 

 

 

 

45,846

 

 

 

 

 

 

 

Total non-interest-earning assets

 

 

303,031

 

 

 

 

 

 

 

 

 

352,849

 

 

 

 

 

 

 

Total assets

 

$

2,024,459

 

 

 

 

 

 

 

 

$

1,694,674

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

1,386,967

 

 

$

4,912

 

 

 

1.42

%

 

$

1,104,935

 

 

$

4,465

 

 

 

1.62

%

Retail and privately placed notes

 

 

121,000

 

 

 

2,507

 

 

 

8.31

 

 

 

125,744

 

 

 

2,592

 

 

 

8.27

 

SBA debentures and borrowings

 

 

69,407

 

 

 

561

 

 

 

3.24

 

 

 

60,763

 

 

 

509

 

 

 

3.36

 

Preferred securities

 

 

33,000

 

 

 

250

 

 

 

3.04

 

 

 

33,000

 

 

 

191

 

 

 

2.32

 

Notes payable to banks

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,570

 

 

 

94

 

 

 

3.94

 

Other borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,558

 

 

 

33

 

 

 

1.55

 

Total interest-bearing liabilities

 

 

1,610,374

 

 

 

8,230

 

 

 

2.05

 

 

 

1,342,570

 

 

 

7,884

 

 

 

2.36

 

Non-interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liability

 

 

21,648

 

 

 

 

 

 

 

 

 

5,835

 

 

 

 

 

 

 

Other liabilities (2)

 

 

28,748

 

 

 

 

 

 

 

 

 

26,982

 

 

 

 

 

 

 

Total non-interest-bearing liabilities

 

 

50,396

 

 

 

 

 

 

 

 

 

32,817

 

 

 

 

 

 

 

Total liabilities

 

 

1,660,770

 

 

 

 

 

 

 

 

 

1,375,387

 

 

 

 

 

 

 

Non-controlling interest

 

 

69,166

 

 

 

 

 

 

 

 

 

72,489

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

294,523

 

 

 

 

 

 

 

 

 

246,798

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,024,459

 

 

 

 

 

 

 

 

$

1,694,674

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

38,881

 

 

 

 

 

 

 

 

$

29,491

 

 

 

 

Net interest margin

 

 

 

 

 

 

 

 

9.07

%

 

 

 

 

 

 

 

 

8.84

%
(1)
Includes financed sales of this collateral to third parties reported separately from the loan portfolio, and that are conducted by Medallion Bank of $7.7 million and $9.3 million as of June 30, 2022 and 2021.
(2)
Includes deferred financing costs of $7.4 million and $7.1 million as of June 30, 2022 and 2021.

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Average
Balance

 

 

Interest

 

 

Average
Yield/Cost

 

 

Average
Balance

 

 

Interest

 

 

Average
Yield/Cost

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning cash equivalents

 

$

4,277

 

 

$

86

 

 

 

4.05

%

 

$

3,198

 

 

$

32

 

 

 

2.02

%

Federal funds sold

 

 

67,103

 

 

 

103

 

 

 

0.31

 

 

 

43,274

 

 

 

9

 

 

 

4.19

 

Investment securities

 

 

45,926

 

 

 

500

 

 

 

2.20

 

 

 

43,797

 

 

 

427

 

 

 

1.97

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

980,673

 

 

 

64,650

 

 

 

13.29

 

 

 

801,074

 

 

 

56,319

 

 

 

14.18

 

Home improvement

 

 

469,125

 

 

 

20,288

 

 

 

8.72

 

 

 

340,655

 

 

 

16,146

 

 

 

9.56

 

Commercial

 

 

82,581

 

 

 

4,366

 

 

 

10.66

 

 

 

63,078

 

 

 

3,076

 

 

 

9.83

 

Medallion

 

 

4,690

 

 

 

378

 

 

 

16.25

 

 

 

10,075

 

 

 

(1,564

)

 

 

31.30

 

Strategic partnerships

 

 

283

 

 

 

43

 

 

 

30.64

 

 

 

41

 

 

 

10

 

 

 

49.18

 

Total loans

 

 

1,537,352

 

 

 

89,725

 

 

 

11.77

 

 

 

1,214,923

 

 

 

73,987

 

 

 

12.28

 

Total interest-earning assets

 

 

1,654,658

 

 

 

90,414

 

 

 

11.04

 

 

 

1,305,192

 

 

 

74,455

 

 

 

11.50

 

Non-interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

48,842

 

 

 

 

 

 

 

 

 

51,219

 

 

 

 

 

 

 

Equity investments

 

 

10,461

 

 

 

 

 

 

 

 

 

9,666

 

 

 

 

 

 

 

Loan collateral in process of foreclosure(1)

 

 

33,114

 

 

 

 

 

 

 

 

 

52,307

 

 

 

 

 

 

 

Goodwill and intangible assets

 

 

173,925

 

 

 

 

 

 

 

 

 

201,534

 

 

 

 

 

 

 

Other assets

 

 

45,219

 

 

 

 

 

 

 

 

 

45,642

 

 

 

 

 

 

 

Total non-interest-earning assets

 

 

311,561

 

 

 

 

 

 

 

 

 

360,368

 

 

 

 

 

 

 

Total assets

 

$

1,966,219

 

 

 

 

 

 

 

 

$

1,665,560

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

1,332,971

 

 

$

9,066

 

 

 

1.37

%

 

$

1,077,260

 

 

$

9,176

 

 

 

1.72

%

Retail and privately placed notes

 

 

121,000

 

 

 

5,005

 

 

 

8.34

 

 

 

120,450

 

 

 

5,224

 

 

 

8.75

 

SBA debentures and borrowings

 

 

69,604

 

 

 

1,084

 

 

 

3.14

 

 

 

62,654

 

 

 

1,081

 

 

 

3.48

 

Preferred securities

 

 

33,000

 

 

 

450

 

 

 

2.75

 

 

 

33,000

 

 

 

356

 

 

 

3.91

 

Notes payable to banks

 

 

—

 

 

 

—

 

 

 

—

 

 

 

18,378

 

 

 

380

 

 

 

2.32

 

Other borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

8,619

 

 

 

75

 

 

 

1.75

 

Total interest-bearing liabilities

 

 

1,556,575

 

 

 

15,605

 

 

 

2.02

 

 

 

1,320,361

 

 

 

16,292

 

 

 

2.49

 

Non-interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liability

 

 

20,052

 

 

 

 

 

 

 

 

 

3,575

 

 

 

 

 

 

 

Other liabilities (2)

 

 

27,521

 

 

 

 

 

 

 

 

 

27,521

 

 

 

 

 

 

 

Total non-interest-bearing liabilities

 

 

47,573

 

 

 

 

 

 

 

 

 

31,096

 

 

 

 

 

 

 

Total liabilities

 

 

1,604,148

 

 

 

 

 

 

 

 

 

1,351,457

 

 

 

 

 

 

 

Non-controlling interest

 

 

69,220

 

 

 

 

 

 

 

 

 

72,833

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

292,851

 

 

 

 

 

 

 

 

 

241,270

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,966,219

 

 

 

 

 

 

 

 

$

1,665,560

 

 

 

 

 

 

 

Net interest income

 

 

 

 

$

74,809

 

 

 

 

 

 

 

 

$

58,163

 

 

 

 

Net interest margin

 

 

 

 

 

 

 

 

9.15

%

 

 

 

 

 

 

 

 

9.01

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(1)
Includes financed sales of this collateral to third parties reported separately from the loan portfolio, and that are conducted by Medallion Bank of $7.7 million and $9.3 million as of June 30, 2022 and 2021.
(2)
Includes deferred financing costs of $7.4 million and $7.1 million as of June 30, 2022 and 2021.

RATE/VOLUME ANALYSIS

During the quarter, our net loans receivable had a yield of 11.74% (compared to 11.95% in the prior year’s second quarter), with the yield driven by our recreation, home improvement and commercial loans. The 21 basis point decrease from the prior year’s second quarter is attributable to our changing mix of loans, mainly driven by the growth in the home improvement loans, which have a lower coupon than our recreation and commercial loans. Our debt, a significant component being certificates of deposit, funds our growing lending businesses. Despite the current year increase in interest rates, our average interest cost during the quarter of 2.05% decreased 21 basis points from the prior year second quarter, primarily reflecting the decreasing rates for certificate of deposits issued during 2021 compared to maturing older deposits which bore a higher cost. During the year to date period, our net loans receivable had a yield of 11.77% (compared to 12.28% in the prior year’s second quarter), the decrease similarly driven by the changing mix of our loans, mainly driven by the growth in the home improvement loan portfolio. Similar to the quarter, despite the current year increase in interest rates, our average interest cost during the year to date period of 2.02% decreased 47 basis points from the prior year period, primarily reflecting the decreasing rates for certificate of deposits issued during 2021 compared to maturing older deposits which bore a higher cost, and to a lesser extent the repayment of retail notes in the prior year, which carried a higher rate of interest when compared to privately placed notes issued in the prior year.

The following tables present the change in interest income and expense due to changes in the average balances (volume) and average yield/cost, calculated for the periods indicated.

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Increase
(Decrease)
In Volume

 

 

Increase
(Decrease)
In Rate

 

 

Net Change

 

 

Increase
(Decrease)
In Volume

 

 

Increase
(Decrease)
In Rate

 

 

Net Change

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning cash and cash equivalents

 

$

44

 

 

$

66

 

 

$

110

 

 

$

(443

)

 

$

450

 

 

$

7

 

Investment securities

 

 

21

 

 

 

35

 

 

 

56

 

 

 

(15

)

 

 

(11

)

 

 

(26

)

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

6,198

 

 

 

(1,560

)

 

 

4,638

 

 

 

3,264

 

 

 

(1,616

)

 

 

1,648

 

Home improvement

 

 

3,077

 

 

 

(717

)

 

 

2,360

 

 

 

2,019

 

 

 

(117

)

 

 

1,902

 

Commercial

 

 

611

 

 

 

211

 

 

 

822

 

 

 

(157

)

 

 

(105

)

 

 

(262

)

Medallion

 

 

(193

)

 

 

1,920

 

 

 

1,727

 

 

 

14,903

 

 

 

(16,391

)

 

 

(1,488

)

Strategic partnerships

 

 

24

 

 

 

(1

)

 

 

23

 

 

 

5

 

 

 

1

 

 

 

6

 

Total loans

 

$

9,717

 

 

$

(147

)

 

$

9,570

 

 

$

20,034

 

 

$

(18,228

)

 

$

1,806

 

Total interest-earning assets

 

$

9,782

 

 

$

(46

)

 

$

9,736

 

 

$

19,576

 

 

$

(17,789

)

 

$

1,787

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

999

 

 

$

(552

)

 

$

447

 

 

$

124

 

 

$

(1,579

)

 

$

(1,455

)

Retail and privately placed notes

 

 

(98

)

 

 

13

 

 

 

(85

)

 

 

(96

)

 

 

(51

)

 

 

(147

)

SBA debentures and borrowings

 

 

70

 

 

 

(18

)

 

 

52

 

 

 

(221

)

 

 

27

 

 

 

(194

)

Notes payable to banks

 

 

—

 

 

 

(94

)

 

 

(94

)

 

 

1,162

 

 

 

(254

)

 

 

908

 

Preferred securities

 

 

—

 

 

 

59

 

 

 

59

 

 

 

1

 

 

 

(57

)

 

 

(56

)

Other borrowings

 

 

—

 

 

 

(33

)

 

 

(33

)

 

 

3

 

 

 

(10

)

 

 

(7

)

Total interest-bearing liabilities

 

$

971

 

 

$

(625

)

 

$

346

 

 

$

973

 

 

$

(1,924

)

 

$

(951

)

Net

 

$

8,811

 

 

$

579

 

 

$

9,390

 

 

$

18,603

 

 

$

(15,865

)

 

$

2,738

 

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Increase
(Decrease)
In Volume

 

 

Increase
(Decrease)
In Rate

 

 

Net Change

 

 

Increase
(Decrease)
In Volume

 

 

Increase
(Decrease)
In Rate

 

 

Net Change

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning cash and cash equivalents

 

$

66

 

 

$

82

 

 

$

148

 

 

$

26

 

 

$

(104

)

 

$

(78

)

Investment securities

 

 

23

 

 

 

50

 

 

 

73

 

 

 

46

 

 

 

(201

)

 

 

(155

)

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

11,840

 

 

 

(3,509

)

 

 

8,331

 

 

 

5,898

 

 

 

(3,142

)

 

 

2,756

 

Home improvement

 

 

5,556

 

 

 

(1,414

)

 

 

4,142

 

 

 

3,903

 

 

 

30

 

 

 

3,933

 

Commercial

 

 

1,031

 

 

 

259

 

 

 

1,290

 

 

 

(149

)

 

 

(433

)

 

 

(582

)

Medallion

 

 

(434

)

 

 

2,376

 

 

 

1,942

 

 

 

15,363

 

 

 

(17,922

)

 

 

(2,559

)

Strategic partnerships

 

 

37

 

 

 

(4

)

 

 

33

 

 

 

10

 

 

 

—

 

 

 

10

 

Total loans

 

$

18,030

 

 

$

(2,292

)

 

$

15,738

 

 

$

25,025

 

 

$

(21,467

)

 

$

3,558

 

Total interest-earning assets

 

$

18,119

 

 

$

(2,160

)

 

$

15,959

 

 

$

25,097

 

 

$

(21,772

)

 

$

3,325

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

1,739

 

 

$

(1,849

)

 

$

(110

)

 

$

1,328

 

 

$

(4,013

)

 

$

(2,685

)

Retail and privately placed notes

 

 

23

 

 

 

(242

)

 

 

(219

)

 

 

(127

)

 

 

(135

)

 

 

(262

)

SBA debentures and borrowings

 

 

108

 

 

 

(105

)

 

 

3

 

 

 

(243

)

 

 

(25

)

 

 

(268

)

Notes payable to banks

 

 

—

 

 

 

(356

)

 

 

(356

)

 

 

2,195

 

 

 

(337

)

 

 

1,858

 

Preferred securities

 

 

—

 

 

 

70

 

 

 

70

 

 

 

65

 

 

 

(246

)

 

 

(181

)

Other borrowings

 

 

—

 

 

 

(75

)

 

 

(75

)

 

 

7

 

 

 

(12

)

 

 

(5

)

Total interest-bearing liabilities

 

$

1,870

 

 

$

(2,557

)

 

$

(687

)

 

$

3,225

 

 

$

(4,768

)

 

$

(1,543

)

Net

 

$

16,249

 

 

$

397

 

 

$

16,646

 

 

$

21,872

 

 

$

(17,004

)

 

$

4,868

 

 

During the three and six months ended June 30, 2022, the increase in the interest earning assets was mainly driven by the increase in volume of consumer loans, even as the yield on these loans declined. The increase in debt similarly was driven by the increase in the borrowings, mainly driven by deposits, which are used to fund our growing loan portfolio.

Our interest expense is driven by the interest rates payable on our bank certificates of deposit, privately placed notes, fixed-rate, long-term debentures issued to the SBA, and have, in the past, included credit facilities with banks and other short-term notes payable. The Bank issues brokered time certificates of deposit, which are our lowest borrowing costs. The Bank is able to bid on these deposits at a variety of maturity options, which allows for improved interest rate management strategies.

Our cost of funds is primarily driven by the rates paid on our various debt instruments and their relative mix, and changes in the levels of average borrowings outstanding. See Note 5 to the consolidated financial statements for details on the terms of our outstanding debt. Our debentures issued to the SBA typically have terms of ten years.

We measure our borrowing costs as our aggregate interest expense for all of our interest-bearing liabilities divided by the average amount of such liabilities outstanding during the period. The tables above show the average borrowings and related borrowing costs for the three and six months ended June 30, 2022 and 2021.

We continue to seek SBA funding through Medallion Capital, Inc., to the extent it offers attractive rates. SBA financing subjects its recipients to limits on the amount of secured bank debt they may incur. We use SBA funding to fund loans that qualify under the Small Business Investment Act of 1985, as amended, or the SBIA, and SBA regulations. In July 2020, we obtained a $25.0 million commitment from the SBA. At June 30, 2022 and 2021, adjustable rate debt constituted just 2% and 3% of total debt.

LOANS

Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, and which are amortized to interest income over the life of the loan. During the three and six months ended June 30, 2022, there was continued growth in the consumer lending segments along with recoveries in the medallion segment, which was partly offset by consumer and medallion charge-offs during the period, the continuing of loans aged over 120 days transferred to loan collateral in process of foreclosure and payments received from borrowers.

Three Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – March 31, 2022

 

$

1,004,091

 

 

$

473,408

 

 

$

77,867

 

 

$

13,849

 

 

$

226

 

 

$

1,569,441

 

Loan originations

 

 

170,207

 

 

 

105,172

 

 

 

19,272

 

 

 

472

 

 

 

9,830

 

 

 

304,953

 

Principal payments, sales, maturities, and recoveries

 

 

(73,114

)

 

 

(51,006

)

 

 

(386

)

 

 

(30

)

 

 

(9,463

)

 

 

(133,999

)

Charge-offs

 

 

(5,074

)

 

 

(1,108

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,182

)

Transfer to loan collateral in process of foreclosure, net

 

 

(2,618

)

 

 

—

 

 

 

—

 

 

 

(139

)

 

 

—

 

 

 

(2,757

)

Amortization of origination costs

 

 

(2,931

)

 

 

380

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,551

)

Amortization of loan premium

 

 

(60

)

 

 

(90

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(150

)

FASB origination costs, net

 

 

6,169

 

 

 

(478

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,691

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

175

 

 

 

—

 

 

 

—

 

 

 

175

 

Gross loans – June 30, 2022

 

$

1,096,670

 

 

$

526,278

 

 

$

96,928

 

 

$

14,152

 

 

$

593

 

 

$

1,734,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – December 31, 2021

 

$

961,320

 

 

$

436,772

 

 

$

76,696

 

 

$

14,046

 

 

$

90

 

 

$

1,488,924

 

Loan originations

 

 

284,613

 

 

 

194,992

 

 

 

23,672

 

 

 

564

 

 

 

14,839

 

 

 

518,680

 

Principal payments, sales, maturities, and recoveries

 

 

(138,230

)

 

 

(103,170

)

 

 

(2,203

)

 

 

(115

)

 

 

(14,336

)

 

 

(258,054

)

Charge-offs

 

 

(10,141

)

 

 

(2,168

)

 

 

(1,584

)

 

 

(75

)

 

 

—

 

 

 

(13,968

)

Transfer to loan collateral in process of foreclosure, net

 

 

(5,529

)

 

 

—

 

 

 

—

 

 

 

(268

)

 

 

—

 

 

 

(5,797

)

Amortization of origination costs

 

 

(5,370

)

 

 

700

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,670

)

Amortization of loan premium

 

 

(120

)

 

 

(180

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(300

)

FASB origination costs, net

 

 

10,127

 

 

 

(668

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,459

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

347

 

 

 

—

 

 

 

—

 

 

 

347

 

Gross loans – June 30, 2022

 

$

1,096,670

 

 

$

526,278

 

 

$

96,928

 

 

$

14,152

 

 

$

593

 

 

$

1,734,621

 

 

 

Three Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – March 31, 2021

 

$

822,932

 

 

$

342,121

 

 

$

58,854

 

 

$

35,250

 

 

$

58

 

 

$

1,259,215

 

Loan originations

 

 

134,467

 

 

 

62,992

 

 

 

11,059

 

 

 

—

 

 

 

2,426

 

 

 

210,944

 

Principal payments, sales, maturities, and recoveries

 

 

(67,084

)

 

 

(36,171

)

 

 

(564

)

 

 

(467

)

 

 

(2,414

)

 

 

(106,700

)

Charge-offs

 

 

(2,672

)

 

 

(786

)

 

 

—

 

 

 

(12,791

)

 

 

—

 

 

 

(16,249

)

Transfer to loan collateral in process of foreclosure, net

 

 

(2,980

)

 

 

—

 

 

 

—

 

 

 

(3,933

)

 

 

—

 

 

 

(6,913

)

Amortization of origination costs

 

 

(2,477

)

 

 

410

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,067

)

Amortization of loan premium

 

 

(60

)

 

 

(90

)

 

 

—

 

 

 

(1,545

)

 

 

—

 

 

 

(1,695

)

FASB origination costs, net

 

 

4,080

 

 

 

(219

)

 

 

1

 

 

 

—

 

 

 

—

 

 

 

3,862

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

170

 

 

 

—

 

 

 

—

 

 

 

170

 

Gross loans – June 30, 2021

 

$

886,206

 

 

$

368,257

 

 

$

69,520

 

 

$

16,514

 

 

$

70

 

 

$

1,340,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – December 31, 2020

 

$

792,686

 

 

$

334,033

 

 

$

65,327

 

 

$

37,768

 

 

$

24

 

 

$

1,229,838

 

Loan originations

 

 

228,317

 

 

 

111,051

 

 

 

15,216

 

 

 

—

 

 

 

4,370

 

 

 

358,954

 

Principal payments, sales, maturities, and recoveries

 

 

(123,043

)

 

 

(75,807

)

 

 

(11,541

)

 

 

(1,102

)

 

 

(4,324

)

 

 

(215,817

)

Charge-offs

 

 

(7,725

)

 

 

(1,467

)

 

 

—

 

 

 

(13,905

)

 

 

—

 

 

 

(23,097

)

Transfer to loan collateral in process of foreclosure, net

 

 

(6,033

)

 

 

—

 

 

 

—

 

 

 

(4,630

)

 

 

—

 

 

 

(10,663

)

Amortization of origination costs

 

 

(4,639

)

 

 

907

 

 

 

11

 

 

 

(2

)

 

 

—

 

 

 

(3,723

)

Amortization of loan premium

 

 

(101

)

 

 

(166

)

 

 

—

 

 

 

(1,615

)

 

 

—

 

 

 

(1,882

)

FASB origination costs, net

 

 

6,744

 

 

 

(294

)

 

 

12

 

 

 

—

 

 

 

—

 

 

 

6,462

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

495

 

 

 

—

 

 

 

—

 

 

 

495

 

Gross loans – June 30, 2021

 

$

886,206

 

 

$

368,257

 

 

$

69,520

 

 

$

16,514

 

 

$

70

 

 

$

1,340,567

 

The following table presents the approximate maturities and sensitivity to changes in interest rates for our loans as of June 30, 2022.

 

 

Loan Maturity

 


(Dollars in thousands)

 

Within 1 year

 

 

After 1 to 5 years

 

 

After 5 to 15 years

 

 

After 15 years

 

 

Total

 

Fixed-rate

 

$

34,927

 

 

$

207,242

 

 

$

1,321,917

 

 

$

133,685

 

 

$

1,697,771

 

Recreation

 

 

2,302

 

 

 

104,962

 

 

 

937,422

 

 

 

13,419

 

 

 

1,058,105

 

Home improvement

 

 

17,209

 

 

 

26,932

 

 

 

364,179

 

 

 

120,266

 

 

 

528,586

 

Commercial

 

 

12,498

 

 

 

64,114

 

 

 

20,316

 

 

 

—

 

 

 

96,928

 

Medallion

 

 

2,918

 

 

 

11,234

 

 

 

—

 

 

 

—

 

 

 

14,152

 

Adjustable-rate

 

$

3,436

 

 

$

1,032

 

 

$

—

 

 

$

—

 

 

$

4,468

 

Recreation

 

 

3,436

 

 

 

1,032

 

 

 

—

 

 

 

—

 

 

 

4,468

 

Home improvement

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Commercial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Medallion

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total loans(1)

 

$

38,363

 

 

$

208,274

 

 

$

1,321,917

 

 

$

133,685

 

 

$

1,702,239

 
(1)
Excludes strategic partnership loans.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

Our methodology to calculate the general reserve portion of the allowance includes the use of quantitative and qualitative factors. We initially determine an allowance based on quantitative loss factors for loans evaluated collectively for impairment. The quantitative loss factors are based primarily on historical loss rates, after considering loan type, historical loss and delinquency experience. The quantitative loss factors applied in the methodology are periodically re-evaluated and adjusted to reflect changes in historical loss levels or other risks. Qualitative loss factors are used to modify the reserve determined by the quantitative factors and are designed to account for losses that may not be included in the quantitative calculation according to management’s best judgment. If our qualitative loss factor rates were to increase 50 basis points, our recreation and home improvement general reserve would increase by $5.3 million and $2.6 million, respectively. Likewise, if our qualitative loss factor rates were to decrease 50 basis points, our recreation and home improvement general reserve would decrease by $5.3 million and $2.6 million, respectively. Performing loans are recorded at book value and the general reserve maintained to absorb expected losses consistent with GAAP.

For medallion loans, during the three and six months ended June 30, 2022, we continued to utilize a value of $79,500 for New York City taxi medallions in determining loan loss allowances, despite reported transfer prices exceeding that level at various points during the period, as we continue to deem the entire medallion portfolio as impaired.

The following table sets forth the activity in the allowance for loan losses for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Allowance for loan losses – beginning balance

 

$

50,686

 

 

$

57,809

 

 

$

50,166

 

 

$

57,548

 

Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

(5,074

)

 

 

(2,672

)

 

 

(10,141

)

 

 

(7,725

)

Home improvement

 

 

(1,108

)

 

 

(786

)

 

 

(2,168

)

 

 

(1,467

)

Commercial

 

 

—

 

 

 

—

 

 

 

(1,584

)

 

 

—

 

Medallion

 

 

—

 

 

 

(12,791

)

 

 

(75

)

 

 

(13,905

)

Total charge-offs

 

 

(6,182

)

 

 

(16,249

)

 

 

(13,968

)

 

 

(23,097

)

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

3,615

 

 

 

3,588

 

 

 

7,125

 

 

 

6,057

 

Home improvement

 

 

585

 

 

 

558

 

 

 

1,144

 

 

 

990

 

Commercial

 

 

13

 

 

 

—

 

 

 

47

 

 

 

—

 

Medallion

 

 

2,676

 

 

 

1,922

 

 

 

3,639

 

 

 

3,112

 

Total recoveries

 

 

6,889

 

 

 

6,068

 

 

 

11,955

 

 

 

10,159

 

Net charge-offs (recoveries) (1)

 

 

707

 

 

 

(10,181

)

 

 

(2,013

)

 

 

(12,938

)

Provision for loan losses

 

 

7,759

 

 

 

(682

)

 

 

10,999

 

 

 

2,336

 

Allowance for loan losses – ending balance (2)

 

$

59,152

 

 

$

46,946

 

 

$

59,152

 

 

$

46,946

 
(1)
As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion portfolio were $252.1 million, some of which may represent collection opportunities for us.
(2)
As of June 30, 2022, there was no allowance for loan loss and net charge-offs related to the strategic partnership loans.

The following tables set forth the allowance for loan losses by type as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Amount

 

 

Percentage
of Allowance

 

 

Allowance as
a Percent of
Loan Category

 

 

Allowance as a Percent of Nonaccrual

 

Recreation

 

$

37,772

 

 

 

64

%

 

 

3.44

%

 

 

113.48

%

Home improvement

 

 

9,234

 

 

 

16

 

 

 

1.75

 

 

 

27.74

 

Commercial

 

 

2,720

 

 

 

4

 

 

 

2.81

 

 

 

8.17

 

Medallion

 

 

9,426

 

 

 

16

 

 

 

66.61

 

 

 

28.32

 

Total

 

$

59,152

 

 

 

100

%

 

 

3.41

%

 

 

177.71

%

 

December 31, 2021
(Dollars in thousands)

 

Amount

 

 

Percentage
of Allowance

 

 

Allowance as
a Percent of
Loan Category

 

 

Allowance as a Percent of Nonaccrual

 

Recreation

 

$

32,435

 

 

 

64

%

 

 

3.37

%

 

 

91.18

%

Home improvement

 

 

7,356

 

 

 

15

 

 

 

1.68

 

 

 

20.68

 

Commercial

 

 

1,141

 

 

 

2

 

 

 

1.49

 

 

 

3.21

 

Medallion

 

 

9,234

 

 

 

19

 

 

 

65.74

 

 

 

25.96

 

Total

 

$

50,166

 

 

 

100

%

 

 

3.37

%

 

 

141.03

%

As of June 30, 2022, the total allowance rate for loan losses increased 4 basis points from December 31, 2021, with the actual allowance increasing 18%, reflecting the overall increase in size of the loan portfolio. For recreation and home improvement loans, as of June 30, 2022 the allowances exclude $2.1 million and $0.2 million of loan loss allowances which have been netted within loans as a result of the consolidation of Medallion Bank.

For the recreation loan portfolio, the process to repossess the collateral is typically started at 60 days past due. If the collateral is not located and the account reaches 120 days delinquent, the account is charged-off in full. If the collateral is repossessed, a loss is recorded to write the collateral down to its net realizable value, and the collateral is sent to auction. When the collateral is sold, the net auction proceeds are applied to the account, and any remaining balance is written off as a realized loss, and any excess proceeds are recorded as a recovery. Proceeds collected on charged off accounts are recorded as recoveries. All collection, repossession, and recovery efforts are handled on behalf of the Bank by the contracted servicer.

The following table shows the trend in loans 90 days or more past due as of the dates indicated.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Amount

 

 

% (1)

 

 

Amount

 

 

% (1)

 

Recreation

 

$

3,810

 

 

 

0.2

%

 

$

3,818

 

 

 

0.3

%

Home improvement

 

 

396

 

 

*

 

 

 

132

 

 

*

 

Commercial

 

 

74

 

 

*

 

 

 

74

 

 

*

 

Total loans 90 days or more past due

 

$

4,280

 

 

 

0.3

%

 

$

4,024

 

 

 

0.3

%

(*) Less than 0.1%

(1)
Percentages are calculated against the total loan portfolio.

We estimate that the weighted average loan-to-value ratio of our medallion loans was approximately 320% and 295% as of June 30, 2022 and December 31, 2021.

Recreation and medallion loans that reach 120 days past due are charged down to collateral value and reclassified to loan collateral in process of foreclosure. The following tables show the activity of loan collateral in process of foreclosure for the three months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – March 31, 2022

 

$

1,369

 

 

$

32,465

 

 

$

33,834

 

Transfer from loans, net

 

 

2,618

 

 

 

139

 

 

 

2,757

 

Sales

 

 

(2,146

)

 

 

(1,999

)

 

 

(4,145

)

Cash payments received

 

 

—

 

 

 

(4,381

)

 

 

(4,381

)

Collateral valuation adjustments

 

 

(963

)

 

 

(128

)

 

 

(1,091

)

Loan collateral in process of foreclosure – June 30, 2022

 

$

878

 

 

$

26,096

 

 

$

26,974

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – December 31, 2021

 

$

1,720

 

 

$

35,710

 

 

$

37,430

 

Transfer from loans, net

 

 

5,529

 

 

 

268

 

 

 

5,797

 

Sales

 

 

(4,398

)

 

 

(2,115

)

 

 

(6,513

)

Cash payments received

 

 

—

 

 

 

(7,253

)

 

 

(7,253

)

Collateral valuation adjustments

 

 

(1,973

)

 

 

(514

)

 

 

(2,487

)

Loan collateral in process of foreclosure – June 30, 2022

 

$

878

 

 

$

26,096

 

 

$

26,974

 

 

Three Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – March 31, 2021

 

$

970

 

 

$

49,763

 

 

$

50,733

 

Transfer from loans, net

 

 

2,980

 

 

 

3,933

 

 

 

6,913

 

Sales

 

 

(1,989

)

 

 

(231

)

 

 

(2,220

)

Cash payments received

 

 

—

 

 

 

(3,146

)

 

 

(3,146

)

Collateral valuation adjustments

 

 

(1,079

)

 

 

(2,162

)

 

 

(3,241

)

Loan collateral in process of foreclosure – June 30, 2021

 

$

882

 

 

$

48,157

 

 

$

49,039

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – December 31, 2020

 

$

1,432

 

 

$

53,128

 

 

$

54,560

 

Transfer from loans, net

 

 

6,033

 

 

 

4,630

 

 

 

10,663

 

Sales

 

 

(4,288

)

 

 

(231

)

 

 

(4,519

)

Cash payments received

 

 

—

 

 

 

(4,423

)

 

 

(4,423

)

Collateral valuation adjustments

 

 

(2,295

)

 

 

(4,947

)

 

 

(7,242

)

Loan collateral in process of foreclosure – June 30, 2021

 

$

882

 

 

$

48,157

 

 

$

49,039

 

As of June 30, 2022, medallion loans in the process of foreclosure included 462 medallions in the New York City market, 335 medallions in the Chicago market, 61 medallions in the Newark market, and 47 medallions in other markets.

SEGMENT RESULTS

We manage our financial results under four operating segments; recreation lending, home improvement lending, commercial lending, and medallion lending. We also show results for non-operating segments; RPAC and corporate and other investments. As mentioned earlier, the Company disposed of its investment in RPAC on December 1, 2021 and, as a result, all presented segment results are through such date. For information related to RPAC, refer to our 2021 Form 10-K. All results are for the three and six months ended June 30, 2022 and 2021.

 

Recreation Lending

The recreation lending segment is a high-growth prime and non-prime consumer finance business which is a significant source of income for us, accounting for 71% and 72% of our interest income for the three and six months ended June 30, 2022, and 77% for the three and six months ended June 30, 2021. The loans are secured primarily by RVs, boats, and trailers, with RV loans making up 59% of the portfolio, boat loans making up 20% of the portfolio, and trailer loans 13% as of June 30, 2022, compared to 60%, 20% and 10% as of June 30, 2021. Recreation loans are made to borrowers residing in all fifty states, with the highest concentrations in Texas, Florida, and California at 16%, 10%, and 9% of loans outstanding, compared to 16%, 9%, and 10% as of June 30, 2021, and with no other states over 10%.

During the three and six months ended June 30, 2022, the recreation portfolio grew, with the interest yield in both periods decreasing from the prior year periods as a result of the change in portfolio mix toward higher credit quality but lower yielding assets. Additionally, reserve rates increased 2 basis points from June 30, 2021, an insignificant change as we continue to see delinquencies and net charge-offs at near historic lows.

The following table presents certain financial data and ratios as of and for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Selected Earnings Data

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

33,514

 

 

$

28,886

 

 

$

64,650

 

 

$

56,328

 

Total interest expense

 

 

4,096

 

 

 

2,863

 

 

 

7,697

 

 

 

5,657

 

Net interest income

 

 

29,418

 

 

 

26,023

 

 

 

56,953

 

 

 

50,671

 

Provision for loan losses

 

 

6,674

 

 

 

1,017

 

 

 

8,354

 

 

 

4,630

 

Net interest income after loss provision

 

 

22,744

 

 

 

25,006

 

 

 

48,599

 

 

 

46,041

 

Total other expense, net

 

 

(7,551

)

 

 

(7,455

)

 

 

(14,371

)

 

 

(12,918

)

Net income before taxes

 

 

15,193

 

 

 

17,551

 

 

 

34,228

 

 

 

33,123

 

Income tax provision

 

 

(3,567

)

 

 

(4,519

)

 

 

(9,248

)

 

 

(8,529

)

Net income after taxes

 

$

11,626

 

 

$

13,032

 

 

$

24,980

 

 

$

24,594

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, gross

 

 

 

 

 

 

 

$

1,096,670

 

 

$

886,206

 

Total loan allowance

 

 

 

 

 

 

 

 

37,772

 

 

 

30,306

 

Total loans, net

 

 

 

 

 

 

 

 

1,058,898

 

 

 

855,900

 

Total assets

 

 

 

 

 

 

 

 

1,072,356

 

 

 

868,709

 

Total borrowings

 

 

 

 

 

 

 

 

861,083

 

 

 

712,777

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

4.53

%

 

 

6.24

%

 

 

5.04

%

 

 

6.06

%

Return on average equity

 

 

25.52

 

 

 

31.19

 

 

 

27.27

 

 

 

30.32

 

Interest yield

 

 

13.27

 

 

 

14.03

 

 

 

13.29

 

 

 

14.18

 

Net interest margin

 

 

11.65

 

 

 

12.64

 

 

 

11.71

 

 

 

12.76

 

Reserve coverage

 

 

3.44

 

 

 

3.42

 

 

 

3.44

 

 

 

3.42

 

Delinquency status (1)

 

 

0.36

 

 

 

0.32

 

 

 

0.36

 

 

 

0.32

 

Charge-off (recovery) ratio(2)

 

 

0.43

 

 

 

(0.44

)

 

 

0.44

 

 

 

0.12

 
(1)
Loans 90 days or more past due.

 

Home Improvement Lending

The home improvement lending segment is a consumer finance business that works with contractors and financial service providers to finance home improvements and is concentrated in roofs, swimming pools, and windows at 36%, 25%, and 12% of total loans outstanding as of June 30, 2022, as compared to 29%, 27%, and 12% as of June 30, 2021, with no other collateral types over 10%. Home improvement loans are made to borrowers residing in all fifty states, with the highest concentrations in Texas and Florida at 11% and 10% of loans outstanding June 30, 2022, compared to 11% and 10% as of June 30, 2021, with no other states over 10%.

During the three and six months ended June 30, 2022, the home improvement lending segment grew substantially with loans increasing 42% from the prior year. Reserve rates increased 15 basis points from a year ago. The interest yield was 8.65% and 8.72% for the three and six months ended June 30, 2022, compared to 9.48% and 9.56% for the three and six months ended June 30, 2021.

The following table presents certain financial data and ratios as of and for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Selected Earnings Data

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

10,587

 

 

$

8,228

 

 

$

20,288

 

 

$

16,146

 

Total interest expense

 

 

1,625

 

 

 

1,143

 

 

 

2,967

 

 

 

2,351

 

Net interest income

 

 

8,962

 

 

 

7,085

 

 

 

17,321

 

 

 

13,795

 

Provision for loan losses

 

 

1,697

 

 

 

756

 

 

 

2,902

 

 

 

1,206

 

Net interest income after loss provision

 

 

7,265

 

 

 

6,329

 

 

 

14,419

 

 

 

12,589

 

Other income (expense), net

 

 

(3,210

)

 

 

(2,638

)

 

 

(6,106

)

 

 

(4,552

)

Net income before taxes

 

 

4,055

 

 

 

3,691

 

 

 

8,313

 

 

 

8,037

 

Income tax provision

 

 

(975

)

 

 

(951

)

 

 

(2,246

)

 

 

(2,070

)

Net income after taxes

 

$

3,080

 

 

$

2,740

 

 

$

6,067

 

 

$

5,967

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, gross

 

 

 

 

 

 

 

$

526,278

 

 

$

368,257

 

Total loan allowance

 

 

 

 

 

 

 

 

9,234

 

 

 

5,887

 

Total loans, net

 

 

 

 

 

 

 

 

517,044

 

 

 

362,370

 

Total assets

 

 

 

 

 

 

 

 

521,931

 

 

 

375,189

 

Total borrowings

 

 

 

 

 

 

 

 

419,101

 

 

 

295,887

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

2.49

%

 

 

3.04

%

 

 

2.56

%

 

 

3.39

%

Return on average equity

 

 

14.02

 

 

 

15.19

 

 

 

13.87

 

 

 

16.96

 

Interest yield

 

 

8.65

 

 

 

9.48

 

 

 

8.72

 

 

 

9.56

 

Net interest margin

 

 

7.33

 

 

 

8.16

 

 

 

7.45

 

 

 

8.17

 

Reserve coverage

 

 

1.75

 

 

 

1.60

 

 

 

1.75

 

 

 

1.60

 

Delinquency status (1)

 

 

0.07

 

 

 

0.02

 

 

 

0.07

 

 

 

0.02

 

Charge-off (recovery) ratio

 

 

0.58

 

 

 

0.26

 

 

 

0.62

 

 

 

0.99

 
(1)
Loans 90 days or more past due.

 

Commercial Lending

We originate both senior and subordinated loans nationwide to businesses in a variety of industries, more than 47% of which are located in the Midwest region, with the rest scattered across the country. These mezzanine loans are primarily secured by a second position on all assets of the businesses and generally range in amount from $2,000,000 to $5,000,000 at origination, and typically include an equity component as part of the financing. The commercial lending business has concentrations in manufacturing, wholesale trade, administrative and support services, and construction making up 53%, 11%, 11%, and 10% of the loans outstanding as of June 30, 2022.

During 2022, the commercial portfolio continued to grow, with $19.3 million of new originations in the quarter and $23.7 million of new originations in the six months. Additionally, reserve rates reflected specific reserves on aged investments.

The following table presents certain financial data and ratios as of and for the three and six months ended June 30, 2022 and 2021. The commercial segment encompasses the mezzanine lending business, and the other legacy commercial loans (immaterial to total) have been allocated to corporate and other investments. The commercial segment increased in the current year as originations exceeded repayments.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Selected Earnings Data

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

2,278

 

 

$

1,383

 

 

$

4,208

 

 

$

2,865

 

Total interest expense

 

 

785

 

 

 

716

 

 

 

1,507

 

 

 

1,288

 

Net interest income

 

 

1,493

 

 

 

667

 

 

 

2,701

 

 

 

1,577

 

Provision for loan losses

 

 

1,879

 

 

 

—

 

 

 

3,134

 

 

 

—

 

Net interest (expense) income after loss provision

 

 

(386

)

 

 

667

 

 

 

(433

)

 

 

1,577

 

Other income (expense), net

 

 

3,263

 

 

 

(69

)

 

 

1,932

 

 

 

(529

)

Net income (loss) before taxes

 

 

2,877

 

 

 

598

 

 

 

1,499

 

 

 

1,048

 

Income tax (provision) benefit

 

 

(817

)

 

 

(150

)

 

 

(405

)

 

 

(263

)

Net (loss) income after taxes

 

$

2,060

 

 

$

448

 

 

$

1,094

 

 

$

785

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, gross

 

 

 

 

 

 

 

$

96,928

 

 

$

66,236

 

Total loan allowance

 

 

 

 

 

 

 

 

2,720

 

 

 

—

 

Total loans, net

 

 

 

 

 

 

 

 

94,208

 

 

 

66,236

 

Total assets

 

 

 

 

 

 

 

 

103,643

 

 

 

90,563

 

Total borrowings

 

 

 

 

 

 

 

 

83,223

 

 

 

72,450

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

8.06

%

 

 

2.36

%

 

 

2.15

%

 

 

1.95

%

Return on average equity

 

 

49.17

 

 

 

11.78

 

 

 

12.21

 

 

 

9.77

 

Interest yield

 

 

10.60

 

 

 

9.16

 

 

 

10.28

 

 

 

9.66

 

Net interest margin

 

 

6.95

 

 

 

4.42

 

 

 

6.60

 

 

 

5.32

 

Reserve coverage(1)

 

 

2.81

 

 

 

—

 

 

 

2.81

 

 

 

—

 

Delinquency status (1) (2)

 

 

0.08

 

 

 

0.11

 

 

 

0.08

 

 

 

0.11

 

Charge-off (recovery) ratio(3)

 

 

(0.00

)

 

 

—

 

 

 

3.75

 

 

 

—

 
(1)
Ratio is based off of total commercial balances, and relates solely to the legacy commercial loan balances.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.

 

 

As of June 30,

 

 

 

2022

 

 

2021

 

Geographic Concentrations

 

Total Gross
Loans

 

 

% of
Market

 

 

Total Gross
Loans

 

 

% of
Market

 

California

 

 

15,110

 

 

 

16

%

 

 

5,008

 

 

 

8

%

Illinois

 

 

12,857

 

 

 

13

 

 

 

16,689

 

 

 

25

 

Minnesota

 

 

12,356

 

 

 

13

 

 

 

8,086

 

 

 

12

 

Michigan

 

 

6,332

 

 

 

7

 

 

 

10,794

 

 

 

16

 

Other (1)

 

 

50,273

 

 

 

51

 

 

 

25,659

 

 

 

39

 

Total

 

$

96,928

 

 

 

100

%

 

$

66,236

 

 

 

100

%
(1)
Includes four other states, which were all under 5% as of June 30, 2022, and four other states, all under 10% as of June 30, 2021.

Medallion Lending

The medallion lending segment operates primarily in New York City, and to a lesser extent in Newark, Chicago and other markets. During the three and six months ended June 30, 2022, taxi medallion values remained consistent in the New York City market. We continue to not recognize interest income with all loans being placed on nonaccrual as of the third quarter 2020, and by transferring underperforming loans from the portfolio to loan collateral in process of foreclosure with charge-offs to collateral value, once loans become more than 120 days past due. All the loans are secured by taxi medallions and enhanced by personal guarantees of the shareholders and owners.

The following table presents certain financial data and ratios as of and for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Selected Earnings Data

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income (loss)

 

$

231

 

 

$

(1,475

)

 

$

377

 

 

$

(1,544

)

Total interest expense

 

 

140

 

 

 

2,524

 

 

 

293

 

 

 

3,894

 

Net interest loss

 

 

91

 

 

 

(3,999

)

 

 

84

 

 

 

(5,438

)

(Benefit) provision for loan losses

 

 

(2,675

)

 

 

(2,943

)

 

 

(3,544

)

 

 

(3,987

)

Net interest income (loss) after loss provision

 

 

2,766

 

 

 

(1,056

)

 

 

3,628

 

 

 

(1,451

)

Other expense, net

 

 

(760

)

 

 

(1,157

)

 

 

(1,566

)

 

 

(3,301

)

Net income (loss) before taxes

 

 

2,006

 

 

 

(2,213

)

 

 

2,062

 

 

 

(4,752

)

Income tax (provision) benefit

 

 

(541

)

 

 

556

 

 

 

(557

)

 

 

1,193

 

Net income (loss) after taxes

 

$

1,465

 

 

$

(1,657

)

 

$

1,505

 

 

$

(3,559

)

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, gross

 

 

 

 

 

 

 

$

14,152

 

 

$

16,514

 

Total loan allowance

 

 

 

 

 

 

 

 

9,426

 

 

 

10,750

 

Total loans, net

 

 

 

 

 

 

 

 

4,726

 

 

 

5,764

 

Total assets

 

 

 

 

 

 

 

 

31,258

 

 

 

101,205

 

Total borrowings

 

 

 

 

 

 

 

 

25,099

 

 

 

80,959

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

17.05

%

 

 

(6.10

)%

 

 

5.86

%

 

 

(6.29

)%

Return on average equity

 

 

95.49

 

 

 

(30.51

)

 

 

30.74

 

 

 

(31.44

)

Interest yield

 

 

19.61

 

 

 

(70.71

)

 

 

16.07

 

 

 

(30.90

)

Net interest margin

 

 

7.78

 

 

 

(189.15

)

 

 

3.58

 

 

 

(108.84

)

Reserve coverage

 

 

66.61

 

 

 

65.11

 

 

 

66.61

 

 

 

65.11

 

Delinquency status (1)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Charge-off (recovery) ratio

 

 

(232.80

)

 

 

513.86

 

 

 

(153.24

)

 

 

216.01

 
(1)
Loans 90 days or more past due.

 

 

As of June 30,

 

 

 

2022

 

 

2021

 

Geographic Concentration

 

Total Gross
Loans

 

 

% of
Market

 

 

Total Gross
Loans

 

 

% of
Market

 

New York City

 

$

13,035

 

 

 

92

%

 

$

14,056

 

 

 

85

%

Newark

 

 

1,079

 

 

 

8

 

 

 

2,393

 

 

 

15

 

All Other

 

 

38

 

 

*

 

 

 

65

 

 

*

 

Total

 

$

14,152

 

 

 

—

%

 

$

16,514

 

 

 

100

%

(*) Less than 1%

 

 

As of June 30,

 

 

 

2022

 

 

2021

 

Geographic Concentration

 

Total Loan Collateral in Process of Foreclosure

 

 

% of
Market

 

 

Total Loan Collateral in Process of Foreclosure

 

 

% of
Market

 

New York City

 

$

21,327

 

 

 

82

%

 

$

32,411

 

 

 

67

%

Newark

 

 

3,664

 

 

 

14

 

 

 

6,009

 

 

 

12

 

Chicago

 

 

987

 

 

 

4

 

 

 

2,689

 

 

 

6

 

All Other

 

 

118

 

 

*

 

 

 

7,048

 

 

 

15

 

Total

 

$

26,096

 

 

 

100

%

 

$

48,157

 

 

 

100

%

(*) Less than 1%

 

Corporate and Other Investments

This non-operating segment relates to our equity and investment securities as well as our legacy commercial business, and other assets, liabilities, revenues, and expenses, which are not specifically allocated to the operating segments. Commencing with the 2020 second quarter, the Bank began issuing loans related to the new strategic partnership business, which is currently included within this segment. The associated activities of the strategic partnership business are currently limited to originating loans or other receivables facilitated by our strategic partners and selling those loans or receivables to our strategic partners or other third parties, without recourse, within a specified time after origination, such as three business days. Strategic partnerships represent $0.6 million in net loans as of June 30, 2022, compared to less than $0.1 million as of June 30, 2021, having originations of $9.8 million and $14.8 million during the three and six months ended June 30, 2022 and $2.4 million and $4.4 million during the three and six months ended June 30, 2021.

The following table presents certain financial data and ratios as of and for the three and six months ended June 30, 2022 and 2021.

(Dollars in thousands)

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Selected Earnings Data

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income

 

$

501

 

 

$

353

 

 

$

891

 

 

$

660

 

Total interest expense

 

 

1,584

 

 

 

604

 

 

 

3,141

 

 

 

3,027

 

Net interest loss

 

 

(1,083

)

 

 

(251

)

 

 

(2,250

)

 

 

(2,367

)

Total interest expense

 

 

184

 

 

 

488

 

 

 

153

 

 

 

487

 

Net interest loss

 

 

(1,267

)

 

 

(739

)

 

 

(2,403

)

 

 

(2,854

)

Other expense, net

 

 

(3,197

)

 

 

(543

)

 

 

(7,847

)

 

 

(1,858

)

Net loss before taxes

 

 

(4,464

)

 

 

(1,282

)

 

 

(10,250

)

 

 

(4,712

)

Income tax benefit (provision)

 

 

1,044

 

 

 

(1,521

)

 

 

2,769

 

 

 

(1,158

)

Net loss after taxes

 

$

(3,420

)

 

$

(2,803

)

 

$

(7,481

)

 

$

(5,870

)

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, gross

 

 

 

 

 

 

 

$

593

 

 

$

3,351

 

Total loan allowance

 

 

 

 

 

 

 

 

—

 

 

 

—

 

Total loans, net

 

 

 

 

 

 

 

$

593

 

 

 

3,351

 

Total assets

 

 

 

 

 

 

 

 

382,943

 

 

 

272,204

 

Total borrowings

 

 

 

 

 

 

 

 

307,499

 

 

 

212,020

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

(3.56

)%

 

 

(3.85

)%

 

 

(4.24

)%

 

 

(4.08

)%

Return on average equity

 

 

(20.01

)

 

 

(1.95

)

 

 

(24.85

)

 

 

(30.46

)

SUMMARY CONSOLIDATED FINANCIAL DATA

The table below presents our selected financial data for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands, Except per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Return on average assets (ROA)

 

 

2.63

%

 

 

2.43

%

 

 

2.37

%

 

 

2.26

%

Return on average stockholders' equity (ROE)

 

 

18.11

 

 

 

16.69

 

 

 

15.93

 

 

 

15.63

 

Dividend payout ratio

 

 

14.40

 

 

 

—

 

 

 

17.11

 

 

 

—

 

Net interest margin

 

 

9.07

 

 

 

8.84

 

 

 

9.50

 

 

 

9.01

 

Other income ratio (1)

 

 

1.71

 

 

 

2.32

 

 

 

1.08

 

 

 

1.50

 

Total expense ratio (2)

 

 

5.17

 

 

 

10.23

 

 

 

5.21

 

 

 

9.45

 

Equity to assets (3)

 

 

17.18

 

 

 

18.56

 

 

 

17.18

 

 

 

18.56

 

Debt to equity (4)

 

4.3x

 

 

4.2x

 

 

4.3x

 

 

4.2x

 

Loans receivable to assets

 

 

79

%

 

 

74

%

 

 

79

%

 

 

74

%

Net (recoveries) charge-offs

 

 

(707

)

 

 

10,181

 

 

 

2,013

 

 

 

12,938

 

Net (recoveries) charge-offs as a % of average loans receivable

 

 

(0.18

)%

 

 

3.36

%

 

 

0.26

%

 

 

2.15

%

Allowance coverage ratio

 

 

3.41

 

 

 

3.50

 

 

 

3.41

 

 

 

3.50

 
(1)
Other income ratio represents other income divided by average interest earning assets.
(2)
Total expense ratio represents total expenses (interest expense, operating expenses, and income taxes) divided by average interest earning assets.
(3)
Includes $68.8 million and $72.1 million related to non-controlling interests in consolidated subsidiaries as of June 30, 2022 and 2021.
(4)
Excludes deferred financing costs of $7.4 million and $6.5 million as of June 30, 2022 and 2021.

 

CONSOLIDATED RESULTS OF OPERATIONS

Three and Six Months Ended June 30, 2022 compared to the Three and Six Months Ended June 30, 2021

Net income attributable to shareholders was $13.3 million and $23.1 million, or $0.54 and $0.93 per share, for the three and six months ended June 30, 2022, compared to $10.3 million and $18.7 million, or $0.41 and $0.75 per share, for the three and six months ended June 30, 2021.

Total interest income was $47.1 million and $90.4 million for the three and six months ended June 30, 2022 compared to $37.4 million and $74.5 million for the three and six months ended June 30, 2021. The increase in interest income reflected the continued growth in our loan portfolio, despite slightly lower average margins reflected in our recreation, home improvement and commercial loans. The yield on interest earning assets was 11.00% and 11.04% for the three and six months ended June 30, 2022, compared to 11.17% and 11.50% for the three and six months ended June 30, 2021. Average interest earning assets were $1.7 billion for the three and six months ended June 30, 2022, an increase from $1.3 billion for the three and six months ended June 30, 2021. We began increasing rates on new home improvement loans in the 2022 second quarter and anticipate increasing rates on new recreation loans during the second half of 2022 as a response to rising interest rates which effect our cost of funds.

Loans before allowance for loan losses were $1.7 billion as of June 30, 2022, comprised of recreation ($1.1 billion), home improvement ($526.3 million), commercial ($96.9 million), medallion ($14.2 million), and strategic partnership loans ($0.6 million). We had an allowance for loan losses as of June 30, 2022 of $59 million, which was attributable to the recreation (64%), medallion (16%), home improvement (16%), and commercial (4%) loans. We experienced significant growth in our consumer and commercial loan business during the three and six months ended June 30, 2022, and do expect continued growth as we look ahead, however we don’t expect origination growth to continue at this pace long term.

Loans increased $246 million, or 16.5%, from December 31, 2021 as a result of $519 million of loan originations, partially offset by principal payments, and to a lesser extent transfers to loan collateral in process of foreclosure and net charge-offs. The provision for loan losses was $7.8 million and $11.0 million for the three and six months ended June 30, 2022, compared to a $0.7 million benefit and $2.3 million provision for the three and six months ended June 30, 2021. The net charge-off (recovery) ratios on the loan portfolios were (0.18)% and 0.26% for the three and six months ended June 30, 2022 compared to 3.36% and 2.15% for the three and six months ended June 30, 2021. Net charge-offs in the current year quarter and year to date period included recoveries of $6.9 million and $12.0 million, inclusive of $2.7 million and $3.7 million of medallion loan recoveries for the three and six months ended June 30, 2022. Charge-offs in our consumer businesses continue to be below historic levels. Although we are not seeing any current indications that charge-offs will return to normal levels in the near term, we do expect a return to normal experience in the future.

Interest expense was $8.2 million and $15.6 million for the three and six months ended June 30, 2022, as compared to $7.9 million and $16.3 million for the three and six months ended June 30, 2021, reflective of higher average borrowings, even as average borrowing costs decreased. The average cost of borrowed funds was 2.05% and 2.02% for the three and six months ended June 30, 2022, compared to 2.36% and 2.49% for the three and six months ended June 30, 2021, mainly driven by the decline in market rates for deposits throughout 2021, and which generally carry a lower cost of funds than other forms of borrowings, and the repayment of our retail notes, offset to a lesser extent with the replacement of notes payable to banks with higher fixed rate private notes. We expect an increase in the cost of funds throughout the remainder of 2022 as older deposits mature and newer deposits are issued both to replace maturing deposits and to facilitate our growth in our lending. Average debt outstanding was $1.6 billion for the three and six months ended June 30, 2022, up from $1.3 billion for the three and six months ended June 30, 2021, as we issued additional certificates of deposits to increase our liquidity and fund our loan growth. See page 33 for tables that show average balances and cost of funds for our funding sources.

Net interest income was $38.9 million and $74.8 million for the three and six months ended June 30, 2022, compared to $29.5 million and $58.2 million for the three and six months ended June 30, 2021. The net interest margin was 9.07% and 9.15% for the three and six months ended June 30, 2022, compared to 8.84% and 9.01%, for the three and six months ended June 30, 2021, reflecting the above.

Net other income, which is comprised of net recoveries of loan collateral, a majority of which relate to recoveries in the Medallion segment, prepayment fees, servicing fee income, late charges, write-downs of loan collateral, impairment of equity investments, and other miscellaneous income was $7.4 million and $8.9 million for the three and six months ended June 30, 2022, compared to $7.8 million and $9.7 million for the three and six months ended June 30, 2021. The current year periods included a $4.2 million gain associated with the exit of an equity investment tied to our commercial lending business, as well as $2.7 million and $4.5 million of gains related to the disposition of medallion assets during the three and six month periods. The decrease from the prior year was primarily due to the absence of race team related revenue, as well as the absence of gains on the extinguishment of debt which occurred in the prior year.

 

Operating expenses were $18.8 million and $36.8 million for the three and six months ended June 30, 2022, compared to $19.8 million and $34.5 million for the three and six months ended June 30, 2021. Salaries and benefits were $7.7 million and $15.3 million for the three and six months ended June 30, 2022, compared to $7.9 million and $13.6 million for the three and six months ended June 30, 2021, with the increase primarily reflective of reduced bonus expense in the prior year. Professional fees were $4.4 million and $8.4 million for the three and six months ended June 30, 2022, compared to $2.2 million and $2.7 million for the three and six months ended June 30, 2021, primarily reflecting higher legal and professional costs for a variety of corporate matters inclusive of the SEC litigation.

Total income tax expense was $4.9 million and $9.7 million for the three and six months ended June 30, 2022, compared to $6.5 and $10.4 for the three and six months ended June 30, 2021.

Loan collateral in process of foreclosure was $27.0 million at June 30, 2022, a decline from $37.4 million at December 31, 2021. The decrease was primarily reflective of cash payments received and structured settlements during the period. See page 37 for a table that shows the changes during the quarter.

ASSET/LIABILITY MANAGEMENT

Interest Rate Sensitivity

We, like other financial institutions, are subject to interest rate risk to the extent that our interest-earning assets (consisting of consumer, commercial, and medallion loans, and investment securities) reprice on a different basis over time in comparison to our interest-bearing liabilities (consisting primarily of bank certificates of deposit, credit facilities and borrowings from banks and other lenders, and SBA debentures and borrowings).

Having interest-bearing liabilities that mature or reprice more frequently on average than assets may be beneficial in times of declining interest rates, although such an asset/liability structure may result in declining net earnings during periods of rising interest rates. Abrupt increases in market rates of interest may have an adverse impact on our earnings until we are able to originate new loans at the higher prevailing interest rates. Conversely, having interest-earning assets that mature or reprice more frequently on average than liabilities may be beneficial in times of rising interest rates, although this asset/liability structure may result in declining net earnings during periods of falling interest rates. This mismatch between maturities and interest rate sensitivities of our interest-earning assets and interest-bearing liabilities results in interest rate risk.

The effect of changes in interest rates is mitigated by regular turnover of the portfolio. We believe that the average life of our loan portfolio varies to some extent as a function of changes in interest rates. Borrowers are more likely to exercise prepayment rights in a decreasing interest rate environment because the interest rate payable on the borrower’s loan is high relative to prevailing interest rates. Conversely, borrowers are less likely to prepay in a rising interest rate environment. However, borrowers may prepay for a variety of other reasons, such as to monetize increases in the underlying collateral values. In addition, we manage our exposure to increases in market rates of interest by incurring fixed-rate indebtedness, such as ten year subordinated SBA debentures, and by setting repricing intervals on certificates of deposit, for terms of up to five years.

A relative measure of interest rate risk can be derived from our interest rate sensitivity gap. The interest rate sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities, which mature and/or reprice within specified intervals of time. The gap is considered to be positive when repriceable assets exceed repriceable liabilities, and negative when repriceable liabilities exceed repriceable assets. A relative measure of interest rate sensitivity is provided by the cumulative difference between interest sensitive assets and interest sensitive liabilities for a given time interval expressed as a percentage of total assets.

 

The following table presents our interest rate sensitivity gap at June 30, 2022. The principal amounts of interest earning assets are assigned to the time frames in which such principal amounts are contractually obligated to be repriced. We do not reflect any prepayment assumptions in preparing the analysis, despite historical average life experience being significantly shorter than contractual terms.

June 30, 2022 Cumulative Rate Gap (1)

 

(Dollars in thousands)

 

Less
Than
1 Year

 

 

More
Than
1 and Less
Than 2
Years

 

 

More
Than 2
and Less
Than 3
Years

 

 

More
Than 3
and Less
Than 4
Years

 

 

More
Than 4
and Less
Than 5
Years

 

 

More
Than
5 and Less
Than 6
Years

 

 

Thereafter

 

 

Total

 

Earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed-rate

 

$

34,925

 

 

$

17,612

 

 

$

40,625

 

 

$

45,492

 

 

$

103,512

 

 

$

64,683

 

 

$

1,390,920

 

 

$

1,697,769

 

Adjustable rate

 

 

3,436

 

 

 

898

 

 

 

113

 

 

 

21

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,468

 

Investment securities

 

 

6,074

 

 

 

283

 

 

 

3,493

 

 

 

5,151

 

 

 

288

 

 

 

4,655

 

 

 

37,789

 

 

 

57,733

 

Cash

 

 

125,080

 

 

 

—

 

 

 

—

 

 

 

500

 

 

 

750

 

 

 

—

 

 

 

—

 

 

 

126,330

 

Total earning assets

 

$

169,515

 

 

$

18,793

 

 

$

44,231

 

 

$

51,164

 

 

$

104,550

 

 

$

69,338

 

 

$

1,428,709

 

 

$

1,886,300

 

Interest bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

$

394,619

 

 

$

347,548

 

 

$

412,380

 

 

$

131,077

 

 

$

186,452

 

 

$

—

 

 

$

—

 

 

$

1,472,076

 

Privately placed notes

 

 

—

 

 

 

36,000

 

 

 

—

 

 

 

31,250

 

 

 

—

 

 

 

—

 

 

 

53,750

 

 

 

121,000

 

SBA debentures and borrowings

 

 

5,000

 

 

 

10,429

 

 

 

12,500

 

 

 

15,500

 

 

 

4,500

 

 

 

—

 

 

 

21,000

 

 

 

68,929

 

Preferred securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,000

 

 

 

33,000

 

Total liabilities

 

$

399,619

 

 

$

393,977

 

 

$

424,880

 

 

$

177,827

 

 

$

190,952

 

 

$

—

 

 

$

107,750

 

 

$

1,695,005

 

Interest rate gap

 

$

(230,104

)

 

$

(375,184

)

 

$

(380,649

)

 

$

(126,663

)

 

$

(86,402

)

 

$

69,338

 

 

$

1,320,959

 

 

$

191,295

 

Cumulative interest rate gap

 

$

(230,104

)

 

$

(605,288

)

 

$

(985,937

)

 

$

(1,112,600

)

 

$

(1,199,002

)

 

$

(1,129,664

)

 

$

191,295

 

 

$

—

 

December 31, 2021 (2)

 

$

(230,601

)

 

$

(455,807

)

 

$

(770,239

)

 

$

(891,489

)

 

$

(1,007,810

)

 

$

(940,350

)

 

$

153,539

 

 

$

—

 

December 31, 2020 (2)

 

$

(366,801

)

 

$

(570,449

)

 

$

(719,385

)

 

$

(827,236

)

 

$

(907,295

)

 

$

(860,941

)

 

$

52,347

 

 

$

—

 
(1)
The ratio of the cumulative one-year gap to total interest rate sensitive assets was (12%) as of June 30, 2022, and was (14%) as of December 31, 2021
(2)
Excludes federal funds sold and investment securities.

Our interest rate sensitive assets were $1.9 billion and interest rate sensitive liabilities were $1.7 billion at June 30, 2022. The one-year cumulative interest rate gap was a negative $230.1 million or 12% of interest rate sensitive assets. We seek to manage interest rate risk by incurring fixed-rate indebtedness, by evaluating appropriate derivatives, pursuing securitization opportunities, by originating adjustable-rate loans, and by other options consistent with managing interest rate risk.

With the cessation of LIBOR in 2023, we are currently reviewing the impact on our loans and borrowings. We do not have lendings tied to LIBOR and do not expect a significant impact on our loans. We have trust preferred securities that bear a variable rate of interest of 90 day LIBOR (2.29% at June 30, 2022) plus 2.13%. We expect to rely on our lenders to adjust and communicate rate adjustments; however, we do not expect a material impact on our borrowings.

Liquidity and Capital Resources

Our sources of liquidity include unfunded commitments to sell debentures to the SBA, loan amortization and prepayments, private issuances of debt securities, participations or sales of loans to third parties, the disposition of our other assets, and dividends from Medallion Capital and the Bank, and are subject to compliance with regulatory ratios. As of June 30, 2022, we had unfunded commitments from the SBA of $9.5 million.

Additionally, the Bank has access to independent sources of funds for our business originated there, primarily through brokered certificates of deposit. The Bank has up to $45.0 million available under Fed Funds lines with several commercial banks.

In February 2021, we completed a private placement to certain institutional investors of $25.0 million aggregate principal amount of 7.25% unsecured senior notes due February 2026, with interest payable semiannually. Follow-on offerings of these notes in March and April 2021 raised an additional $3.3 million and $3.0 million.

In December 2020, we completed a private placement to certain institutional investors of $33.6 million aggregate principal amount of 7.50% unsecured senior notes due December 2027, with interest payable semiannually. Follow-on offerings of these notes in February and March 2021 raised an additional $8.5 million. In April 2021, we raised an additional $11.7 million in a follow-on offering, and repaid substantially all of our remaining bank borrowings.

The net proceeds from the December 2020, February 2021, March 2021 and April 2021 private placements were used for general corporate purposes, including repayment of outstanding debt, including repayment of our 9.00% retail notes at maturity in April 2021 and to pay down other borrowings, including some borrowings at a discount.

In December 2019, the Bank closed an initial public offering of $46.0 million aggregate liquidation amount, yielding net proceeds of $42.5 million, of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F. Dividends are payable quarterly from the date of issuance to, but excluding April 1, 2025, at a rate of 8% per annum, and from and including April 1, 2025, at a floating

rate equal to a benchmark rate (which is expected to be three-month Secured Overnight Financing Rate, or SOFR) plus a spread of 6.46% per annum.

In March 2019, we completed a private placement to certain institutional investors of $30.0 million aggregate principal amount of 8.25% unsecured notes due 2024, with interest payable semiannually. A follow-on offering of these notes in the 2019 third quarter raised an additional $6.0 million.

The table below presents the components of our debt were as of June 30, 2022, exclusive of deferred financing costs of June 30, 2022. See Note 4 to the consolidated financial statements for details of the contractual terms of our borrowings.

(Dollars in thousands)

 

Balance

 

 

Percentage

 

 

Rate (1)

 

Deposits (2)

 

$

1,472,077

 

 

 

87

%

 

 

1.46

%

Privately placed notes

 

 

121,000

 

 

 

7

 

 

 

7.66

 

SBA debentures and borrowings

 

 

68,929

 

 

 

4

 

 

 

2.94

 

Preferred securities

 

 

33,000

 

 

 

2

 

 

 

3.75

 

Total outstanding debt

 

$

1,695,006

 

 

 

100

%

 

 

2.00

%
(1)
Weighted average contractual rate as of June 30, 2022.
(2)
Balance includes $1.0 million of strategic partner reserve deposits as of June 30, 2022.

Our contractual obligations expire on or mature at various dates through September 2037. The following table shows all contractual obligations at June 30, 2022.

 

 

Payments due by period

 

 

 

 

(Dollars in thousands)

 

Less than
1 year

 

 

1 – 2
years

 

 

2 – 3
years

 

 

3 – 4
years

 

 

4 – 5
years

 

 

More than
5 years

 

 

Total (1)

 

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits (2)

 

$

394,619

 

 

$

347,548

 

 

$

412,380

 

 

$

131,077

 

 

$

186,452

 

 

$

—

 

 

$

1,472,076

 

Privately placed notes

 

 

—

 

 

 

36,000

 

 

 

—

 

 

 

31,250

 

 

 

—

 

 

 

53,750

 

 

 

121,000

 

SBA debentures and borrowings

 

 

5,000

 

 

 

10,429

 

 

 

12,500

 

 

 

15,500

 

 

 

4,500

 

 

 

21,000

 

 

 

68,929

 

Preferred securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,000

 

 

 

33,000

 

Total outstanding borrowings

 

 

399,619

 

 

 

393,977

 

 

 

424,880

 

 

 

177,827

 

 

 

190,952

 

 

 

107,750

 

 

 

1,695,005

 

Operating lease obligations

 

 

2,512

 

 

 

2,516

 

 

 

2,516

 

 

 

2,473

 

 

 

2,471

 

 

 

1,251

 

 

 

13,738

 

Total contractual obligations

 

$

402,131

 

 

$

396,493

 

 

$

427,396

 

 

$

180,300

 

 

$

193,423

 

 

$

109,001

 

 

$

1,708,743

 
(1)
Total debt is exclusive of deferred financing costs of $7.4 million as of June 30, 2022.
(2)
Balance excludes $1.0 million of strategic partner reserve deposits as of June 30, 2022.

Approximately $794 million of our borrowings have maturity dates during the next two years, a vast majority of which are brokered CDs.

In addition, the illiquidity of portions of our loan portfolio and investments may adversely affect our ability to dispose of them at times when it may be advantageous for us to liquidate such portfolio or investments. In addition, if we were required to liquidate some or all of our portfolio, the proceeds of such liquidation may be significantly less than the current value of such investments. Because we borrow money to make loans and investments, our net operating income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our interest income. In periods of sharply rising interest rates, our cost of funds would increase, which would reduce our net interest income.

We use a combination of long-term and short-term borrowings and equity capital to finance our lending and investing activities. Our long-term fixed-rate investments are financed primarily with fixed-rate debt. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. We have analyzed the potential impact of changes in interest rates on net interest income. Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of June 30, 2022 by $1.3 million on an annualized basis, and the impact of such an immediate increase of 1% over an one year period would have been a reduction in net income by $0.3 million at June 30, 2022. Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in credit quality, size, and composition of the assets on the balance sheet, and other business developments that could affect net income from operations in a particular quarter or for the year taken as a whole. Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates.

From time to time, we work with investment banking firms and other financial intermediaries to investigate the viability of several other financing options which include, among others, the sale or spinoff of certain assets or divisions, the development of a securitization conduit program, and other independent financing for certain subsidiaries or asset classes. These financing options would also provide additional sources of funds for both external expansion and continuation of internal growth.

The following table illustrates sources of available funds for us and each of our subsidiaries, and amounts outstanding under credit facilities and their respective end of period weighted average interest rates at June 30, 2022. See Note 5 to the consolidated financial statements for additional information about each credit facility.

(Dollars in thousands)

 

Medallion
Financial Corp.

 

 

MFC

 

 

MCI

 

 

FSVC

 

 

MB

 

 

All Other

 

 

June 30,
2022

 

 

December 31,
2021

 

Cash, cash equivalents and federal funds sold

 

$

27,719

 

 

$

511

 

 

$

3,955

 

 (1)

$

274

 

 (1)

$

93,846

 

 

$

25

 

 

$

126,330

 

 

$

124,484

 

Preferred Securities

 

 

33,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,000

 

 

 

33,000

 

Average interest rate

 

 

3.75

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.75

%

 

 

2.31

%

Maturity

 

9/37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/37

 

 

9/37

 

Retailed notes and privately placed borrowings

 

 

121,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

121,000

 

 

 

121,000

 

Average interest rate

 

 

7.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.66

%

 

 

7.66

%

Maturity

 

3/24 - 12/27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/24 - 12/27

 

 

3/24-12/27

 

SBA debentures & borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

78,429

 

 

 

79,463

 

Amounts available

 

 

 

 

 

 

 

 

9,500

 

 

 

 

 

 

 

 

 

 

 

 

9,500

 

 

 

9,500

 

Amounts outstanding

 

 

 

 

 

 

 

 

61,000

 

 

 

7,929

 

 

 

 

 

 

 

 

 

68,929

 

 

 

69,963

 

Average interest rate

 

 

 

 

 

 

 

 

2.90

%

 

 

3.25

%

 

 

 

 

 

 

 

 

2.94

%

 

 

2.72

%

Maturity

 

 

 

 

 

 

 

3/23 - 3/32

 

 

4/30/24

 

 

 

 

 

 

 

 

3/23- 3/32

 

 

3/23- 3/32

 

Brokered CD's & other funds borrowed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,473,076

 

 (2)

 

 

 

 

1,473,076

 

 

 

1,254,038

 

Average interest rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.46

%

 

 

 

 

 

1.46

%

 

 

1.20

%

Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

7/22 - 6/27

 

 

 

 

 

7/22 - 6/27

 

 

1/22-12/26

 

Total Cash

 

$

27,719

 

 

$

511

 

 

$

3,955

 

 

$

274

 

 

$

93,846

 

 

$

25

 

 

$

126,330

 

 

$

124,484

 

Total debt outstanding

 

$

154,000

 

 

$

—

 

 

$

61,000

 

 

$

7,929

 

 

$

1,473,076

 

 

$

—

 

 

$

1,696,005

 

 

$

1,478,001

 
(1)
Cash resides in the applicable SBIC and is generally not available for corporate use.
(2)
Includes deposits of $1.0 million related to the strategic partnership business and $8.7 million related to listing services.

Loan amortization, prepayments, and sales also provide a source of funding for us. Prepayments on loans are influenced significantly by general interest rates, medallion loan market values, economic conditions, and competition.

We also generate liquidity through deposits generated at the Bank, the offering of privately placed notes, through the issuance of SBA debentures, and through our preferred securities, and have utilized borrowing arrangements with other banks in the past, as well as from cash flow from operations. In addition, we may choose to participate a greater portion of our loan portfolio to third parties. We regularly seek additional sources of liquidity; however, given current market conditions, there can be no assurance that we will be able to secure additional liquidity on terms favorable to us or at all. If that occurs, we may decline to underwrite lower yielding loans in order to conserve capital until credit conditions in the market become more favorable; or we may be required to dispose of assets when we would not otherwise do so, and at prices which may be below the net book value of such assets in order for us to repay indebtedness on a timely basis.

Dividends and Stock Repurchases

Beginning March 2022, the Company's board of directors reinstated our quarterly dividend, with dividends of $0.08 per share, paid in March 2022 and May 2022. We may, however, re-evaluate this new dividend policy in the future depending on market conditions. There can be no assurance that we will continue to pay any cash distributions, as we may retain our earnings to facilitate the growth of our business, to finance our investments, to provide liquidity, or for other corporate purposes.

On May 1, 2022, the Company's board of directors authorized a new stock repurchase program, pursuant to which the Company is authorized to repurchase up to $35 million of its shares. Such new repurchase program replaced the existing one, which was terminated. During the six months ended June 30, 2022 we repurchased 1,272,150 shares of our common stock at an aggregate cost of $9,974,553. Accordingly, as of June 30, 2022, up to $25,025,447 of shares remain authorized for repurchase under our stock repurchase program.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in disclosure regarding quantitative and qualitative disclosures about market risk since we filed our Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a—15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, and have concluded that they are effective as of June 30, 2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated our internal control over financial reporting to determine whether any changes occurred during the 2022 second quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, and have concluded that there have been no changes that occurred during the 2022 second quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

See Note 10 “Commitments and Contingencies” subsections (c) and (d) to the consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for details of the Company’s legal proceedings.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed with the Securities and Exchange Commission on March 14, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 1, 2022 the Company's board of directors authorized a new stock repurchase program, pursuant to which the Company is authorized to repurchase up to $35 million of its shares. Such new repurchase program replaces the existing one, which was terminated. During the six months ended June 30, 2022 we repurchased 1,272,150 shares of our common stock at an aggregate cost of $9,974,553. Accordingly, as of June 30, 2022, up to $25,025,447 of shares remain authorized for repurchase under our stock repurchase program.

 

 

Total Shares of Common Stock Repurchased

 

 

Average Price Paid per Share

 

 

Total
Amount Paid

 

 

Maximum Value of Shares Yet to Be Purchased

 

April 1 - April 30

 

 

—

 

 

$

—

 

 

$

—

 

 

$

22,257,654

 

May 1 - May 31

 

 

1,056,933

 

 

 

7.87

 

 

 

8,316,012

 

 

 

26,683,988

 

June 1 - June 30

 

 

215,217

 

 

 

7.71

 

 

 

1,658,542

 

 

 

25,025,447

 

Total

 

 

1,272,150

 

 

$

7.84

 

 

$

9,974,553

 

 

$

25,025,447

 

 

ITEM 6. EXHIBITS

EXHIBITS

 

Number

 

Description

 

 

 

  10.1

 

Amendment No. 2 to Medallion Financial Corp. 2018 Equity Incentive Plan. Filed as Annex A to our definitive proxy statement for our 2022 Annual Meeting of Shareholders filed on May 2, 2022 (File No. 001-37747) and incorporated by reference herein.

 

 

 

  10.2

 

Medallion Financial Corp. Annual Short Term Incentive Plan, adopted by the Board of Directors on June 1, 2022. Filed as Exhibit 10.1 to the Current Report on Form 8-K filed on June 7, 2022 (File No. 001-37747) and incorporated by reference herein.

 

 

 

  10.3

 

Amended and Restated Employment Agreement, dated June 13, 2022, by and between Anthony N. Cutrone and Medallion Financial Corp. Filed as Exhibit 10.1 to the Current Report on Form 8-K filed on June 15, 2022 (File No. 001-37747) and incorporated by reference herein.

 

 

 

  31.1

 

Certification of Alvin Murstein pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

 

 

  31.2

 

Certification of Antony N. Cutrone pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

 

 

  32.1

 

Certification of Alvin Murstein pursuant to 18 USC. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

 

 

  32.2

 

Certification of Anthony N. Cutrone pursuant to 18 USC. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

 

 

101.INS

 

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

 

 

 

101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB

 

Inline XBRL Taxonomy Extension Labels Linkbase Document

 

 

 

101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

MEDALLION FINANCIAL CORP.

 

 

 

Date:

August 8, 2022

 

 

   By:

/s/ Alvin Murstein

 

Alvin Murstein

 

Chairman and Chief Executive Officer

 

 

By:

/s/ Anthony N. Cutrone

 

Anthony N. Cutrone

 

Executive Vice President and Chief Financial Officer

 

 

 

Signing on behalf of the registrant as principal financial and accounting officer.

 
v3.22.2
Funds Borrowed
 6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
Funds Borrowed

(5) FUNDS BORROWED

The outstanding balances of funds borrowed were as follows:

 

 

Payments Due for the Twelve Months Ending June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

2023

 

 

2024

 

 

2025

 

 

2026

 

 

2027

 

 

Thereafter

 

 

June 30, 2022(1)

 

 

December 31, 2021(1)

 

 

Interest
Rate (2)

 

Deposits (3)

 

$

394,619

 

 

$

347,548

 

 

$

412,380

 

 

$

131,077

 

 

$

186,452

 

 

$

—

 

 

$

1,472,076

 

 

$

1,253,288

 

 

 

1.46

%

Privately placed notes

 

 

—

 

 

 

36,000

 

 

 

—

 

 

 

31,250

 

 

 

—

 

 

 

53,750

 

 

 

121,000

 

 

 

121,000

 

 

 

7.66

 

SBA debentures and borrowings

 

 

5,000

 

 

 

10,429

 

 

 

12,500

 

 

 

15,500

 

 

 

4,500

 

 

 

21,000

 

 

 

68,929

 

 

 

69,963

 

 

 

2.94

 

Preferred securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,000

 

 

 

33,000

 

 

 

33,000

 

 

 

3.75

 

Total

 

$

399,619

 

 

$

393,977

 

 

$

424,880

 

 

$

177,827

 

 

$

190,952

 

 

$

107,750

 

 

$

1,695,005

 

 

$

1,477,251

 

 

 

2.00

%
(1)
Excludes deferred financing costs of $7.4 million and $7.1 million as of June 30, 2022 and December 31, 2021.
(2)
Weighted average contractual rate as of June 30, 2022.
(3)
Balance excludes $1.0 million and $0.8 million of strategic partner reserve deposits as of June 30, 2022 and December 31, 2021.

(A) DEPOSITS

Substantially all deposits are raised through the use of investment brokerage firms that package time deposits in denominations of less than $250,000 qualifying for FDIC insurance into larger pools that are sold to the Bank. The rates paid on the deposits are highly competitive with market rates paid by other financial institutions. Additionally, a brokerage fee is paid, depending on the maturity of the deposits, which averages less than 0.15%. Interest on the deposits is accrued daily and paid monthly, quarterly, semiannually, or at maturity. The Bank did not have any uninsured deposits as of June 30, 2022 and December 31, 2021. In October 2020, the Bank began to originate time deposits through an internet listing service. These deposits are from other financial institutions and, as of June 30, 2022 and December 31, 2021, the Bank had $8.7 million in listing service deposit balances. The following table presents the maturity of the deposit pools, which excludes strategic partner reserve deposits, as of June 30, 2022.

(Dollars in thousands)

 

June 30, 2022

 

Three months or less

 

$

83,985

 

Over three months through six months

 

 

85,568

 

Over six months through one year

 

 

225,066

 

Over one year

 

 

1,077,457

 

Total deposits

 

$

1,472,076

 

(B) PRIVATELY PLACED NOTES

In February 2021, the Company completed a private placement to certain institutional investors of $25.0 million aggregate principal amount of 7.25% unsecured senior notes due February 2026, with interest payable semiannually. In March 2021, an additional $3.3 million principal amount of such notes was issued to certain institutional investors. Subsequently in April 2021, an additional $3.0 million principal amount of such notes was issued to certain institutional investors. The Company used the net proceeds from the offering for general corporate purposes, including repayment of outstanding debt.

In December 2020, the Company completed a private placement to certain institutional investors of $33.6 million aggregate principal amount of 7.50% unsecured senior notes due December 2027, with interest payable semiannually. In February and March 2021, an additional $8.5 million principal amount of such notes was issued to certain institutional investors. Subsequently in April 2021, an additional $11.7 million principal amount of such notes was issued to certain institutional investors. The Company used the net proceeds from the offering for general corporate purposes, including repayment of outstanding debt.

In March 2019, the Company completed a private placement to certain institutional investors of $30.0 million aggregate principal amount of 8.25% unsecured senior notes due 2024, with interest payable semiannually. The Company used the net proceeds from the offering for general corporate purposes, including repaying certain borrowings under its notes payable to banks at a discount which led to a gain of $4.1 million in 2019. In August 2019, an additional $6.0 million principal amount of such notes was issued to certain institutional investors.

(C) SBA DEBENTURES AND BORROWINGS

Over the years, the SBA has approved commitments for MCI and FSVC, typically for a four and half year term and a 1% fee, which fee was paid. During 2017, the SBA restructured FSVC’s debentures with SBA totaling $33.5 million in principal into a new loan by the SBA to FSVC in the principal amount of $34.0 million, or the SBA Loan. In connection with the SBA Loan, FSVC executed a Note, or the SBA Note, with an effective date of March 1, 2017, in favor of SBA, in the principal amount of $34.0 million. The SBA Loan bears interest at a rate of 3.25% and all remaining unpaid principal and interest are due on April 30, 2024, the maturity date. As of June 30, 2022, there were $9.5 million commitments available, and $68.9 million was outstanding, including $7.9 million under the SBA Note.

On July 31, 2020, MCI accepted a commitment from the SBA for $25.0 million in debenture financing. As part of the acceptance, MCI paid the SBA a 1% commitment fee. The commitment expires September 24, 2024. As of June 30, 2022, $15.5 million of the commitment had been drawn, including $8.5 million to replace debentures which matured in 2021 and $9.5 million remains drawable.

(D) PREFERRED SECURITIES

In June 2007, the Company issued and sold $36.1 million aggregate principal amount of unsecured junior subordinated notes to Fin Trust which, in turn, sold $35.0 million of preferred securities to Merrill Lynch International and issued 1,083 shares of common stock to the Company. The notes bear a variable rate of interest of 90 day LIBOR (2.29% at June 30, 2022) plus 2.13%. The notes mature in September 2037 and are prepayable at par. Interest is payable quarterly in arrears. The terms of the preferred securities and the notes are substantially identical. In December 2007, $2.0 million of the preferred securities were repurchased from a third-party investor. As of June 30, 2022, $33.0 million was outstanding on the preferred securities.

(E) COVENANT COMPLIANCE

From time to time the Company may enter into debt agreements which may contain restrictions that require the Company and its subsidiaries to maintain certain financial ratios, including minimum net worth. As of June 30, 2022, the Company did not have any borrowing agreements that contained any such restrictions.
v3.22.2
Leases
 6 Months Ended
Jun. 30, 2022
Leases [Abstract]  
Leases

(6) LEASES

The Company has leased premises that expire at various dates through November 30, 2027 subject to various operating leases. The Company has implemented ASC Topic 842 under a modified retrospective approach in which no adjustments have been made to the prior year balances.

The following table presents the operating lease costs and additional information for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating lease costs

 

$

590

 

 

$

572

 

 

$

1,179

 

 

$

1,144

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

 

435

 

 

 

590

 

 

 

1,080

 

 

 

1,265

 

Right-of-use asset obtained in exchange for lease liability

 

 

(40

)

 

 

(18

)

 

 

(85

)

 

 

(36

)

The following table presents the breakout of the operating leases as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Operating lease right-of-use assets

 

$

10,156

 

 

$

10,045

 

Other current liabilities

 

 

2,103

 

 

 

2,159

 

Operating lease liabilities

 

 

9,078

 

 

 

9,053

 

Total operating lease liabilities

 

 

11,181

 

 

 

11,212

 

Weighted average remaining lease term

 

5.9 years

 

 

5.4 years

 

Weighted average discount rate

 

 

5.54

%

 

 

5.54

%

At June 30, 2022, maturities of the lease liabilities were as follows:

(Dollars in thousands)

 

 

 

Remainder of 2022

 

$

1,259

 

2023

 

 

2,506

 

2024

 

 

2,526

 

2025

 

 

2,505

 

2026

 

 

2,440

 

Thereafter

 

 

2,502

 

Total lease payments

 

 

13,738

 

Less imputed interest

 

 

2,557

 

Total operating lease liabilities

 

$

11,181

 
v3.22.2
Income Taxes
 6 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

(7) INCOME TAXES

The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C of the Internal Revenue Code, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries, in which it holds 80% or more of the outstanding equity interest measured by both vote and fair value.

 

The following table sets forth the significant components of our deferred and other tax assets and liabilities as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Goodwill and other intangibles

 

$

(43,637

)

 

$

(43,894

)

Provision for loan losses

 

 

11,065

 

 

 

11,057

 

Net operating loss carryforwards (1)

 

 

4,661

 

 

 

12,167

 

Accrued expenses, compensation, and other assets

 

 

2,961

 

 

 

2,579

 

Unrealized gains on other investments

 

 

3,197

 

 

 

2,176

 

Total deferred tax liability

 

 

(21,753

)

 

 

(15,915

)

Valuation allowance

 

 

(2,295

)

 

 

(2,295

)

Deferred tax liability, net

 

$

(24,048

)

 

$

(18,210

)
(1)
As of June 30, 2022, the Company and its subsidiaries had an estimated $22.5 million of net operating loss carryforwards, $1.7 million of which expires at various dates between December 31, 2026 and December 31, 2035, which had a net carrying value of $2.4 million as of June 30, 2022.

The components of our tax provision for the three and six months ended June 30, 2022 and 2021 was as follows:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

984

 

 

$

795

 

 

$

1,488

 

 

$

795

 

State

 

 

447

 

 

 

100

 

 

 

769

 

 

 

270

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

2,378

 

 

 

3,001

 

 

 

5,598

 

 

 

6,054

 

State

 

 

1,047

 

 

 

2,632

 

 

 

1,832

 

 

 

3,287

 

Net provision for income taxes

 

$

4,856

 

 

$

6,528

 

 

$

9,687

 

 

$

10,406

 

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Statutory Federal income tax provision at 21%

 

$

4,130

 

 

$

3,805

 

 

$

7,529

 

 

$

6,524

 

State and local income taxes, net of federal income tax

 

 

808

 

 

 

743

 

 

 

1,473

 

 

 

1,275

 

Change in state income tax accruals

 

 

—

 

 

 

1,833

 

 

 

—

 

 

 

1,833

 

Change in effective state income tax rates and accrual

 

 

—

 

 

 

1,399

 

 

 

—

 

 

 

1,369

 

Income attributable to non-controlling interest

 

 

—

 

 

 

(47

)

 

 

—

 

 

 

(266

)

Non deductible expenses

 

 

362

 

 

 

(385

)

 

 

1,075

 

 

 

(213

)

Other

 

 

(444

)

 

 

(820

)

 

 

(390

)

 

 

(116

)

Total income tax provision

 

$

4,856

 

 

$

6,528

 

 

$

9,687

 

 

$

10,406

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. Based upon these considerations, the Company determined the necessary valuation allowance as of June 30, 2022.

The Company has filed tax returns in many states and jurisdictions. Federal, New York State, New York City, and Utah tax filings of the Company for the tax years 2018 through the present are the more significant filings that are open for examination.
v3.22.2
Stock Options and Restricted Stock
 6 Months Ended
Jun. 30, 2022
Share-based Payment Arrangement [Abstract]  
Stock Options and Restricted Stock

(8) STOCK OPTIONS AND RESTRICTED STOCK

The Company’s Board of Directors approved the 2018 Equity Incentive Plan, or the 2018 Plan, which was approved by the Company’s stockholders on June 15, 2018. The terms of 2018 Plan provide for grants of a variety of different type of stock awards to the Company’s employees and non-employee directors, including options, restricted stock, restricted stock units, and stock appreciation rights, etc. On April 22, 2020, the Company’s Board of Directors approved an amendment to the 2018 Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 19, 2020, and subsequently on April 26, 2022, the Company’s Board of Directors approved an additional amendment to the 2018 Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder, which was approved by the Company’s stockholders on June 14, 2022. A total of 5,710,968 shares of the Company’s common stock are issuable under the 2018 Plan, and 3,528,019 remained issuable as of June 30, 2022. Awards under the 2018 Plan are subject to certain limitations as set forth in the 2018 Plan, which will terminate when all shares of common stock authorized for delivery have been delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the 2018 Plan, whichever occurs first.

The Company’s Board of Directors approved the 2015 Employee Restricted Stock Plan, or the 2015 Restricted Stock Plan, on February 13, 2015, which was approved by the Company’s shareholders on June 5, 2015. The 2015 Restricted Stock Plan became

effective upon the Company’s receipt of exemptive relief from the SEC on March 1, 2016. The terms of 2015 Restricted Stock Plan provided for grants of restricted stock awards to the Company’s employees. A grant of restricted stock is a grant of shares of the Company’s common stock which, at the time of issuance, is subject to certain forfeiture provisions, and thus is restricted as to transferability until such forfeiture restrictions have lapsed. A total of 700,000 shares of the Company’s common stock were issuable under the 2015 Restricted Stock Plan, and 241,919 remained issuable as of June 15, 2018. Effective June 15, 2018, the 2018 Plan was approved, and these remaining shares were rolled into the 2018 Plan. Awards under the 2015 Restricted Stock Plan are subject to certain limitations as set forth in the 2015 Restricted Stock Plan. The 2015 Restricted Stock Plan will terminate when all shares of common stock authorized for delivery under the 2015 Restricted Stock Plan have been delivered and the forfeiture restrictions on all awards have lapsed, or by action of the Board of Directors pursuant to the 2015 Restricted Stock Plan, whichever occurs first.

The Company had a stock option plan, the 2006 Stock Option Plan, available to grant both incentive and nonqualified stock options to employees. The 2006 Stock Option Plan, which was approved by the Board of Directors on February 15, 2006 and shareholders on June 16, 2006, provided for the issuance of a maximum of 800,000 shares of common stock of the Company. No additional shares are available for issuance under the 2006 Stock Option Plan. The 2006 Stock Option Plan was administered by the Compensation Committee of the Board of Directors. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. The term and vesting periods of the options were determined by the Compensation Committee, provided that the maximum term of an option could not exceed a period of ten years.

The Company’s Board of Directors approved the 2015 Non-Employee Director Stock Option Plan, or the 2015 Director Plan, on March 12, 2015, which was approved by the Company’s shareholders on June 5, 2015, and on which exemptive relief to implement the 2015 Director Plan was received from the SEC on February 29, 2016. A total of 300,000 shares of the Company’s common stock were issuable under the 2015 Director Plan, and 258,334 remained issuable as of June 15, 2018. Effective June 15, 2018, the 2018 Plan was approved, and these remaining shares were rolled into the 2018 Plan. Under the 2015 Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the 2015 Director Plan, the Company granted options to purchase 12,000 shares of the Company’s common stock to a non-employee director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the 2015 Director Plan are exercisable annually, as defined in the 2015 Director Plan. The term of the options could not exceed ten years.

The Company’s Board of Directors approved the First Amended and Restated 2006 Director Plan, or the Amended Director Plan, on April 16, 2009, which was approved by the Company’s shareholders on June 5, 2009, and on which exemptive relief to implement the Amended Director Plan was received from the SEC on July 17, 2012. A total of 200,000 shares of the Company’s common stock were issuable under the Amended Director Plan. No additional shares are available for issuance under the Amended Director Plan. Under the Amended Director Plan, unless otherwise determined by a committee of the Board of Directors comprised of directors who are not eligible for grants under the Amended Director Plan, the Company would grant options to purchase 9,000 shares of the Company’s common stock to an Eligible Director upon election to the Board of Directors, with an adjustment for directors who were elected to serve less than a full term. The option price per share could not be less than the current market value of the Company’s common stock on the date the option was granted. Options granted under the Amended Director Plan are exercisable annually, as defined in the Amended Director Plan. The term of the options could not exceed ten years.

Additional shares are only available for future issuance under the 2018 Plan. At June 30, 2022, 1,081,609 options on the Company’s common stock were outstanding under the Company’s plans, of which 552,381 options were exercisable. Additionally, there were 744,687 unvested shares under the Company’s restricted common stock plan, 0 unvested restricted stock units, and 60,391 vested restricted stock units under the Company’s restricted stock plans.

The fair value of each restricted stock grant is determined on the date of grant by the closing market price of the Company’s common stock on the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average fair value of options granted was $3.50 per share for the six months ended June 30, 2022. The following assumption categories are used to determine the value of any option grants. There were no grants issued during the six months ended June 30, 2022.

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Risk free interest rate

 

 

—

 

 

 

0.97

%

Expected dividend yield

 

 

—

 

 

 

—

 

Expected life of option in years (1)

 

 

—

 

 

 

6.25

 

Expected volatility (2)

 

 

—

 

 

 

53.98

%
(1)
Expected life is calculated using the simplified method.
(2)
We determine our expected volatility based on our historical volatility.

The following table presents the activity for the stock option programs for the 2022 first and second quarters and the 2021 full year.

 

 

Number of
Options

 

 

 

Exercise
Price Per
Share

 

 

Weighted
Average
Exercise Price

 

Outstanding at December 31, 2020 (2)

 

 

951,669

 

 

$

2.14 - 12.55

 

$

 

6.41

 

Granted

 

 

317,398

 

 

 

 

6.79

 

 

 

6.79

 

Cancelled

 

 

(113,310

)

 

 

4.89 - 11.53

 

 

 

6.64

 

Exercised (1)

 

 

(44,070

)

 

 

5.21 - 7.25

 

 

 

5.58

 

Outstanding at December 31, 2021

 

 

1,111,687

 

 

$

2.14 - 12.55

 

$

 

6.41

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(4,783

)

 

 

4.89 - 7.25

 

 

 

5.69

 

Exercised (1)

 

 

(23,192

)

 

 

4.89 - 7.25

 

 

 

6.53

 

Outstanding at March 31, 2022 (2)

 

 

1,083,712

 

 

$

2.14 - 12.55

 

 

$

6.53

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(2,103

)

 

 

4.89 - 7.25

 

 

 

6.37

 

Exercised (1)

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022 (2)

 

 

1,081,609

 

 

$

2.14 - 12.55

 

 

$

6.53

 

Options exercisable at:

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

320,922

 

 

$

2.14 - 12.55

 

 

$

6.53

 

June 30, 2022

 

 

552,381

 

 

$

2.14 - 12.55

 

 

$

6.54

 
(1)
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was $0 and less than $0.1 million for the three and six months ended June 30, 2022 and was $0.2 million for the year ended December 31, 2021.
(2)
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at June 30, 2022 and the related exercise price of the underlying options, was $0.2 million for outstanding options and $0.1 million for exercisable options as of June 30, 2022. The remaining contractual life was 7.5 years for outstanding options and 7.1 years for exercisable options at June 30, 2022.

The following table presents the activity for the restricted stock programs for the 2022 first and second quarters and the 2021 full year.

 

 

Number of
Shares

 

 

 

Grant
Price Per
Share

 

 

Weighted
Average
Grant Price

 

Outstanding at December 31, 2020

 

 

416,140

 

 

$

4.39 - 7.25

 

 

$

6.24

 

Granted

 

 

258,120

 

 

 

6.79 - 8.40

 

 

 

7.38

 

Cancelled

 

 

(21,940

)

 

 

4.89 - 7.25

 

 

 

5.98

 

Vested (1)

 

 

(158,994

)

 

 

4.39 - 7.25

 

 

 

6.16

 

Outstanding at December 31, 2021(2)

 

 

493,326

 

 

$

4.89 - 8.40

 

 

$

6.87

 

Granted

 

 

383,925

 

 

 

 

7.68

 

 

 

7.68

 

Cancelled

 

 

(5,747

)

 

 

4.89 - 8.40

 

 

 

7.33

 

Vested (1)

 

 

(126,234

)

 

 

4.89 - 7.25

 

 

 

6.55

 

Outstanding at March 31, 2022(2)

 

 

745,270

 

 

$

4.89 - 8.40

 

 

$

7.34

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(583

)

 

 

4.89 - 8.40

 

 

 

7.58

 

Vested (1)

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022(2)

 

 

744,687

 

 

$

4.89 - 8.40

 

 

$

7.34

 
(1)
The aggregate fair value of the restricted stock vested was $0 and $1.0 million for the three and six months ended June 30, 2022 and was $0 and $0.8 million for the three and six months ended June 30, 2021.
(2)
The aggregate fair value of the restricted stock was $4.8 million as of June 30, 2022. The remaining vesting period was 2.7 years at June 30, 2022.

During the three and six months ended June 30, 2022, the Company granted no restricted stock units (RSUs) and during the year ended December 31, 2021, granted 16,803 RSUs that vest on June 17, 2022 with a grant price of $8.87. For the RSUs granted in 2021, unitholders had the option of deferring settlement until a future date if the recipient makes a formal election under the guidelines of IRC Section 409A. As of June 30, 2022, there were 60,391 RSUs outstanding, all of which were vested.

The following table presents the activity for the unvested options outstanding under the plans for the 2022 first and second quarters.

 

 

Number of
Options

 

 

 

Exercise Price
Per Share

 

 

Weighted
Average
Exercise Price

 

Outstanding at December 31, 2021

 

 

790,765

 

 

$

4.89 - 7.25

 

 

$

6.52

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(4,200

)

 

 

4.89 - 7.25

 

 

 

5.48

 

Vested

 

 

(256,972

)

 

 

4.89 - 7.25

 

 

 

6.55

 

Outstanding at March 31, 2022

 

 

529,593

 

 

$

4.89 - 7.25

 

 

$

6.52

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(365

)

 

 

4.89 - 7.25

 

 

 

5.78

 

Vested

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022

 

 

529,228

 

 

$

4.89 - 7.25

 

 

$

6.52

 

The intrinsic value of the options vested was $0 and $0.1 million for the three and six months ended June 30, 2022.

v3.22.2
Segment Reporting
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment Reporting

(9) SEGMENT REPORTING

The Company currently has five business segments, which include four lending and a non-operating segment, which are reflective of how Company management makes decisions about its business and operations.

The four lending segments reflect the main types of lending performed at the Company, which are recreation, home improvement, commercial, and medallion. The recreation and home improvement lending segments are operated by the Bank and include loans in all fifty states. The highest concentrations of recreation loans are in Texas and Florida at 16% and 10% of loans outstanding and with no other states over 10% as of June 30, 2022. The recreation lending segment is a consumer finance business that works with third-party dealers and financial service providers for the purpose of financing RVs, boats, and other consumer recreational equipment, of which RVs, boats, and trailers make up 59%, 20%, and 13% of the segment portfolio as of June 30, 2022. The home improvement lending segment works with contractors and financial service providers to finance residential home improvements concentrated in roofs, swimming pools, and windows at 36%, 25%, and 12% of total home improvement loans outstanding, and with no other product lines over 10% as of June 30, 2022. The highest concentrations of home improvement loans are in Texas and Florida at 11% and 10% of loans outstanding and with no other states over 10% as of June 30, 2022. The commercial lending segment focuses on enterprise wide industries, including manufacturing services, and various other industries, and 47% of these loans are made in the Midwest. The medallion lending segment arose in connection with the financing of taxi medallions, taxis, and related assets, substantially all of which are located in the New York City metropolitan area as of June 30, 2022.

Our corporate and other investments segment is a non-operating segment that includes items not allocated to our operating segments such as investment securities, equity investments, intercompany eliminations, and other corporate elements. Additionally, through December 1, 2021, the date of disposition, the Company had another non-operating segment, RPAC, a race car team.

As part of segment reporting, capital ratios for all operating segments have been normalized as a percentage of consolidated total equity divided by total assets, with the net adjustment applied to corporate and other investments. In addition, the commercial segment primarily represents the mezzanine lending business, with certain legacy commercial loans (immaterial to total) allocated to corporate and other investments.

The following tables present segment data as of and for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

33,514

 

 

$

10,587

 

 

$

2,278

 

 

 

$

231

 

 

$

501

 

 

$

47,111

 

Total interest expense

 

 

4,096

 

 

 

1,625

 

 

 

785

 

 

 

 

140

 

 

 

1,584

 

 

 

8,230

 

Net interest income (loss)

 

 

29,418

 

 

 

8,962

 

 

 

1,493

 

 

 

 

91

 

 

 

(1,083

)

 

 

38,881

 

Provision (recoveries) for loan losses

 

 

6,674

 

 

 

1,697

 

 

 

1,879

 

 

 

 

(2,675

)

 

 

184

 

 

 

7,759

 

Net interest income (loss) after loss provision

 

 

22,744

 

 

 

7,265

 

 

 

(386

)

 

 

 

2,766

 

 

 

(1,267

)

 

 

31,122

 

Other income (expense), net

 

 

(7,551

)

 

 

(3,210

)

 

 

3,263

 

 

 

 

(760

)

 

 

(3,197

)

 

 

(11,455

)

Net income (loss) before taxes

 

 

15,193

 

 

 

4,055

 

 

 

2,877

 

 

 

 

2,006

 

 

 

(4,464

)

 

 

19,667

 

Income tax (provision) benefit

 

 

(3,567

)

 

 

(975

)

 

 

(817

)

 

 

 

(541

)

 

 

1,044

 

 

 

(4,856

)

Net income (loss) after taxes

 

$

11,626

 

 

$

3,080

 

 

$

2,060

 

 

 

$

1,465

 

 

$

(3,420

)

 

$

14,811

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, net

 

$

1,058,898

 

 

$

517,044

 

 

$

94,208

 

 

 

$

4,726

 

 

$

593

 

 

$

1,675,469

 

Total assets

 

 

1,072,356

 

 

 

521,931

 

 

 

103,643

 

 

 

 

31,258

 

 

 

382,943

 

 

 

2,112,131

 

Total funds borrowed

 

 

861,083

 

 

 

419,101

 

 

 

83,223

 

 

 

 

25,099

 

 

 

307,499

 

 

 

1,696,005

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

4.53

%

 

 

2.49

%

 

 

8.06

%

 

 

 

17.05

%

 

 

(3.56

)%

 

 

2.63

%

Return on average stockholders' equity

 

 

25.52

 

 

 

14.02

 

 

 

49.17

 

 

 

 

95.49

 

 

 

(20.01

)

 

 

18.11

 

Interest yield

 

 

13.27

 

 

 

8.65

 

 

 

10.60

 

 

 

 

19.61

 

 

N/A

 

 

 

11.00

 

Net interest margin

 

 

11.65

 

 

 

7.33

 

 

 

6.95

 

 

 

 

7.78

 

 

N/A

 

 

 

9.07

 

Reserve coverage

 

 

3.44

 

 

 

1.75

 

 

 

2.81

 

(1)

 

 

66.61

 

 

N/A

 

 

 

3.41

 

Delinquency status(2)

 

 

0.36

 

 

 

0.07

 

 

 

0.08

 

(1)

 

 

—

 

 

N/A

 

 

 

0.25

 

Charge-off (recovery) ratio(4)

 

 

0.43

 

 

 

0.58

 

 

 

(0.00

)

(3)

 

 

(232.80

)

 

N/A

 

 

 

(0.18

)
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Six Months Ended June 30, 2022

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

64,650

 

 

$

20,288

 

 

$

4,208

 

 

 

$

377

 

 

$

891

 

 

$

90,414

 

Total interest expense

 

 

7,697

 

 

 

2,967

 

 

 

1,507

 

 

 

 

293

 

 

 

3,141

 

 

 

15,605

 

Net interest income (loss)

 

 

56,953

 

 

 

17,321

 

 

 

2,701

 

 

 

 

84

 

 

 

(2,250

)

 

 

74,809

 

Provision (recoveries) for loan losses

 

 

8,354

 

 

 

2,902

 

 

 

3,134

 

 

 

 

(3,544

)

 

 

153

 

 

 

10,999

 

Net interest income (loss) after loss provision

 

 

48,599

 

 

 

14,419

 

 

 

(433

)

 

 

 

3,628

 

 

 

(2,403

)

 

 

63,810

 

Other income (expense), net

 

 

(14,371

)

 

 

(6,106

)

 

 

1,932

 

 

 

 

(1,566

)

 

 

(7,847

)

 

 

(27,958

)

Net income (loss) before taxes

 

 

34,228

 

 

 

8,313

 

 

 

1,499

 

 

 

 

2,062

 

 

 

(10,250

)

 

 

35,852

 

Income tax (provision) benefit

 

 

(9,248

)

 

 

(2,246

)

 

 

(405

)

 

 

 

(557

)

 

 

2,769

 

 

 

(9,687

)

Net income (loss) after taxes

 

$

24,980

 

 

$

6,067

 

 

$

1,094

 

 

 

$

1,505

 

 

$

(7,481

)

 

$

26,165

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, net

 

$

1,058,898

 

 

$

517,044

 

 

$

94,208

 

 

 

$

4,726

 

 

$

593

 

 

$

1,675,469

 

Total assets

 

 

1,072,356

 

 

 

521,931

 

 

 

103,643

 

 

 

 

31,258

 

 

 

382,943

 

 

 

2,112,131

 

Total funds borrowed

 

 

861,083

 

 

 

419,101

 

 

 

83,223

 

 

 

 

25,099

 

 

 

307,499

 

 

 

1,696,005

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

5.04

%

 

 

2.56

%

 

 

2.15

%

 

 

 

5.86

%

 

 

(4.24

)%

 

 

2.37

%

Return on average stockholders' equity

 

 

27.27

 

 

 

13.87

 

 

 

12.21

 

 

 

 

30.74

 

 

 

(24.85

)

 

 

15.93

 

Interest yield

 

 

13.29

 

 

 

8.72

 

 

 

10.28

 

 

 

 

16.07

 

 

N/A

 

 

 

11.04

 

Net interest margin

 

 

11.71

 

 

 

7.45

 

 

 

6.60

 

 

 

 

3.58

 

 

N/A

 

 

 

9.15

 

Reserve coverage

 

 

3.44

 

 

 

1.75

 

 

 

2.81

 

(1)

 

 

66.61

 

 

N/A

 

 

 

3.41

 

Delinquency status(2)

 

 

0.36

 

 

 

0.07

 

 

 

0.08

 

(1)

 

 

—

 

 

N/A

 

 

 

0.25

 

Charge-off (recovery) ratio(4)

 

 

0.44

 

 

 

0.62

 

 

 

3.75

 

(3)

 

 

(153.24

)

 

N/A

 

 

 

0.26

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Three Months Ended June 30, 2021

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

RPAC

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

28,886

 

 

$

8,228

 

 

$

1,383

 

 

 

$

(1,475

)

 

$

—

 

 

$

353

 

 

$

37,375

 

Total interest expense

 

 

2,863

 

 

 

1,143

 

 

 

716

 

 

 

 

2,524

 

 

 

34

 

 

 

604

 

 

 

7,884

 

Net interest income (loss)

 

 

26,023

 

 

 

7,085

 

 

 

667

 

 

 

 

(3,999

)

 

 

(34

)

 

 

(251

)

 

 

29,491

 

Provision for loan losses

 

 

1,017

 

 

 

756

 

 

 

—

 

 

 

 

(2,943

)

 

 

—

 

 

 

488

 

 

 

(682

)

Net interest income (loss) after loss provision

 

 

25,006

 

 

 

6,329

 

 

 

667

 

 

 

 

(1,056

)

 

 

(34

)

 

 

(739

)

 

 

30,173

 

Sponsorship and race winnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

4,345

 

 

 

—

 

 

 

4,345

 

Race team related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

(2,674

)

 

 

—

 

 

 

(2,674

)

Other income (expense), net

 

 

(7,455

)

 

 

(2,638

)

 

 

(69

)

 

 

 

(1,157

)

 

 

(1,862

)

 

 

(543

)

 

 

(13,724

)

Net income (loss) before taxes

 

 

17,551

 

 

 

3,691

 

 

 

598

 

 

 

 

(2,213

)

 

 

(225

)

 

 

(1,282

)

 

 

18,120

 

Income tax (provision) benefit

 

 

(4,519

)

 

 

(951

)

 

 

(150

)

 

 

 

556

 

 

 

57

 

 

 

(1,521

)

 

 

(6,528

)

Net income (loss) after taxes

 

$

13,032

 

 

$

2,740

 

 

$

448

 

 

 

$

(1,657

)

 

$

(168

)

 

$

(2,803

)

 

$

11,592

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans net

 

$

855,900

 

 

$

362,370

 

 

$

66,236

 

 

 

$

5,764

 

 

$

—

 

 

$

3,351

 

 

$

1,293,621

 

Total assets

 

 

868,709

 

 

 

375,189

 

 

 

90,563

 

 

 

 

101,205

 

 

 

31,877

 

 

 

272,204

 

 

 

1,739,747

 

Total funds borrowed

 

 

712,777

 

 

 

295,887

 

 

 

72,450

 

 

 

 

80,959

 

 

 

8,016

 

 

 

212,020

 

 

 

1,382,109

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

6.24

%

 

 

3.04

%

 

 

2.36

%

 

 

 

(6.10

)%

 

 

(1.05

)%

 

 

(3.85

)%

 

 

2.43

%

Return on average equity

 

 

31.19

 

 

 

15.19

 

 

 

11.78

 

 

 

 

(30.51

)

 

 

(39.70

)

 

 

(1.95

)

 

 

12.90

 

Interest yield

 

 

14.03

 

 

 

9.48

 

 

 

9.16

 

 

 

 

(70.71

)

 

N/A

 

 

N/A

 

 

 

11.17

 

Net interest margin

 

 

12.64

 

 

 

8.16

 

 

 

4.42

 

 

 

 

(189.15

)

 

N/A

 

 

N/A

 

 

 

8.84

 

Reserve coverage

 

 

3.42

 

 

 

1.60

 

 

 

—

 

(1)

 

 

65.11

 

 

N/A

 

 

N/A

 

 

 

3.50

 

Delinquency status(2)

 

 

0.32

 

 

 

0.02

 

 

 

0.11

 

(1)

 

 

—

 

 

N/A

 

 

N/A

 

 

 

0.22

 

Charge-off (recovery) ratio(4)

 

 

(0.44

)

 

 

0.26

 

 

 

—

 

(3)

 

 

513.86

 

 

N/A

 

 

N/A

 

 

 

3.28

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Six Months Ended June 30, 2021

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

RPAC

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

56,328

 

 

$

16,146

 

 

$

2,865

 

 

 

$

(1,544

)

 

$

—

 

 

$

660

 

 

$

74,455

 

Total interest expense

 

 

5,657

 

 

 

2,351

 

 

 

1,288

 

 

 

 

3,894

 

 

 

75

 

 

 

3,027

 

 

 

16,292

 

Net interest income (loss)

 

 

50,671

 

 

 

13,795

 

 

 

1,577

 

 

 

 

(5,438

)

 

 

(75

)

 

 

(2,367

)

 

 

58,163

 

Provision for loan losses

 

 

4,630

 

 

 

1,206

 

 

 

—

 

 

 

 

(3,987

)

 

 

—

 

 

 

487

 

 

 

2,336

 

Net interest income (loss) after loss provision

 

 

46,041

 

 

 

12,589

 

 

 

1,577

 

 

 

 

(1,451

)

 

 

(75

)

 

 

(2,854

)

 

 

55,827

 

Sponsorship and race winnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

6,818

 

 

 

—

 

 

 

6,818

 

Race team related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

(4,796

)

 

 

—

 

 

 

(4,796

)

Other income (expense), net

 

 

(12,918

)

 

 

(4,552

)

 

 

(529

)

 

 

 

(3,301

)

 

 

(3,623

)

 

 

(1,858

)

 

 

(26,781

)

Net income (loss) before taxes

 

 

33,123

 

 

 

8,037

 

 

 

1,048

 

 

 

 

(4,752

)

 

 

(1,676

)

 

 

(4,712

)

 

 

31,068

 

Income tax (provision) benefit

 

 

(8,529

)

 

 

(2,070

)

 

 

(263

)

 

 

 

1,193

 

 

 

421

 

 

 

(1,158

)

 

 

(10,406

)

Net income (loss) after taxes

 

$

24,594

 

 

$

5,967

 

 

$

785

 

 

 

$

(3,559

)

 

$

(1,255

)

 

$

(5,870

)

 

$

20,662

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans net

 

$

855,900

 

 

$

362,370

 

 

$

66,236

 

 

 

$

5,764

 

 

$

—

 

 

$

3,351

 

 

$

1,293,621

 

Total assets

 

 

868,709

 

 

 

375,189

 

 

 

90,563

 

 

 

 

101,205

 

 

 

31,877

 

 

 

272,204

 

 

 

1,739,747

 

Total funds borrowed

 

 

712,777

 

 

 

295,887

 

 

 

72,450

 

 

 

 

80,959

 

 

 

8,016

 

 

 

212,020

 

 

 

1,382,109

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

6.06

%

 

 

3.39

%

 

 

1.95

%

 

 

 

(6.29

)%

 

 

(7.72

)%

 

 

(4.08

)%

 

 

2.08

%

Return on average equity

 

 

30.32

 

 

 

16.96

 

 

 

9.77

 

 

 

 

(31.44

)

 

 

(244.87

)

 

 

(30.46

)

 

 

11.09

 

Interest yield

 

 

14.18

 

 

 

9.56

 

 

 

9.66

 

 

 

 

(30.90

)

 

N/A

 

 

N/A

 

 

 

11.50

 

Net interest margin

 

 

12.76

 

 

 

8.17

 

 

 

5.32

 

 

 

 

(108.84

)

 

N/A

 

 

N/A

 

 

 

9.01

 

Reserve coverage

 

 

3.42

 

 

 

1.60

 

 

 

—

 

(1)

 

 

65.11

 

 

N/A

 

 

N/A

 

 

 

3.50

 

Delinquency status(2)

 

 

0.32

 

 

 

0.02

 

 

 

0.11

 

(1)

 

 

—

 

 

N/A

 

 

N/A

 

 

 

0.22

 

Charge-off (recovery) ratio

 

 

0.12

 

 

 

0.99

 

 

 

—

 

(3)

 

 

216.01

 

 

N/A

 

 

N/A

 

 

 

2.15

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
v3.22.2
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

(10) COMMITMENTS AND CONTINGENCIES

(A) EMPLOYMENT AGREEMENTS

The Company has employment agreements with certain key officers for either a one-, two-, three- or five-year term. Annually, the contracts with a five-year term will renew for new five-year terms unless prior to the end of the first year of each five-year term, either the Company or the executive provides notice to the other party of its intention not to extend the employment period beyond the current five-year term. Typically, the contracts with a one- or two-year term will renew for new one- or two-year terms unless prior to the term either the Company or the executive provides notice to the other party of its intention not to extend the employment period beyond the current one or two-year term (as applicable); however, there is currently one agreement that renews after two years for additional one-year terms and one agreement with a three-year term that does not have a renewal period. In the event of a change in control, as defined, during the employment period, the agreements provide for severance compensation to the executive in an amount equal to the balance of the salary, bonus, and value of fringe benefits which the executive would be entitled to receive for the remainder of the employment period.

Employment agreements expire at various dates through 2026, with future minimum payments under these agreements of approximately $13.9 million.

(B) OTHER COMMITMENTS

As of June 30, 2022, the Company had one commitment to extend credit of up to $1.8 million with an expiration date of January 1, 2025. Generally, any commitments would be on the same terms as loans to or investments in existing borrowers or investees, and generally have fixed expiration dates. Since some commitments would be expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

(C) SEC LITIGATION

On December 29, 2021, the SEC filed a civil complaint in the U.S. District Court for the Southern District of New York against the Company and its President and Chief Operating Officer alleging certain violations of the antifraud, books and records, internal controls and anti-touting provisions of the federal securities laws. The litigation relates to certain issues that occurred during the period 2015 to 2017, including (i) the Company’s retention of third parties in 2015 and 2016 concerning posting information about the Company on certain financial websites and (ii) the Company’s financial reporting and disclosures concerning certain assets, including Medallion Bank, in 2016 and 2017, a period when the Company had previously reported as a business development company (BDC) under the Investment Company Act of 1940. Since April 2018, the Company does not report as a BDC, and has not worked with such third parties

since 2016. The Company does not expect to change previously reported financial results. The Company filed a motion to dismiss the complaint on March 22, 2022, the SEC filed an amended complaint on April 26, 2022 and the Company filed a motion to dismiss the amended complaint on August 5, 2022.

The SEC is seeking injunctive relief, disgorgement plus pre-judgment interest and civil penalties in amounts unspecified, as well as an officer and director bar against the Company’s President and Chief Operating Officer. The Company and its President and Chief Operating Officer intend to defend themselves vigorously and believe that the SEC will not prevail on its claims. Nevertheless, depending on the outcome of the litigation, the Company could incur a loss and other penalties that could be material to the Company, its results of operations and/or financial condition, as well as a bar against its President and Chief Operating Officer. In addition, the Company has and expects to further incur significant legal fees and expenses in defending such charges by the SEC and the Company may be subject to shareholder litigation relating to these SEC matters.

(D) OTHER LITIGATION AND REGULATORY MATTERS

The Company and its subsidiaries are subject to inquiries from certain regulators and are currently involved in various legal proceedings incident to the normal course of business, including collection matters with respect to certain loans. We intend to vigorously defend any outstanding claims and pursue our legal rights. In the opinion of management, based on the advice of legal counsel, except for the pending SEC litigation, as described above, there is no proceeding pending, or to the knowledge of management threatened, which in the event of an adverse decision could result in a material adverse impact on the financial condition or results of operations of the Company.
v3.22.2
Related Party Transactions
 6 Months Ended
Jun. 30, 2022
Related Party Transactions [Abstract]  
Related Party Transactions

(11) RELATED PARTY TRANSACTIONS

Certain directors, officers, and stockholders of the Company are also directors and officers of its main consolidated subsidiaries, MFC, MCI, FSVC, and the Bank, as well as other subsidiaries. Officer salaries are set by the Board of Directors of the Company.

Jeffrey Rudnick, the son of one of the Company’s directors, serves as the Company’s Senior Vice President at a salary of $239,000 per year, an increase from $195,000 per year in 2021. Mr. Rudnick received an annual cash bonus of $75,000 and $32,500 as well as an equity bonus in the amount of $45,019 and $30,000, during the six months ended June 30, 2022 and 2021.
v3.22.2
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2022
Investments, All Other Investments [Abstract]  
Fair Value of Financial Instruments

(12) FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC Topic 825, “Financial Instruments,” requires disclosure of fair value information about certain financial instruments, whether assets, liabilities, or off-balance-sheet commitments, if practicable. The following methods and assumptions were used to estimate the fair value of each class of financial instrument. Fair value estimates that were derived from broker quotes cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.

(a) Cash—Book value equals fair value.

(b) Equity investments and securities—The Company’s equity securities are recorded at cost less any impairment plus or minus observable price changes.

(c) Investment securities—The Company’s investments are recorded at the estimated fair value of such investments.

(d) Loans receivable—The Company’s loans are recorded at book value which approximated fair value.

(e) Floating rate borrowings—Due to the short-term nature of these instruments, the carrying amount approximated fair value.

(f) Commitments to extend credit—The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, considering the remaining terms of the agreements and present creditworthiness of the counter parties. For fixed rate loan commitments, fair value also includes a consideration of the difference between the current levels of interest rates and the committed rates. At June 30, 2022 and December 31, 2021, the estimated fair value of these off-balance-sheet instruments was not material.

(g) Fixed rate borrowings—The fair value of the debentures payable to the SBA is estimated based on current market interest rates for similar debt.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Carrying
Amount

 

 

Fair
Value

 

 

Carrying
Amount

 

 

Fair
Value

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents, and federal funds sold (1)

 

$

126,330

 

 

$

126,330

 

 

$

124,484

 

 

$

124,484

 

Equity investments

 

 

10,942

 

 

 

10,942

 

 

 

9,726

 

 

 

9,726

 

Investment securities

 

 

50,358

 

 

 

50,358

 

 

 

44,772

 

 

 

44,772

 

Loans receivable

 

 

1,675,469

 

 

 

1,675,469

 

 

 

1,438,758

 

 

 

1,438,758

 

Accrued interest receivable (2)

 

 

11,534

 

 

 

11,534

 

 

 

10,621

 

 

 

10,621

 

Equity securities(3)

 

 

1,796

 

 

 

1,796

 

 

 

1,950

 

 

 

1,950

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Funds borrowed

 

 

1,696,005

 

 

 

1,696,005

 

 

 

1,478,001

 

 

 

1,478,001

 

Accrued interest payable (2)

 

 

3,548

 

 

 

3,548

 

 

 

3,395

 

 

 

3,395

 
(1)
Categorized as level 1 within the fair value hierarchy, excluding $1.3 million in interest bearing deposits categorized as level 2 as of June 30, 2022 and December 31, 2021. See Note 13.
(2)
Categorized as level 3 within the fair value hierarchy. See Note 13.
Included within other assets on the balance sheet.
v3.22.2
Fair Value of Assets and liabilities
 6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Assets and liabilities

(13) FAIR VALUE OF ASSETS AND LIABILITIES

The Company follows the provisions of FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements.

In accordance with FASB ASC 820, the Company has categorized its assets and liabilities measured at fair value, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). Our assessment and classification of an investment within a level can change over time based upon maturity or liquidity of the investment and would be reflected at the beginning of the quarter in which the change occurred.

As required by FASB ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a level 3 fair value measurement may include inputs that are observable (levels 1 and 2) and unobservable (level 3). Therefore, gains and losses for such assets and liabilities categorized within the level 3 table below may include changes in fair value that are attributable to both observable inputs (levels 1 and 2) and unobservable inputs (level 3).

 

Assets and liabilities measured at fair value, recorded on the consolidated balance sheets, are categorized based on the inputs to the valuation techniques as follows:

Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access (examples include active exchange-traded equity securities, exchange-traded derivatives, most U.S. Government and agency securities, and certain other sovereign government obligations).

Level 2. Assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

a)
Quoted prices for similar assets or liabilities in active markets (for example, restricted stock);
b)
Quoted price for identical or similar assets or liabilities in non-active markets (for example, corporate and municipal bonds, which trade infrequently);
c)
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and
d)
Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability (examples include certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).

Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the assets or liability (examples include certain private equity investments, and certain residential and commercial mortgage-related assets, including loans, securities, and derivatives).

A review of fair value hierarchy classification is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain assets or liabilities. Reclassifications impacting level 3 of the fair value hierarchy are reported as transfers in/out of the level 3 category as of the beginning of the quarter in which the reclassifications occur.

Equity investments were recorded at cost less impairment plus or minus observable price changes. Commencing in 2020, the Company elected to measure equity investments at fair value on a non-recurring basis, which have been adjusted for all periods presented.

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

—

 

 

$

1,250

 

 

$

—

 

 

$

1,250

 

Available for sale investment securities

 

 

—

 

 

 

50,358

 

 

 

—

 

 

 

50,358

 

Equity securities

 

 

1,796

 

 

 

—

 

 

 

—

 

 

 

1,796

 

Total(1)

 

$

1,796

 

 

$

51,608

 

 

$

—

 

 

$

53,404

 
(1)
Total unrealized losses of $1.4 million and $3.1 million, net of tax, was included in accumulated other comprehensive loss for the three and six months ended June 30, 2022 related to these assets.

December 31, 2021
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

—

 

 

$

1,250

 

 

$

—

 

 

$

1,250

 

Available for sale investment securities

 

 

—

 

 

 

44,772

 

 

 

—

 

 

 

44,772

 

Equity securities

 

 

1,950

 

 

 

—

 

 

 

—

 

 

 

1,950

 

Total(1)

 

$

1,950

 

 

$

46,022

 

 

$

—

 

 

$

47,972

 
(1)
Total unrealized losses of $1.0 million, net of tax, was included in accumulated other comprehensive income (loss) for the year ended December 31, 2021 related to these assets.

 

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

—

 

 

$

—

 

 

$

10,942

 

 

$

10,942

 

Impaired loans

 

 

—

 

 

 

—

 

 

 

33,285

 

 

 

33,285

 

Loan collateral in process of foreclosure

 

 

—

 

 

 

—

 

 

 

26,974

 

 

 

26,974

 

Total

 

$

—

 

 

$

—

 

 

$

71,201

 

 

$

71,201

 

 

December 31, 2021
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

—

 

 

$

—

 

 

$

9,726

 

 

$

9,726

 

Impaired loans

 

 

—

 

 

 

—

 

 

 

35,571

 

 

 

35,571

 

Loan collateral in process of foreclosure

 

 

—

 

 

 

—

 

 

 

37,430

 

 

 

37,430

 

Total

 

$

—

 

 

$

—

 

 

$

82,727

 

 

$

82,727

 

Significant Unobservable Inputs

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as level 3 within the fair value hierarchy. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

The valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

Fair Value
at June 30, 2022

 

 

Valuation Techniques

 

Unobservable Inputs

 

Range
(Weighted Average)

Equity investments

 

$

10,669

 

 

Investee financial analysis

 

Financial condition and operating performance of the borrower (1)

 

N/A

 

 

 

 

 

 

 

Collateral support

 

N/A

 

 

 

273

 

 

Precedent market transaction

 

Offering price

 

$8.73 / share

Impaired loans

 

 

33,285

 

 

Market approach

 

Historical and actual loss experience

 

0.00% - 5.52%

 

 

 

 

 

 

 

 

 

60% of balance

 

 

 

 

 

 

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value

 

N/A

Loan collateral in process of foreclosure

 

 

26,974

 

 

Market approach

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value (3)

 

$1.8 - 34.2
(1)
Includes projections based on revenue, EBITDA, leverage, and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry, and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(2)
Represents amount net of liquidation costs.
(3)
Relates to the recreation portfolio.

(Dollars in thousands)

 

Fair Value
at December 31, 2021

 

 

Valuation Techniques

 

Unobservable Inputs

 

Range
(Weighted Average)

Equity investments

 

$

9,453

 

 

Investee financial analysis

 

Financial condition and operating performance of the borrower (1)

 

N/A

 

 

 

 

 

 

 

Collateral support

 

N/A

 

 

 

273

 

 

Precedent market transaction

 

Offering price

 

$8.73 / share

Impaired loans

 

 

35,571

 

 

Market approach

 

Historical and actual loss experience

 

1.50% - 6.00%

 

 

 

 

 

 

 

 

 

60% of balance

 

 

 

 

 

 

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value

 

N/A

Loan collateral in process of foreclosure

 

 

37,430

 

 

Market approach

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value (3)

 

$3.6 - 49.8
(1)
Includes projections based on revenue, EBITDA, leverage, and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry, and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(2)
Represents amount net of liquidation costs.
(3)
Relates to the recreation portfolio.
v3.22.2
Medallion Bank Preferred Stock (Non-controlling Interest)
 6 Months Ended
Jun. 30, 2022
Medallion Bank Preferred Stock (Non-controlling Interest)

(14) MEDALLION BANK PREFERRED STOCK (Non-controlling interest)

On December 17, 2019, the Bank closed an initial public offering of 1,840,000 shares of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F, with a $46.0 million aggregate liquidation amount, yielding net proceeds of $42.5 million, which were recorded in the Bank’s shareholders’ equity. Dividends are payable quarterly from the date of issuance to, but excluding April 1, 2025, at a rate of 8% per annum, and from and including April 1, 2025, at a floating rate equal to a benchmark rate (which is expected to be three-month Secured Overnight Financing Rate, or SOFR) plus a spread of 6.46% per annum.

On July 21, 2011, the Bank issued, and the U.S. Treasury purchased, 26,303 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series E, or Series E, for an aggregate purchase price of $26.3 million under the Small Business Lending Fund Program, or SBLF, with a liquidation amount of $1,000 per share. The SBLF is a voluntary program intended to encourage small business lending by providing capital to qualified smaller banks at favorable rates. The Bank pays a dividend rate of 9% on the Series E.
v3.22.2
Subsequent Events
 6 Months Ended
Jun. 30, 2022
Subsequent Events [Abstract]  
Subsequent Events

(15) SUBSEQUENT EVENTS

The Company has evaluated the effects of events that have occurred subsequent to June 30, 2022 through the date of financial statement issuance. As of such date, there were no subsequent events that required disclosure.
v3.22.2
Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2022
Accounting Policies [Abstract]  
Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S., or GAAP, requires management to make estimates that affect the amounts reported in the consolidated financial statements and the accompanying notes. Accounting estimates and assumptions are those that management considers to be the most critical to an understanding of the consolidated financial statements because they inherently involve significant judgments and uncertainties. All of these estimates reflect management’s best judgment about current economic and market conditions and their effects based on information available as of the date of these consolidated financial statements. If such conditions change, it is reasonably possible that the judgments and estimates could change, which may result in future impairments of loans and loan collateral in process of foreclosure, goodwill and intangible assets, and investments, among other effects.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its wholly-owned and controlled subsidiaries. All significant intercompany transactions, balances, and profits (losses) have been eliminated in consolidation.

The consolidated financial statements have been prepared in accordance with GAAP. The Company consolidates all entities it controls through a majority voting interest, a controlling interest through other contractual rights, or as being identified as the primary beneficiary of VIEs. The primary beneficiary is the party who has both (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (2) an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third-party’s holding is recorded as non-controlling interest.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original purchased maturity of three months or less to be cash equivalents. Cash balances are generally held in accounts at large national or regional banking organizations in amounts that exceed the federally insured limits. As of June 30, 2022, cash includes $1.3 million of interest-bearing funds deposited in other banks, that are mainly callable, with original terms of 4 to 7 years.

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

The Company follows the Financial Accounting Standards Board, or FASB, FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, or FASB ASC 820, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FASB ASC 820 defines fair value as an exit price (i.e. a price that would be received to sell, as opposed to acquire, an asset or transfer a liability), and emphasizes that fair value is a market-based measurement. It establishes a fair value hierarchy that distinguishes between assumptions developed based on market data obtained from independent external sources and the reporting entity’s own assumptions. Further, it specifies that fair value measurement should consider adjustment for risk, such as the risk inherent in the valuation technique or its inputs. See also Notes 12 and 13 to the consolidated financial statements.

Equity Investments

Equity Investments

The Company follows FASB ASC Topic 321, Investments – Equity Securities, or ASC 321, which requires all applicable investments in equity securities with a readily determinable fair value to be valued as such, and those without a readily determinable fair value, are measured at cost, less any impairment plus or minus any observable price changes. Equity investments of $10.9 million and $9.7 million at June 30, 2022 and December 31, 2021, comprised mainly of nonmarketable stock and stock warrants, are recorded at cost less any impairment plus or minus observable price changes. As of June 30, 2022, the Company determined that there was no impairment or observable price change.

During 2021, the Company purchased $2.0 million of equity securities with a readily determinable fair value. As a result, all unrealized gains and losses are included in gain (loss) on equity investments. As of June 30, 2022 and December 31, 2021, the fair value of these securities were $1.8 million and $2.0 million and are included in other assets on the consolidated balance sheet.

The table below presents the unrealized portion related to the equity securities held.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net losses recognized during the period on equity securities

 

$

(63

)

 

$

(3

)

 

$

(154

)

 

$

(31

)

Less: Net gains (losses) recognized during the period on equity
   securities sold during the period

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Unrealized losses recognized during the reporting period on
   equity securities still held at the reporting date

 

$

(63

)

 

$

(3

)

 

$

(154

)

 

$

(31

)
Investment Securities

Investment Securities

The Company follows FASB ASC Topic 320, Investments – Debt Securities, or ASC 320, which requires that all applicable investments in debt securities be classified as trading securities, available-for-sale securities, or held-to-maturity securities. Investment securities are purchased from time-to-time in the open market at prices that are greater or lesser than the par value of the investment. The resulting premium or discount is deferred and recognized on a level yield basis as an adjustment to the yield of the related investment. The net premium on investment securities totaled $0.1 million at June 30, 2022 and $0.3 million at December 31, 2021, and less than $0.1 million was amortized to interest income for the three and six months ended June 30, 2022 and less than $0.1 million for the three and six months ended June 30, 2021. ASC 320 further requires that held-to-maturity securities be reported at amortized cost and available-for-sale securities be reported at fair value, with unrealized gains and losses excluded from earnings at the date of the consolidated financial statements, and reported in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity, net of the effect of income taxes, until they are sold. At the time of sale, any gains or losses, calculated by the specific identification method, will be recognized as a component of operating results and any amounts previously included in stockholders’ equity, which were recorded net of the income tax effect, will be reversed.

Loans

Loans

The Company’s loans are currently reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, and which is amortized to interest income over the life of the loan.

Loan origination fees and certain direct origination costs are deferred and recognized as an adjustment to the yield of the related loans. At June 30, 2022 and December 31, 2021, net loan origination costs were $31.6 million and $26.1 million. Net amortization to income for the three and six months ended June 30, 2022 was $2.4 million and $4.5 million and was $2.1 million and $3.7 million for the three and six months ended June 30, 2021.

Interest income is recorded on the accrual basis. Medallion and commercial loans are placed on nonaccrual status, and all uncollected accrued interest is reversed, when there is doubt as to the collectability of interest or principal, or if loans are 90 days or more past due, unless management has determined that they are both well-secured and in the process of collection. Interest income on nonaccrual loans is generally recognized when cash is received, unless a determination has been made to apply all cash receipts to principal. The consumer loan portfolio has different characteristics, typified by a larger number of smaller dollar loans that have similar characteristics. A loan is considered to be impaired, or nonperforming, when based on current information and events, it is unlikely the Company will be able to collect all amounts due according to the contractual terms of the original loan agreement. Management considers loans that are in bankruptcy status, but have not been charged-off, to be impaired. Consumer loans are placed on nonaccrual when they become 90 days past due, or earlier if they enter bankruptcy, and are charged-off in their entirety when deemed uncollectible, or when they become 120 days past due, whichever occurs first, at which time appropriate recovery efforts against both the borrower and the underlying collateral are initiated. For the recreation loan portfolio, the process to repossess the collateral is typically started at 60 days past due. If the collateral is not located and the account reaches 120 days delinquent, the account is charged-off. If the collateral is repossessed, a loss is recorded by writing the collateral down to its fair value less selling costs, and the collateral is sent to auction. When the collateral is sold, the net auction proceeds are applied to the account, and any remaining balance is written off. Proceeds collected on charged-off accounts are recorded as recoveries. Total loans 90 days or more past due were $4.3 million at June 30, 2022, or 0.25% of the total loan portfolio, compared to $4.0 million, or 0.28%, at December 31, 2021.

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants concessions to the borrower for other than an insignificant period of time that the Company would not otherwise consider, the related loan is classified as a troubled debt restructuring, or TDR. The Company strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before they reach nonaccrual status. These modified terms may include rate reductions, principal forgiveness, term extensions, payment forbearance and other actions intended to minimize the economic loss to the Company and to avoid foreclosure or repossession of the collateral. For modifications where the Company forgives principal, the entire amount of such principal forgiveness is immediately charged off. Loans classified as TDRs are considered impaired loans. All consumer loans which are party to a Chapter 13 bankruptcy are immediately classified as TDRs. The Company’s policy with regard to bankrupt recreation loans is to take an immediate 40% write down of the loan balance.

Loan collateral in process of foreclosure primarily includes medallion loans that have reached 120 days past due and have been charged-down to their net realizable value, in addition to consumer repossessed collateral in the process of being sold. For New York City medallion loans in the process of foreclosure, although market prices fluctuate and may exceed the internally determined value, the Company continued to utilize a net value of $79,500 when assessing net realizable value for the medallion loans, despite fluctuating current transfer prices which may exceed that level from time to time. The "loan collateral in the process of foreclosure" designation reflects that the collection activities on these loans have transitioned from working with the borrower, to the liquidation of the collateral securing the loans. The Company accounts for its sales of loans in accordance with FASB Accounting Standards Codification Topic 860, Transfers and Servicing, or FASB ASC 860, which provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities. In accordance with FASB ASC 860, the Company had elected the fair value measurement method for its servicing assets and liabilities. The principal portion of loans serviced for others by the Company and its affiliates was $19.7 million and $20.5 million at June 30, 2022 and December 31, 2021. The Company has evaluated the servicing aspect of its business in accordance with FASB ASC 860 and determined that no material servicing asset or liability existed as of June 30, 2022 and December 31, 2021.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions, and excess concentration risks. In analyzing the adequacy of the allowance for loan losses, the Company uses historical delinquency and actual loss rates with a one-year lookback period for consumer loans. For commercial loans deemed nonperforming, the historical loss experience and other projections are looked at. For medallion loans, delinquent nonperforming loans are valued at collateral value for the most recent quarter. Collateral value for the medallion loans is generally determined utilizing factors deemed relevant under the circumstances of the market including but not limited to: actual transfers, pending transfers, median and average sales prices, discounted cash flows, market direction and sentiment, and general economic trends for the industry and economy. This evaluation is inherently subjective, as

it requires estimates that are susceptible to significant revision as more information becomes available. As a result of COVID-19, the Company determined that anticipated payment activity on the medallion portfolio was impossible to quantify upon exit of the six-month deferral period with borrowers, and therefore deemed all such loans as impaired in the third quarter of 2020. As a result, all medallion loans were placed on nonaccrual and reserved down to collateral value, net of liquidation costs, which was $79,500 for New York City medallions. The Company continued to use $79,500 as its internally determined value for assessing net realizable value for these medallion loans, despite fluctuating current transfer prices which may exceed that level from time to time. The Company continues to monitor the impact of COVID-19 on the consumer, commercial, and medallion loans. Credit losses are deducted from the allowance and subsequent recoveries are added back to the allowance.
Goodwill and Intangible Assets

Goodwill and Intangible Assets

The Company’s goodwill and intangible assets arose as a result of the excess of fair value over book value for several of the Company’s previously unconsolidated portfolio investment companies as of April 2, 2018. This fair value was brought forward under the Company’s new reporting, and was subject to a purchase price accounting allocation process conducted by an independent third-party expert to arrive at the current categories and amounts. Goodwill is not amortized, but is subject to quarterly review by management to determine whether additional impairment testing is needed, and such testing is performed at least on an annual basis. Intangible assets are amortized over their useful life of approximately 20 years. As of June 30, 2022 and December 31, 2021, the Company had goodwill of $150.8 million, all of which related to the Bank. As of June 30, 2022 and December 31, 2021, the Company had intangible assets of $22.8 million and $23.5 million. Amortization expense on the intangible assets for the three and six months ended June 30, 2022 and 2021 was $0.4 million and $0.7 million. Additionally, loan portfolio premiums of $12.4 million were determined as of April 2, 2018, of which $0.2 million and $0.5 million were outstanding as of June 30, 2022 and December 31, 2021, and of which $0.2 million and $0.3 million was amortized to interest income for the three and six months ended June 30, 2022 and $1.7 million and $1.9 million was amortized to interest income for the three and six months ended June 30, 2021. Management performed a step 0 analysis in assessing the goodwill and intangibles for impairment at December 31, 2021, concluding that there was no impairment of these assets. The Company has reviewed these assets, all of which relate to the Bank, and concluded that no impairment exists as of June 30, 2022.

The table below shows the details of the intangible assets as of the dates presented.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Brand-related intellectual property

 

$

17,325

 

 

$

17,874

 

Home improvement contractor relationships

 

 

5,434

 

 

 

5,606

 

Total intangible assets

 

$

22,759

 

 

$

23,480

 
Fixed Assets

Fixed Assets

Fixed assets are carried at cost less accumulated depreciation and amortization, and are depreciated on a straight-line basis over their estimated useful lives of 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated economic useful life of the improvement. Depreciation and amortization expense was $0.1 million and $0.2 million for the three and six months ended June 30, 2022 and 2021.
Deferred Costs

Deferred Costs

Deferred financing costs represent costs associated with obtaining the Company’s borrowing facilities, and are amortized on a straight-line basis over the lives of the related financing agreements and life of the respective pool. Amortization expense was $0.7 million and $1.3 million for the three and six months ended June 30, 2022 and was $0.6 million and $1.2 million for the three and six months ended June 30, 2021. In addition, the Company capitalizes certain costs for transactions in the process of completion (other than business combinations), including those for potential investments, and the sourcing of other financing alternatives. Upon completion or termination of the transaction, any accumulated amounts will be amortized against income over an appropriate period, or written off. The amount on the Company’s balance sheet for all of these purposes were $7.4 million and $7.1 million as of June 30, 2022 and December 31, 2021.
Income Taxes

Income Taxes

Income taxes are accounted for using the asset and liability approach in accordance with FASB ASC Topic 740, Income Taxes, or ASC 740. Deferred tax assets and liabilities reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred tax assets are also recorded for net operating losses, capital losses and any tax credit carryforwards. A valuation allowance is provided against a deferred tax asset when it is more likely than not that some or all of the deferred tax assets will not be realized. All available evidence, both positive and negative, is considered to determine whether a valuation allowance for deferred tax assets is needed. Items considered in determining the Company’s valuation allowance include expectations of future earnings of the appropriate tax character, recent historical financial results, tax planning strategies, the length of statutory carryforward periods and the expected timing of the reversal of temporary differences. The Company recognizes tax benefits of uncertain tax positions only when the position is more likely than not to be sustained assuming examination by tax authorities. The Company records income tax related interest and penalties, if applicable, within current income tax expense.
Earnings Per Share (EPS)

Earnings Per Share (EPS)

Basic earnings per share are computed by dividing net income resulting from operations available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur if option contracts to issue common stock were exercised, or if restricted stock vests, and has been computed after considering to the weighted average dilutive effect of the Company’s stock options and restricted stock. The Company uses the treasury stock method to calculate diluted EPS, which is a method of recognizing the use of proceeds that could be obtained upon exercise of options and warrants, including unvested compensation expense related to the shares, in computing diluted EPS. It assumes that any proceeds would be used to purchase common stock at the average market price during the period. The table below shows the calculation of basic and diluted EPS.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income available to common stockholders

 

$

13,300

 

 

$

10,267

 

 

$

23,141

 

 

$

18,698

 

Weighted average common shares outstanding applicable
   to basic EPS

 

 

24,153,015

 

 

 

24,595,822

 

 

 

24,459,870

 

 

 

24,557,511

 

Effect of dilutive stock options

 

 

84,232

 

 

 

127,493

 

 

 

86,869

 

 

 

74,331

 

Effect of restricted stock grants

 

 

184,620

 

 

 

227,197

 

 

 

204,273

 

 

 

291,181

 

Adjusted weighted average common shares outstanding
   applicable to diluted EPS

 

 

24,421,867

 

 

 

24,950,512

 

 

 

24,751,012

 

 

 

24,923,023

 

Basic net income per share

 

$

0.55

 

 

$

0.42

 

 

$

0.95

 

 

$

0.76

 

Diluted net income per share

 

 

0.54

 

 

 

0.41

 

 

 

0.93

 

 

 

0.75

 

Potentially dilutive common shares excluded from the above calculations aggregated 832,895 and 396,373 shares as of June 30, 2022 and 2021.

Stock Compensation

Stock Compensation

The Company follows FASB ASC Topic 718, or ASC 718, Compensation – Stock Compensation, for its equity incentive, stock option, and restricted stock plans, and accordingly, the Company recognizes the expense of these grants as required. Stock-based employee compensation costs pertaining to stock options are reflected in net income resulting from operations for any new grants using the fair values established by usage of the Black-Scholes option pricing model, expensed over the vesting period of the underlying option. Stock-based employee compensation costs pertaining to restricted stock are reflected in net income resulting from operations for any new grants using the grant date fair value of the shares granted, expensed over the vesting period of the underlying stock.

During the six months ended June 30, 2022 and 2021, the Company issued 383,925 and 163,561 restricted shares of stock-based compensation awards, issued 0 and 317,398 shares of other stock-based compensation awards, issued 0 and 16,803 restricted stock units. The Company recognized $0.9 million and $1.5 million, or $0.04 and $0.06 per share, for the three and six months ended June 30, 2022, and $0.6 million and $1.1 million, or $0.02 and $0.04 per share, for the three and six months ended June 30, 2021, of non-cash stock-based compensation expense related to the grants. As of June 30, 2022, the total remaining unrecognized compensation cost related to unvested stock options and restricted stock was $4.2 million, which is expected to be recognized over the next 11 quarters.
Regulatory Capital

Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the FDIC and the Utah Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classifications are also subject to qualitative judgments by the bank regulators about components, risk weightings, and other factors.

FDIC-insured banks, including the Bank, are subject to certain federal laws, which impose various legal limitations on the extent to which banks may finance or otherwise supply funds to certain of their affiliates. In particular, the Bank is subject to certain restrictions on any extensions of credit to, or other covered transactions with, such as certain purchases of assets, the Company or its affiliates.

 

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios as defined in the regulations (set forth in the table below). Additionally, as conditions of granting the Bank’s application for federal deposit insurance, the FDIC ordered that the Tier 1 leverage capital to total assets ratio, as defined, be not less than 15%, a level which could preclude its ability to pay dividends to the Company, and that an adequate allowance for loan losses be maintained. As of June 30, 2022, the Bank’s Tier 1 leverage ratio was 17.0%. The Bank’s actual capital amounts and ratios, and the regulatory minimum ratios are presented in the following table.

 

 

Regulatory

 

 

 

 

 

 

 

(Dollars in thousands)

 

Minimum

 

 

Well-Capitalized

 

 

June 30, 2022

 

 

December 31, 2021

 

Common equity tier 1 capital

 

 

 

 

 

 

 

$

217,079

 

 

$

193,459

 

Tier 1 capital

 

 

 

 

 

 

 

 

285,867

 

 

 

262,247

 

Total capital

 

 

 

 

 

 

 

 

307,653

 

 

 

281,211

 

Average assets

 

 

 

 

 

 

 

 

1,681,043

 

 

 

1,495,726

 

Risk-weighted assets

 

 

 

 

 

 

 

 

1,706,568

 

 

 

1,482,678

 

Leverage ratio (1)

 

 

4.0

%

 

 

5.0

%

 

 

17.0

%

 

 

17.5

%

Common equity tier 1 capital ratio (2)

 

 

7.0

 

 

 

6.5

 

 

 

12.7

 

 

 

13.1

 

Tier 1 capital ratio (3)

 

 

8.5

 

 

 

8.0

 

 

 

16.8

 

 

 

17.7

 

Total capital ratio (3)

 

 

10.5

 

 

 

10.0

 

 

 

18.0

 

 

 

19.0

 
(1)
Calculated by dividing Tier 1 capital by average assets.
(2)
Calculated by subtracting preferred stock or non-controlling interest from Tier 1 capital and dividing by risk-weighted assets.
(3)
Calculated by dividing Tier 1 or total capital by risk-weighted assets.

In the table above, the minimum risk-based ratios as of June 30, 2022 and December 31, 2021 reflect the capital conservation buffer of 2.5%. The minimum regulatory requirements, inclusive of the capital conservation buffer, were the binding requirements for the risk-based requirements, and the “well-capitalized” requirements were the binding requirements for Tier 1 leverage capital as of both June 30, 2022 and December 31, 2021.
Recently Issued Accounting Standards

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, or Topic 326: Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. The main objective of this new standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial assets and other commitments to extend credit held by a reporting entity at each reporting date. Under the FASB’s new standard, the concepts used by entities to account for credit losses on financial instruments will fundamentally change. The existing “probable” and “incurred” loss recognition threshold is removed. Loss estimates are based upon lifetime “expected” credit losses. The use of past and current events must now be supplemented with “reasonable and supportable” expectations about the future to determine the amount of credit loss. The collective changes to the recognition and measurement accounting standards for financial instruments and their anticipated impact on the allowance for credit losses modeling have been universally referred to as the CECL (current expected credit loss) model. ASU 2016-13 applies to all entities and is effective for fiscal years beginning after December 15, 2019 for public entities, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10 to defer implementation of the standard for smaller reporting companies, such as the Company, to fiscal years beginning after December 15, 2022. The Company is assessing the impact the update will have on the accompanying financial statements, and expects the update to have a material impact on the Company’s accounting for estimated credit losses on its loans.

In August 2021, the FASB issued ASU 2021-06, Presentation of Financial Statements, or Topic 205: Depository and Lending, or Topic 942: and Financial Services – Investment Companies, or Topic 946: Measurement of Credit Losses on Financial Instruments, or ASU 2016-13. This new standard amends certain SEC paragraphs from the Codification in response to the issuance of SEC Final Rule No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed Businesses and SEC Rule No. 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants. The Company has assessed the impact the update and determined it does not have a material impact on the accompanying financial statements.

 

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses, or Topic 326: Troubled Debt Restructurings and Vintage Disclosures, or ASU 2022-02. The main objective of this new standard is to amend ASU 2016-13 in response to feedback received from the post-implementation review process. The amendments update ASU 2016-13 to require that an entity measure and record the lifetime expected credit losses on an asset upon origination or acquisition, and, as a result, credit losses from loans modified as troubled debt restructurings (TDRs) have been incorporated into the allowance for credit losses. The amendments also require the disclosure of current period gross write-offs, by year of origination, for financing receivables. ASU 2022-02 is effective upon the adoption of ASU 2016-13. The Company is assessing the impact the update will have on the accompanying financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement, or Topic 820: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, or ASU 2016-13. This new standard clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The Company has assessed the impact the update and determined it does not have a material impact on the accompanying financial statements.
Reclassifications

Reclassifications

Certain reclassifications have been made to prior year balances to conform with the current year presentation. These reclassifications have no effect on the previously reported results of operations.
v3.22.2
Summary of Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2022
Accounting Policies [Abstract]  
Summary of Unrealized Portion Related to Equity Securities

The table below presents the unrealized portion related to the equity securities held.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net losses recognized during the period on equity securities

 

$

(63

)

 

$

(3

)

 

$

(154

)

 

$

(31

)

Less: Net gains (losses) recognized during the period on equity
   securities sold during the period

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Unrealized losses recognized during the reporting period on
   equity securities still held at the reporting date

 

$

(63

)

 

$

(3

)

 

$

(154

)

 

$

(31

)
Schedule of Intangible Assets

The table below shows the details of the intangible assets as of the dates presented.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Brand-related intellectual property

 

$

17,325

 

 

$

17,874

 

Home improvement contractor relationships

 

 

5,434

 

 

 

5,606

 

Total intangible assets

 

$

22,759

 

 

$

23,480

 
Summary of the Calculation of Basic and Diluted EPS The table below shows the calculation of basic and diluted EPS.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income available to common stockholders

 

$

13,300

 

 

$

10,267

 

 

$

23,141

 

 

$

18,698

 

Weighted average common shares outstanding applicable
   to basic EPS

 

 

24,153,015

 

 

 

24,595,822

 

 

 

24,459,870

 

 

 

24,557,511

 

Effect of dilutive stock options

 

 

84,232

 

 

 

127,493

 

 

 

86,869

 

 

 

74,331

 

Effect of restricted stock grants

 

 

184,620

 

 

 

227,197

 

 

 

204,273

 

 

 

291,181

 

Adjusted weighted average common shares outstanding
   applicable to diluted EPS

 

 

24,421,867

 

 

 

24,950,512

 

 

 

24,751,012

 

 

 

24,923,023

 

Basic net income per share

 

$

0.55

 

 

$

0.42

 

 

$

0.95

 

 

$

0.76

 

Diluted net income per share

 

 

0.54

 

 

 

0.41

 

 

 

0.93

 

 

 

0.75

 
Summary of Bank's Actual Capital Amounts and Ratios, and the Regulatory Minimum Ratios The Bank’s actual capital amounts and ratios, and the regulatory minimum ratios are presented in the following table.

 

 

Regulatory

 

 

 

 

 

 

 

(Dollars in thousands)

 

Minimum

 

 

Well-Capitalized

 

 

June 30, 2022

 

 

December 31, 2021

 

Common equity tier 1 capital

 

 

 

 

 

 

 

$

217,079

 

 

$

193,459

 

Tier 1 capital

 

 

 

 

 

 

 

 

285,867

 

 

 

262,247

 

Total capital

 

 

 

 

 

 

 

 

307,653

 

 

 

281,211

 

Average assets

 

 

 

 

 

 

 

 

1,681,043

 

 

 

1,495,726

 

Risk-weighted assets

 

 

 

 

 

 

 

 

1,706,568

 

 

 

1,482,678

 

Leverage ratio (1)

 

 

4.0

%

 

 

5.0

%

 

 

17.0

%

 

 

17.5

%

Common equity tier 1 capital ratio (2)

 

 

7.0

 

 

 

6.5

 

 

 

12.7

 

 

 

13.1

 

Tier 1 capital ratio (3)

 

 

8.5

 

 

 

8.0

 

 

 

16.8

 

 

 

17.7

 

Total capital ratio (3)

 

 

10.5

 

 

 

10.0

 

 

 

18.0

 

 

 

19.0

 
v3.22.2
Investment Securities (Tables)
 6 Months Ended
Jun. 30, 2022
Schedule of Investments [Abstract]  
Summary of Fixed Maturity Securities Available for Sale

Fixed maturity securities available for sale at June 30, 2022 and December 31, 2021 consisted of the following:

June 30, 2022
(Dollars in thousands)

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

44,155

 

 

$

4

 

 

$

(3,680

)

 

$

40,479

 

State and municipalities

 

 

10,280

 

 

 

73

 

 

 

(474

)

 

 

9,879

 

Total

 

$

54,435

 

 

$

77

 

 

$

(4,154

)

 

$

50,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021
(Dollars in thousands)

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

35,469

 

 

$

672

 

 

$

(403

)

 

$

35,738

 

State and municipalities

 

 

9,025

 

 

 

60

 

 

 

(51

)

 

 

9,034

 

Total

 

$

44,494

 

 

$

732

 

 

$

(454

)

 

$

44,772

 
Summary of Amortized Cost and Estimated Market Value of Investment Securities by Contractual Maturity

The amortized cost and estimated market value of investment securities at June 30, 2022 by contractual maturity are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

June 30, 2022
(Dollars in thousands)

 

Amortized
Cost

 

 

Fair
Value

 

Due in one year or less

 

$

22

 

 

$

22

 

Due after one year through five years

 

 

9,435

 

 

 

9,241

 

Due after five years through ten years

 

 

9,568

 

 

 

8,737

 

Due after ten years

 

 

35,410

 

 

 

32,358

 

Total

 

$

54,435

 

 

$

50,358

 
Summary of Securities with Gross Unrealized Losses

The following tables show information pertaining to securities with gross unrealized losses at June 30, 2022 and December 31, 2021, aggregated by investment category and length of time that individual securities have been in a continuous loss position.

 

 

Less than Twelve Months

 

 

Twelve Months and Over

 

June 30, 2022
(Dollars in thousands)

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

(1,861

)

 

$

26,941

 

 

$

(1,819

)

 

$

10,263

 

State and municipalities

 

 

(47

)

 

 

3,543

 

 

 

(427

)

 

 

3,246

 

Total

 

$

(1,908

)

 

$

30,484

 

 

$

(2,246

)

 

$

13,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than Twelve Months

 

 

Twelve Months and Over

 

December 31, 2021
(Dollars in thousands)

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Mortgage-backed securities, principally obligations of U.S. federal agencies

 

$

(403

)

 

$

16,330

 

 

$

—

 

 

$

—

 

State and municipalities

 

 

(9

)

 

 

2,124

 

 

 

(42

)

 

 

(1,956

)

Total

 

$

(412

)

 

$

18,454

 

 

$

(42

)

 

$

(1,956

)

 
v3.22.2
Loans and Allowance for Loan Losses (Tables)
 6 Months Ended
Jun. 30, 2022
Text Block [Abstract]  
Summary of Inclusive Capitalized Loans

The following table shows the major classification of loans, inclusive of capitalized loan origination costs, at June 30, 2022 and December 31, 2021.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Amount

 

 

As a
Percent of
Gross Loans

 

 

Amount

 

 

As a
Percent of
Gross Loans

 

Recreation

 

$

1,096,670

 

 

 

63

%

 

$

961,320

 

 

 

65

%

Home improvement

 

 

526,278

 

 

 

30

 

 

 

436,772

 

 

 

29

 

Commercial

 

 

96,928

 

 

 

6

 

 

 

76,696

 

 

 

5

 

Medallion

 

 

14,152

 

 

 

1

 

 

 

14,046

 

 

 

1

 

Strategic partnership

 

 

593

 

 

*

 

 

 

90

 

 

*

 

Total gross loans

 

 

1,734,621

 

 

 

100

%

 

 

1,488,924

 

 

 

100

%

Allowance for loan losses

 

 

(59,152

)

 

 

 

 

 

(50,166

)

 

 

 

Total net loans

 

$

1,675,469

 

 

 

 

 

$

1,438,758

 

 

 

 

(*) Less than 1%
Schedule of Activity of Gross Loans

The following tables show the activity of the gross loans for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – March 31, 2022

 

$

1,004,091

 

 

$

473,408

 

 

$

77,867

 

 

$

13,849

 

 

$

226

 

 

$

1,569,441

 

Loan originations

 

 

170,207

 

 

 

105,172

 

 

 

19,272

 

 

 

472

 

 

 

9,830

 

 

 

304,953

 

Principal payments, sales, maturities, and recoveries

 

 

(73,114

)

 

 

(51,006

)

 

 

(386

)

 

 

(30

)

 

 

(9,463

)

 

 

(133,999

)

Charge-offs

 

 

(5,074

)

 

 

(1,108

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(6,182

)

Transfer to loan collateral in process of foreclosure, net

 

 

(2,618

)

 

 

—

 

 

 

—

 

 

 

(139

)

 

 

—

 

 

 

(2,757

)

Amortization of origination costs

 

 

(2,931

)

 

 

380

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,551

)

Amortization of loan premium

 

 

(60

)

 

 

(90

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(150

)

FASB origination costs, net

 

 

6,169

 

 

 

(478

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5,691

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

175

 

 

 

—

 

 

 

—

 

 

 

175

 

Gross loans – June 30, 2022

 

$

1,096,670

 

 

$

526,278

 

 

$

96,928

 

 

$

14,152

 

 

$

593

 

 

$

1,734,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – December 31, 2021

 

$

961,320

 

 

$

436,772

 

 

$

76,696

 

 

$

14,046

 

 

$

90

 

 

$

1,488,924

 

Loan originations

 

 

284,613

 

 

 

194,992

 

 

 

23,672

 

 

 

564

 

 

 

14,839

 

 

 

518,680

 

Principal payments, sales, maturities, and recoveries

 

 

(138,230

)

 

 

(103,170

)

 

 

(2,203

)

 

 

(115

)

 

 

(14,336

)

 

 

(258,054

)

Charge-offs

 

 

(10,141

)

 

 

(2,168

)

 

 

(1,584

)

 

 

(75

)

 

 

—

 

 

 

(13,968

)

Transfer to loan collateral in process of foreclosure, net

 

 

(5,529

)

 

 

—

 

 

 

—

 

 

 

(268

)

 

 

—

 

 

 

(5,797

)

Amortization of origination costs

 

 

(5,370

)

 

 

700

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(4,670

)

Amortization of loan premium

 

 

(120

)

 

 

(180

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(300

)

FASB origination costs, net

 

 

10,127

 

 

 

(668

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

9,459

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

347

 

 

 

—

 

 

 

—

 

 

 

347

 

Gross loans – June 30, 2022

 

$

1,096,670

 

 

$

526,278

 

 

$

96,928

 

 

$

14,152

 

 

$

593

 

 

$

1,734,621

 

 

Three Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – March 31, 2021

 

$

822,932

 

 

$

342,121

 

 

$

58,854

 

 

$

35,250

 

 

$

58

 

 

$

1,259,215

 

Loan originations

 

 

134,467

 

 

 

62,992

 

 

 

11,059

 

 

 

—

 

 

 

2,426

 

 

 

210,944

 

Principal payments, sales, maturities, and recoveries

 

 

(67,084

)

 

 

(36,171

)

 

 

(564

)

 

 

(467

)

 

 

(2,414

)

 

 

(106,700

)

Charge-offs

 

 

(2,672

)

 

 

(786

)

 

 

—

 

 

 

(12,791

)

 

 

—

 

 

 

(16,249

)

Transfer to loan collateral in process of foreclosure, net

 

 

(2,980

)

 

 

—

 

 

 

—

 

 

 

(3,933

)

 

 

—

 

 

 

(6,913

)

Amortization of origination costs

 

 

(2,477

)

 

 

410

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,067

)

Amortization of loan premium

 

 

(60

)

 

 

(90

)

 

 

—

 

 

 

(1,545

)

 

 

—

 

 

 

(1,695

)

FASB origination costs, net

 

 

4,080

 

 

 

(219

)

 

 

1

 

 

 

—

 

 

 

—

 

 

 

3,862

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

170

 

 

 

—

 

 

 

—

 

 

 

170

 

Gross loans – June 30, 2021

 

$

886,206

 

 

$

368,257

 

 

$

69,520

 

 

$

16,514

 

 

$

70

 

 

$

1,340,567

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial

 

 

Medallion

 

 

Strategic
Partnership

 

 

Total

 

Gross loans – December 31, 2020

 

$

792,686

 

 

$

334,033

 

 

$

65,327

 

 

$

37,768

 

 

$

24

 

 

$

1,229,838

 

Loan originations

 

 

228,317

 

 

 

111,051

 

 

 

15,216

 

 

 

—

 

 

 

4,370

 

 

 

358,954

 

Principal payments, sales, maturities, and recoveries

 

 

(123,043

)

 

 

(75,807

)

 

 

(11,541

)

 

 

(1,102

)

 

 

(4,324

)

 

 

(215,817

)

Charge-offs

 

 

(7,725

)

 

 

(1,467

)

 

 

—

 

 

 

(13,905

)

 

 

—

 

 

 

(23,097

)

Transfer to loan collateral in process of foreclosure, net

 

 

(6,033

)

 

 

—

 

 

 

—

 

 

 

(4,630

)

 

 

—

 

 

 

(10,663

)

Amortization of origination costs

 

 

(4,639

)

 

 

907

 

 

 

11

 

 

 

(2

)

 

 

—

 

 

 

(3,723

)

Amortization of loan premium

 

 

(101

)

 

 

(166

)

 

 

—

 

 

 

(1,615

)

 

 

—

 

 

 

(1,882

)

FASB origination costs, net

 

 

6,744

 

 

 

(294

)

 

 

12

 

 

 

—

 

 

 

—

 

 

 

6,462

 

Paid-in-kind interest

 

 

—

 

 

 

—

 

 

 

495

 

 

 

—

 

 

 

—

 

 

 

495

 

Gross loans – June 30, 2021

 

$

886,206

 

 

$

368,257

 

 

$

69,520

 

 

$

16,514

 

 

$

70

 

 

$

1,340,567

 
Summary of Activity in Allowance for Loan Losses

The following table sets forth the activity in the allowance for loan losses for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Allowance for loan losses – beginning balance

 

$

50,686

 

 

$

57,809

 

 

$

50,166

 

 

$

57,548

 

Charge-offs

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

(5,074

)

 

 

(2,672

)

 

 

(10,141

)

 

 

(7,725

)

Home improvement

 

 

(1,108

)

 

 

(786

)

 

 

(2,168

)

 

 

(1,467

)

Commercial

 

 

—

 

 

 

—

 

 

 

(1,584

)

 

 

—

 

Medallion

 

 

—

 

 

 

(12,791

)

 

 

(75

)

 

 

(13,905

)

Total charge-offs

 

 

(6,182

)

 

 

(16,249

)

 

 

(13,968

)

 

 

(23,097

)

Recoveries

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

 

3,615

 

 

 

3,588

 

 

 

7,125

 

 

 

6,057

 

Home improvement

 

 

585

 

 

 

558

 

 

 

1,144

 

 

 

990

 

Commercial

 

 

13

 

 

 

—

 

 

 

47

 

 

 

—

 

Medallion

 

 

2,676

 

 

 

1,922

 

 

 

3,639

 

 

 

3,112

 

Total recoveries

 

 

6,889

 

 

 

6,068

 

 

 

11,955

 

 

 

10,159

 

Net recoveries (charge-offs) (1)

 

 

707

 

 

 

(10,181

)

 

 

(2,013

)

 

 

(12,938

)

Provision (benefit) for loan losses

 

 

7,759

 

 

 

(682

)

 

 

10,999

 

 

 

2,336

 

Allowance for loan losses – ending balance (2)

 

$

59,152

 

 

$

46,946

 

 

$

59,152

 

 

$

46,946

 
(1)
As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
(2)
As of June 30, 2022 and June 30, 2021, there were no allowance for loan losses and net charge-offs related to the strategic partnership loans.
Summary of Allowance for Loan Losses by Type

The following tables set forth the allowance for loan losses by type as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Amount

 

 

Percentage
of Allowance

 

 

Allowance as
a Percent of
Loan Category

 

 

Allowance as
a Percent of
Nonaccrual

 

Recreation

 

$

37,772

 

 

 

64

%

 

 

3.44

%

 

 

113.48

%

Home improvement

 

 

9,234

 

 

 

16

 

 

 

1.75

 

 

 

27.74

 

Commercial

 

 

2,720

 

 

 

4

 

 

 

2.81

 

 

 

8.17

 

Medallion

 

 

9,426

 

 

 

16

 

 

 

66.61

 

 

 

28.32

 

Total

 

$

59,152

 

 

 

100

%

 

 

3.41

%

 

 

177.71

%

 

December 31, 2021
(Dollars in thousands)

 

Amount

 

 

Percentage
of Allowance

 

 

Allowance as
a Percent of
Loan Category

 

 

Allowance as
a Percent of
Nonaccrual

 

Recreation

 

$

32,435

 

 

 

64

%

 

 

3.37

%

 

 

91.18

%

Home improvement

 

 

7,356

 

 

 

15

 

 

 

1.68

 

 

20.68

 

Commercial

 

 

1,141

 

 

 

2

 

 

 

1.49

 

 

 

3.21

 

Medallion

 

 

9,234

 

 

 

19

 

 

 

65.74

 

 

 

25.96

 

Total

 

$

50,166

 

 

 

100

%

 

 

3.37

%

 

 

141.03

%
Summary of Total Nonaccrual Loans and Foregone Interest

The following table presents total nonaccrual loans and foregone interest. The fluctuation in nonaccrual interest foregone is due to past due loans and market conditions.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Total nonaccrual loans

 

$

33,285

 

 

$

35,571

 

Interest foregone quarter to date

 

 

536

 

 

 

466

 

Amount of foregone interest applied to principal in the quarter

 

 

104

 

 

 

114

 

Interest foregone year to date

 

 

1,224

 

 

 

1,620

 

Amount of foregone interest applied to principal for the year

 

 

216

 

 

 

432

 

Interest foregone life-to-date

 

 

2,877

 

 

 

3,623

 

Amount of foregone interest applied to principal life-to-date

 

 

1,110

 

 

 

942

 

Percentage of nonaccrual loans to gross loan portfolio

 

 

2

%

 

 

2

%

Percentage of allowance for loan losses to nonaccrual loans

 

 

178

%

 

 

141

%
Summary of Performance Status of Loan

The following tables present the performance status of loans as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Performing

 

 

Nonperforming

 

 

Total

 

 

Percentage of
Nonperforming
to Total

 

Recreation

 

$

1,091,093

 

 

$

5,577

 

 

$

1,096,670

 

 

 

0.51

%

Home improvement

 

 

525,883

 

 

 

395

 

 

 

526,278

 

 

 

0.08

 

Commercial

 

 

83,411

 

 

 

13,517

 

 

 

96,928

 

 

 

13.95

 

Medallion

 

 

—

 

 

 

14,152

 

 

 

14,152

 

 

 

100.00

 

Strategic partnership

 

 

593

 

 

 

—

 

 

 

593

 

 

 

—

 

Total

 

$

1,700,980

 

 

$

33,641

 

 

$

1,734,621

 

 

 

1.94

%

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021
(Dollars in thousands)

 

Performing

 

 

Nonperforming

 

 

Total

 

 

Percentage of
Nonperforming
to Total

 

Recreation

 

$

955,763

 

 

$

5,557

 

 

$

961,320

 

 

 

0.58

%

Home improvement

 

 

436,640

 

 

 

132

 

 

 

436,772

 

 

 

0.03

 

Commercial

 

 

60,366

 

 

 

16,330

 

 

 

76,696

 

 

 

21.29

 

Medallion

 

 

—

 

 

 

14,046

 

 

 

14,046

 

 

 

100.00

 

Strategic partnership

 

 

90

 

 

 

—

 

 

 

90

 

 

 

—

 

Total

 

$

1,452,859

 

 

$

36,065

 

 

$

1,488,924

 

 

 

2.42

%
Summary of Attributes of Nonperforming Loan Portfolio

The following tables provide additional information on attributes of the nonperforming loan portfolio as of June 30, 2022 and December 31, 2021, all of which had an allowance recorded against the principal balance.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Recorded
Investment

 

 

Unpaid
Principal
Balance

 

 

Related
Allowance

 

 

Recorded
Investment

 

 

Unpaid
Principal
Balance

 

 

Related
Allowance

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

$

5,577

 

 

$

5,577

 

 

$

192

 

 

$

5,557

 

 

$

5,557

 

 

$

188

 

Home improvement

 

 

395

 

 

 

395

 

 

 

7

 

 

 

132

 

 

 

132

 

 

 

2

 

Commercial

 

 

13,517

 

 

 

13,577

 

 

 

2,720

 

 

 

16,330

 

 

 

16,360

 

 

 

1,141

 

Medallion

 

 

14,152

 

 

 

15,202

 

 

 

9,426

 

 

 

14,046

 

 

 

14,958

 

 

 

8,837

 

Total nonperforming loans with an allowance

 

$

33,641

 

 

$

34,751

 

 

$

12,345

 

 

$

36,065

 

 

$

37,007

 

 

$

10,168

 

 

 

 

Three Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

$

5,197

 

 

$

119

 

 

$

4,799

 

 

$

180

 

Home improvement

 

 

396

 

 

 

—

 

 

 

74

 

 

 

—

 

Commercial

 

 

13,577

 

 

 

—

 

 

 

19,210

 

 

 

—

 

Medallion

 

 

16,095

 

 

 

—

 

 

 

18,517

 

 

 

—

 

Total nonperforming loans with an allowance

 

$

35,265

 

 

$

119

 

 

$

42,600

 

 

$

180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

(Dollars in thousands)

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

 

Average
Investment
Recorded

 

 

Interest Income
Recognized

 

With an allowance recorded

 

 

 

 

 

 

 

 

 

 

 

 

Recreation

 

$

5,265

 

 

$

223

 

 

$

4,912

 

 

$

323

 

Home improvement

 

 

388

 

 

 

—

 

 

 

75

 

 

 

—

 

Commercial

 

 

13,561

 

 

 

—

 

 

 

19,788

 

 

 

—

 

Medallion

 

 

16,798

 

 

 

—

 

 

 

18,568

 

 

 

—

 

Total nonperforming loans with an allowance

 

$

36,012

 

 

$

223

 

 

$

43,343

 

 

$

323

 
Summary of Aging of Loans

The following tables show the aging of all loans as of June 30, 2022 and December 31, 2021.

June 30, 2022

 

Days Past Due

 

 

 

 

 

 

 

 

 

 

 

Recorded
Investment
90 Days and

 

(Dollars in thousands)

 

30-59

 

 

60-89

 

 

90 +

 

 

Total

 

 

Current

 

 

Total (1)

 

 

Accruing

 

Recreation

 

$

19,813

 

 

$

7,453

 

 

$

3,810

 

 

$

31,076

 

 

$

1,031,497

 

 

$

1,062,573

 

 

$

—

 

Home improvement

 

 

1,725

 

 

 

546

 

 

 

396

 

 

 

2,667

 

 

 

525,918

 

 

 

528,585

 

 

 

—

 

Commercial

 

 

1,765

 

 

 

—

 

 

 

74

 

 

 

1,839

 

 

 

95,089

 

 

 

96,928

 

 

 

—

 

Medallion

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

14,152

 

 

 

14,152

 

 

 

—

 

Strategic partnership

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

593

 

 

 

593

 

 

 

—

 

Total

 

$

23,303

 

 

$

7,999

 

 

$

4,280

 

 

$

35,582

 

 

$

1,667,249

 

 

$

1,702,831

 

 

$

—

 
(1)
Excludes loan premiums of $0.2 million and $31.6 million of capitalized loan origination costs.

 December 31, 2021

 

Days Past Due

 

 

 

 

 

 

 

 

 

 

 

Recorded
Investment
90 Days and

 

(Dollars in thousands)

 

30-59

 

 

60-89

 

 

90 +

 

 

Total

 

 

Current

 

 

Total (1)

 

 

Accruing

 

Recreation

 

$

20,037

 

 

$

6,569

 

 

$

3,818

 

 

$

30,424

 

 

$

901,435

 

 

$

931,859

 

 

$

—

 

Home improvement

 

 

1,517

 

 

 

479

 

 

 

132

 

 

 

2,128

 

 

 

436,803

 

 

 

438,931

 

 

 

—

 

Commercial

 

 

1,795

 

 

 

—

 

 

 

74

 

 

 

1,869

 

 

 

74,827

 

 

 

76,696

 

 

 

—

 

Medallion

 

 

215

 

 

 

7,125

 

 

 

—

 

 

 

7,340

 

 

 

6,706

 

 

 

14,046

 

 

 

—

 

Strategic partnership

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

90

 

 

 

90

 

 

 

—

 

Total

 

$

23,564

 

 

$

14,173

 

 

$

4,024

 

 

$

41,761

 

 

$

1,419,861

 

 

$

1,461,622

 

 

$

—

 
(1)
Excludes loan premiums of $0.5 million and $26.8 million of capitalized loan origination costs.
Summary of TDRs

The following table shows the TDRs which the Company entered into during the three and six months ended June 30, 2022.

(Dollars in thousands)

 

Number of Loans

 

 

Pre-
Modification
Investment

 

 

Post-
Modification
Investment

 

Three months ended June 30, 2022

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

12

 

 

$

147

 

 

$

147

 

Medallion loans

 

 

—

 

 

 

—

 

 

 

—

 

Six months ended June 30, 2022

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

22

 

 

$

276

 

 

$

276

 

Medallion loans

 

 

2

 

 

 

252

 

 

 

252

 

The following table shows the TDRs which the Company entered into during the three and six months ended June 30, 2021.

(Dollars in thousands)

 

Number of Loans

 

 

Pre-
Modification
Investment

 

 

Post-
Modification
Investment

 

Three months ended June 30, 2021

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

21

 

 

$

302

 

 

$

302

 

Medallion loans

 

 

2

 

 

 

256

 

 

 

256

 

Six months ended June 30, 2021

 

 

 

 

 

 

 

 

 

Recreation loans

 

 

39

 

 

$

474

 

 

$

468

 

Medallion loans

 

 

10

 

 

 

2,994

 

 

 

2,994

 
Summary of Activities of the Loan Collateral Process of Foreclosure Related to Recreation and Medallion Loans

The following tables show the activity of loan collateral in process of foreclosure, which relate only to the recreation and medallion loans, for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – March 31, 2022

 

$

1,369

 

 

$

32,465

 

 

$

33,834

 

Transfer from loans, net

 

 

2,618

 

 

 

139

 

 

 

2,757

 

Sales

 

 

(2,146

)

 

 

(1,999

)

 

 

(4,145

)

Cash payments received

 

 

—

 

 

 

(4,381

)

 

 

(4,381

)

Collateral valuation adjustments

 

 

(963

)

 

 

(128

)

 

 

(1,091

)

Loan collateral in process of foreclosure – June 30, 2022

 

$

878

 

 

$

26,096

 

 

$

26,974

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – December 31, 2021

 

$

1,720

 

 

$

35,710

 

 

$

37,430

 

Transfer from loans, net

 

 

5,529

 

 

 

268

 

 

 

5,797

 

Sales

 

 

(4,398

)

 

 

(2,115

)

 

 

(6,513

)

Cash payments received

 

 

—

 

 

 

(7,253

)

 

 

(7,253

)

Collateral valuation adjustments

 

 

(1,973

)

 

 

(514

)

 

 

(2,487

)

Loan collateral in process of foreclosure – June 30, 2022

 

$

878

 

 

$

26,096

 

 

$

26,974

 

 

Three Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – March 31, 2021

 

$

970

 

 

$

49,763

 

 

$

50,733

 

Transfer from loans, net

 

 

2,980

 

 

 

3,933

 

 

 

6,913

 

Sales

 

 

(1,989

)

 

 

(231

)

 

 

(2,220

)

Cash payments received

 

 

—

 

 

 

(3,146

)

 

 

(3,146

)

Collateral valuation adjustments

 

 

(1,079

)

 

 

(2,162

)

 

 

(3,241

)

Loan collateral in process of foreclosure – June 30, 2021

 

$

882

 

 

$

48,157

 

 

$

49,039

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2021
(Dollars in thousands)

 

Recreation

 

 

Medallion

 

 

Total

 

Loan collateral in process of foreclosure – December 31, 2020

 

$

1,432

 

 

$

53,128

 

 

$

54,560

 

Transfer from loans, net

 

 

6,033

 

 

 

4,630

 

 

 

10,663

 

Sales

 

 

(4,288

)

 

 

(231

)

 

 

(4,519

)

Cash payments received

 

 

—

 

 

 

(4,423

)

 

 

(4,423

)

Collateral valuation adjustments

 

 

(2,295

)

 

 

(4,947

)

 

 

(7,242

)

Loan collateral in process of foreclosure – June 30, 2021

 

$

882

 

 

$

48,157

 

 

$

49,039

 

 

As of June 30, 2022, medallion loans in the process of foreclosure included 462 medallions in the New York City market, 335 medallions in the Chicago market, 61 medallions in the Newark market, and 47 medallions in other markets.
v3.22.2
Funds Borrowed (Tables)
 6 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
Schedule of Outstanding Balances of Funds Borrowed

The outstanding balances of funds borrowed were as follows:

 

 

Payments Due for the Twelve Months Ending June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

2023

 

 

2024

 

 

2025

 

 

2026

 

 

2027

 

 

Thereafter

 

 

June 30, 2022(1)

 

 

December 31, 2021(1)

 

 

Interest
Rate (2)

 

Deposits (3)

 

$

394,619

 

 

$

347,548

 

 

$

412,380

 

 

$

131,077

 

 

$

186,452

 

 

$

—

 

 

$

1,472,076

 

 

$

1,253,288

 

 

 

1.46

%

Privately placed notes

 

 

—

 

 

 

36,000

 

 

 

—

 

 

 

31,250

 

 

 

—

 

 

 

53,750

 

 

 

121,000

 

 

 

121,000

 

 

 

7.66

 

SBA debentures and borrowings

 

 

5,000

 

 

 

10,429

 

 

 

12,500

 

 

 

15,500

 

 

 

4,500

 

 

 

21,000

 

 

 

68,929

 

 

 

69,963

 

 

 

2.94

 

Preferred securities

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,000

 

 

 

33,000

 

 

 

33,000

 

 

 

3.75

 

Total

 

$

399,619

 

 

$

393,977

 

 

$

424,880

 

 

$

177,827

 

 

$

190,952

 

 

$

107,750

 

 

$

1,695,005

 

 

$

1,477,251

 

 

 

2.00

%
(1)
Excludes deferred financing costs of $7.4 million and $7.1 million as of June 30, 2022 and December 31, 2021.
(2)
Weighted average contractual rate as of June 30, 2022.
Balance excludes $1.0 million and $0.8 million of strategic partner reserve deposits as of June 30, 2022 and December 31, 2021.
Summary of Maturity of Broker Pools, Excluding Strategic Partner Reserve Deposits The following table presents the maturity of the deposit pools, which excludes strategic partner reserve deposits, as of June 30, 2022.

(Dollars in thousands)

 

June 30, 2022

 

Three months or less

 

$

83,985

 

Over three months through six months

 

 

85,568

 

Over six months through one year

 

 

225,066

 

Over one year

 

 

1,077,457

 

Total deposits

 

$

1,472,076

 
v3.22.2
Leases (Tables)
 6 Months Ended
Jun. 30, 2022
Leases [Abstract]  
Schedule of Operating Lease Costs and Additional Information

The following table presents the operating lease costs and additional information for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating lease costs

 

$

590

 

 

$

572

 

 

$

1,179

 

 

$

1,144

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

 

435

 

 

 

590

 

 

 

1,080

 

 

 

1,265

 

Right-of-use asset obtained in exchange for lease liability

 

 

(40

)

 

 

(18

)

 

 

(85

)

 

 

(36

)
Schedule of Breakout of Operating leases

The following table presents the breakout of the operating leases as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Operating lease right-of-use assets

 

$

10,156

 

 

$

10,045

 

Other current liabilities

 

 

2,103

 

 

 

2,159

 

Operating lease liabilities

 

 

9,078

 

 

 

9,053

 

Total operating lease liabilities

 

 

11,181

 

 

 

11,212

 

Weighted average remaining lease term

 

5.9 years

 

 

5.4 years

 

Weighted average discount rate

 

 

5.54

%

 

 

5.54

%
Schedule of Maturities of the Lease Liabilities

At June 30, 2022, maturities of the lease liabilities were as follows:

(Dollars in thousands)

 

 

 

Remainder of 2022

 

$

1,259

 

2023

 

 

2,506

 

2024

 

 

2,526

 

2025

 

 

2,505

 

2026

 

 

2,440

 

Thereafter

 

 

2,502

 

Total lease payments

 

 

13,738

 

Less imputed interest

 

 

2,557

 

Total operating lease liabilities

 

$

11,181

 
v3.22.2
Income Taxes (Tables)
 6 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
Summary of Components of Deferred and Other Tax Assets and Liabilities

The following table sets forth the significant components of our deferred and other tax assets and liabilities as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

June 30, 2022

 

 

December 31, 2021

 

Goodwill and other intangibles

 

$

(43,637

)

 

$

(43,894

)

Provision for loan losses

 

 

11,065

 

 

 

11,057

 

Net operating loss carryforwards (1)

 

 

4,661

 

 

 

12,167

 

Accrued expenses, compensation, and other assets

 

 

2,961

 

 

 

2,579

 

Unrealized gains on other investments

 

 

3,197

 

 

 

2,176

 

Total deferred tax liability

 

 

(21,753

)

 

 

(15,915

)

Valuation allowance

 

 

(2,295

)

 

 

(2,295

)

Deferred tax liability, net

 

$

(24,048

)

 

$

(18,210

)
(1)
As of June 30, 2022, the Company and its subsidiaries had an estimated $22.5 million of net operating loss carryforwards, $1.7 million of which expires at various dates between December 31, 2026 and December 31, 2035, which had a net carrying value of $2.4 million as of June 30, 2022.
Summary of Components of Tax Provision

The components of our tax provision for the three and six months ended June 30, 2022 and 2021 was as follows:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

984

 

 

$

795

 

 

$

1,488

 

 

$

795

 

State

 

 

447

 

 

 

100

 

 

 

769

 

 

 

270

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

2,378

 

 

 

3,001

 

 

 

5,598

 

 

 

6,054

 

State

 

 

1,047

 

 

 

2,632

 

 

 

1,832

 

 

 

3,287

 

Net provision for income taxes

 

$

4,856

 

 

$

6,528

 

 

$

9,687

 

 

$

10,406

 
Summary of Reconciliation of Statutory Federal Income Tax Provision to Consolidated Actual Income Tax Provision

The following table presents a reconciliation of statutory federal income tax provision to consolidated actual income tax provision for the three and six months ended June 30, 2022 and 2021.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Statutory Federal income tax provision at 21%

 

$

4,130

 

 

$

3,805

 

 

$

7,529

 

 

$

6,524

 

State and local income taxes, net of federal income tax

 

 

808

 

 

 

743

 

 

 

1,473

 

 

 

1,275

 

Change in state income tax accruals

 

 

—

 

 

 

1,833

 

 

 

—

 

 

 

1,833

 

Change in effective state income tax rates and accrual

 

 

—

 

 

 

1,399

 

 

 

—

 

 

 

1,369

 

Income attributable to non-controlling interest

 

 

—

 

 

 

(47

)

 

 

—

 

 

 

(266

)

Non deductible expenses

 

 

362

 

 

 

(385

)

 

 

1,075

 

 

 

(213

)

Other

 

 

(444

)

 

 

(820

)

 

 

(390

)

 

 

(116

)

Total income tax provision

 

$

4,856

 

 

$

6,528

 

 

$

9,687

 

 

$

10,406

 
v3.22.2
Stock Options and Restricted Stock (Tables)
 6 Months Ended
Jun. 30, 2022
Share-based Payment Arrangement [Abstract]  
Summary of Assumption Categories Used to Determine Value of Option Grants the six months ended June 30, 2022.

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Risk free interest rate

 

 

—

 

 

 

0.97

%

Expected dividend yield

 

 

—

 

 

 

—

 

Expected life of option in years (1)

 

 

—

 

 

 

6.25

 

Expected volatility (2)

 

 

—

 

 

 

53.98

%
(1)
Expected life is calculated using the simplified method.
(2)
We determine our expected volatility based on our historical volatility.
Summary of Activity for Stock Option Programs

The following table presents the activity for the stock option programs for the 2022 first and second quarters and the 2021 full year.

 

 

Number of
Options

 

 

 

Exercise
Price Per
Share

 

 

Weighted
Average
Exercise Price

 

Outstanding at December 31, 2020 (2)

 

 

951,669

 

 

$

2.14 - 12.55

 

$

 

6.41

 

Granted

 

 

317,398

 

 

 

 

6.79

 

 

 

6.79

 

Cancelled

 

 

(113,310

)

 

 

4.89 - 11.53

 

 

 

6.64

 

Exercised (1)

 

 

(44,070

)

 

 

5.21 - 7.25

 

 

 

5.58

 

Outstanding at December 31, 2021

 

 

1,111,687

 

 

$

2.14 - 12.55

 

$

 

6.41

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(4,783

)

 

 

4.89 - 7.25

 

 

 

5.69

 

Exercised (1)

 

 

(23,192

)

 

 

4.89 - 7.25

 

 

 

6.53

 

Outstanding at March 31, 2022 (2)

 

 

1,083,712

 

 

$

2.14 - 12.55

 

 

$

6.53

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(2,103

)

 

 

4.89 - 7.25

 

 

 

6.37

 

Exercised (1)

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022 (2)

 

 

1,081,609

 

 

$

2.14 - 12.55

 

 

$

6.53

 

Options exercisable at:

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

320,922

 

 

$

2.14 - 12.55

 

 

$

6.53

 

June 30, 2022

 

 

552,381

 

 

$

2.14 - 12.55

 

 

$

6.54

 
(1)
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was $0 and less than $0.1 million for the three and six months ended June 30, 2022 and was $0.2 million for the year ended December 31, 2021.
(2)
The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at June 30, 2022 and the related exercise price of the underlying options, was $0.2 million for outstanding options and $0.1 million for exercisable options as of June 30, 2022. The remaining contractual life was 7.5 years for outstanding options and 7.1 years for exercisable options at June 30, 2022.
Summary of Activity for Restricted Stock Programs

The following table presents the activity for the restricted stock programs for the 2022 first and second quarters and the 2021 full year.

 

 

Number of
Shares

 

 

 

Grant
Price Per
Share

 

 

Weighted
Average
Grant Price

 

Outstanding at December 31, 2020

 

 

416,140

 

 

$

4.39 - 7.25

 

 

$

6.24

 

Granted

 

 

258,120

 

 

 

6.79 - 8.40

 

 

 

7.38

 

Cancelled

 

 

(21,940

)

 

 

4.89 - 7.25

 

 

 

5.98

 

Vested (1)

 

 

(158,994

)

 

 

4.39 - 7.25

 

 

 

6.16

 

Outstanding at December 31, 2021(2)

 

 

493,326

 

 

$

4.89 - 8.40

 

 

$

6.87

 

Granted

 

 

383,925

 

 

 

 

7.68

 

 

 

7.68

 

Cancelled

 

 

(5,747

)

 

 

4.89 - 8.40

 

 

 

7.33

 

Vested (1)

 

 

(126,234

)

 

 

4.89 - 7.25

 

 

 

6.55

 

Outstanding at March 31, 2022(2)

 

 

745,270

 

 

$

4.89 - 8.40

 

 

$

7.34

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(583

)

 

 

4.89 - 8.40

 

 

 

7.58

 

Vested (1)

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022(2)

 

 

744,687

 

 

$

4.89 - 8.40

 

 

$

7.34

 
(1)
The aggregate fair value of the restricted stock vested was $0 and $1.0 million for the three and six months ended June 30, 2022 and was $0 and $0.8 million for the three and six months ended June 30, 2021.
(2)
The aggregate fair value of the restricted stock was $4.8 million as of June 30, 2022. The remaining vesting period was 2.7 years at June 30, 2022.
Summary of Activity for Unvested Options Outstanding

The following table presents the activity for the unvested options outstanding under the plans for the 2022 first and second quarters.

 

 

Number of
Options

 

 

 

Exercise Price
Per Share

 

 

Weighted
Average
Exercise Price

 

Outstanding at December 31, 2021

 

 

790,765

 

 

$

4.89 - 7.25

 

 

$

6.52

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(4,200

)

 

 

4.89 - 7.25

 

 

 

5.48

 

Vested

 

 

(256,972

)

 

 

4.89 - 7.25

 

 

 

6.55

 

Outstanding at March 31, 2022

 

 

529,593

 

 

$

4.89 - 7.25

 

 

$

6.52

 

Granted

 

 

—

 

 

 

 

—

 

 

 

—

 

Cancelled

 

 

(365

)

 

 

4.89 - 7.25

 

 

 

5.78

 

Vested

 

 

—

 

 

 

 

—

 

 

 

—

 

Outstanding at June 30, 2022

 

 

529,228

 

 

$

4.89 - 7.25

 

 

$

6.52

 

The intrinsic value of the options vested was $0 and $0.1 million for the three and six months ended June 30, 2022.

v3.22.2
Segment Reporting (Tables)
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Schedule of Segment Data

The following tables present segment data as of and for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

33,514

 

 

$

10,587

 

 

$

2,278

 

 

 

$

231

 

 

$

501

 

 

$

47,111

 

Total interest expense

 

 

4,096

 

 

 

1,625

 

 

 

785

 

 

 

 

140

 

 

 

1,584

 

 

 

8,230

 

Net interest income (loss)

 

 

29,418

 

 

 

8,962

 

 

 

1,493

 

 

 

 

91

 

 

 

(1,083

)

 

 

38,881

 

Provision (recoveries) for loan losses

 

 

6,674

 

 

 

1,697

 

 

 

1,879

 

 

 

 

(2,675

)

 

 

184

 

 

 

7,759

 

Net interest income (loss) after loss provision

 

 

22,744

 

 

 

7,265

 

 

 

(386

)

 

 

 

2,766

 

 

 

(1,267

)

 

 

31,122

 

Other income (expense), net

 

 

(7,551

)

 

 

(3,210

)

 

 

3,263

 

 

 

 

(760

)

 

 

(3,197

)

 

 

(11,455

)

Net income (loss) before taxes

 

 

15,193

 

 

 

4,055

 

 

 

2,877

 

 

 

 

2,006

 

 

 

(4,464

)

 

 

19,667

 

Income tax (provision) benefit

 

 

(3,567

)

 

 

(975

)

 

 

(817

)

 

 

 

(541

)

 

 

1,044

 

 

 

(4,856

)

Net income (loss) after taxes

 

$

11,626

 

 

$

3,080

 

 

$

2,060

 

 

 

$

1,465

 

 

$

(3,420

)

 

$

14,811

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, net

 

$

1,058,898

 

 

$

517,044

 

 

$

94,208

 

 

 

$

4,726

 

 

$

593

 

 

$

1,675,469

 

Total assets

 

 

1,072,356

 

 

 

521,931

 

 

 

103,643

 

 

 

 

31,258

 

 

 

382,943

 

 

 

2,112,131

 

Total funds borrowed

 

 

861,083

 

 

 

419,101

 

 

 

83,223

 

 

 

 

25,099

 

 

 

307,499

 

 

 

1,696,005

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

4.53

%

 

 

2.49

%

 

 

8.06

%

 

 

 

17.05

%

 

 

(3.56

)%

 

 

2.63

%

Return on average stockholders' equity

 

 

25.52

 

 

 

14.02

 

 

 

49.17

 

 

 

 

95.49

 

 

 

(20.01

)

 

 

18.11

 

Interest yield

 

 

13.27

 

 

 

8.65

 

 

 

10.60

 

 

 

 

19.61

 

 

N/A

 

 

 

11.00

 

Net interest margin

 

 

11.65

 

 

 

7.33

 

 

 

6.95

 

 

 

 

7.78

 

 

N/A

 

 

 

9.07

 

Reserve coverage

 

 

3.44

 

 

 

1.75

 

 

 

2.81

 

(1)

 

 

66.61

 

 

N/A

 

 

 

3.41

 

Delinquency status(2)

 

 

0.36

 

 

 

0.07

 

 

 

0.08

 

(1)

 

 

—

 

 

N/A

 

 

 

0.25

 

Charge-off (recovery) ratio(4)

 

 

0.43

 

 

 

0.58

 

 

 

(0.00

)

(3)

 

 

(232.80

)

 

N/A

 

 

 

(0.18

)
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Six Months Ended June 30, 2022

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

64,650

 

 

$

20,288

 

 

$

4,208

 

 

 

$

377

 

 

$

891

 

 

$

90,414

 

Total interest expense

 

 

7,697

 

 

 

2,967

 

 

 

1,507

 

 

 

 

293

 

 

 

3,141

 

 

 

15,605

 

Net interest income (loss)

 

 

56,953

 

 

 

17,321

 

 

 

2,701

 

 

 

 

84

 

 

 

(2,250

)

 

 

74,809

 

Provision (recoveries) for loan losses

 

 

8,354

 

 

 

2,902

 

 

 

3,134

 

 

 

 

(3,544

)

 

 

153

 

 

 

10,999

 

Net interest income (loss) after loss provision

 

 

48,599

 

 

 

14,419

 

 

 

(433

)

 

 

 

3,628

 

 

 

(2,403

)

 

 

63,810

 

Other income (expense), net

 

 

(14,371

)

 

 

(6,106

)

 

 

1,932

 

 

 

 

(1,566

)

 

 

(7,847

)

 

 

(27,958

)

Net income (loss) before taxes

 

 

34,228

 

 

 

8,313

 

 

 

1,499

 

 

 

 

2,062

 

 

 

(10,250

)

 

 

35,852

 

Income tax (provision) benefit

 

 

(9,248

)

 

 

(2,246

)

 

 

(405

)

 

 

 

(557

)

 

 

2,769

 

 

 

(9,687

)

Net income (loss) after taxes

 

$

24,980

 

 

$

6,067

 

 

$

1,094

 

 

 

$

1,505

 

 

$

(7,481

)

 

$

26,165

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans, net

 

$

1,058,898

 

 

$

517,044

 

 

$

94,208

 

 

 

$

4,726

 

 

$

593

 

 

$

1,675,469

 

Total assets

 

 

1,072,356

 

 

 

521,931

 

 

 

103,643

 

 

 

 

31,258

 

 

 

382,943

 

 

 

2,112,131

 

Total funds borrowed

 

 

861,083

 

 

 

419,101

 

 

 

83,223

 

 

 

 

25,099

 

 

 

307,499

 

 

 

1,696,005

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

5.04

%

 

 

2.56

%

 

 

2.15

%

 

 

 

5.86

%

 

 

(4.24

)%

 

 

2.37

%

Return on average stockholders' equity

 

 

27.27

 

 

 

13.87

 

 

 

12.21

 

 

 

 

30.74

 

 

 

(24.85

)

 

 

15.93

 

Interest yield

 

 

13.29

 

 

 

8.72

 

 

 

10.28

 

 

 

 

16.07

 

 

N/A

 

 

 

11.04

 

Net interest margin

 

 

11.71

 

 

 

7.45

 

 

 

6.60

 

 

 

 

3.58

 

 

N/A

 

 

 

9.15

 

Reserve coverage

 

 

3.44

 

 

 

1.75

 

 

 

2.81

 

(1)

 

 

66.61

 

 

N/A

 

 

 

3.41

 

Delinquency status(2)

 

 

0.36

 

 

 

0.07

 

 

 

0.08

 

(1)

 

 

—

 

 

N/A

 

 

 

0.25

 

Charge-off (recovery) ratio(4)

 

 

0.44

 

 

 

0.62

 

 

 

3.75

 

(3)

 

 

(153.24

)

 

N/A

 

 

 

0.26

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Three Months Ended June 30, 2021

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

RPAC

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

28,886

 

 

$

8,228

 

 

$

1,383

 

 

 

$

(1,475

)

 

$

—

 

 

$

353

 

 

$

37,375

 

Total interest expense

 

 

2,863

 

 

 

1,143

 

 

 

716

 

 

 

 

2,524

 

 

 

34

 

 

 

604

 

 

 

7,884

 

Net interest income (loss)

 

 

26,023

 

 

 

7,085

 

 

 

667

 

 

 

 

(3,999

)

 

 

(34

)

 

 

(251

)

 

 

29,491

 

Provision for loan losses

 

 

1,017

 

 

 

756

 

 

 

—

 

 

 

 

(2,943

)

 

 

—

 

 

 

488

 

 

 

(682

)

Net interest income (loss) after loss provision

 

 

25,006

 

 

 

6,329

 

 

 

667

 

 

 

 

(1,056

)

 

 

(34

)

 

 

(739

)

 

 

30,173

 

Sponsorship and race winnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

4,345

 

 

 

—

 

 

 

4,345

 

Race team related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

(2,674

)

 

 

—

 

 

 

(2,674

)

Other income (expense), net

 

 

(7,455

)

 

 

(2,638

)

 

 

(69

)

 

 

 

(1,157

)

 

 

(1,862

)

 

 

(543

)

 

 

(13,724

)

Net income (loss) before taxes

 

 

17,551

 

 

 

3,691

 

 

 

598

 

 

 

 

(2,213

)

 

 

(225

)

 

 

(1,282

)

 

 

18,120

 

Income tax (provision) benefit

 

 

(4,519

)

 

 

(951

)

 

 

(150

)

 

 

 

556

 

 

 

57

 

 

 

(1,521

)

 

 

(6,528

)

Net income (loss) after taxes

 

$

13,032

 

 

$

2,740

 

 

$

448

 

 

 

$

(1,657

)

 

$

(168

)

 

$

(2,803

)

 

$

11,592

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans net

 

$

855,900

 

 

$

362,370

 

 

$

66,236

 

 

 

$

5,764

 

 

$

—

 

 

$

3,351

 

 

$

1,293,621

 

Total assets

 

 

868,709

 

 

 

375,189

 

 

 

90,563

 

 

 

 

101,205

 

 

 

31,877

 

 

 

272,204

 

 

 

1,739,747

 

Total funds borrowed

 

 

712,777

 

 

 

295,887

 

 

 

72,450

 

 

 

 

80,959

 

 

 

8,016

 

 

 

212,020

 

 

 

1,382,109

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

6.24

%

 

 

3.04

%

 

 

2.36

%

 

 

 

(6.10

)%

 

 

(1.05

)%

 

 

(3.85

)%

 

 

2.43

%

Return on average equity

 

 

31.19

 

 

 

15.19

 

 

 

11.78

 

 

 

 

(30.51

)

 

 

(39.70

)

 

 

(1.95

)

 

 

12.90

 

Interest yield

 

 

14.03

 

 

 

9.48

 

 

 

9.16

 

 

 

 

(70.71

)

 

N/A

 

 

N/A

 

 

 

11.17

 

Net interest margin

 

 

12.64

 

 

 

8.16

 

 

 

4.42

 

 

 

 

(189.15

)

 

N/A

 

 

N/A

 

 

 

8.84

 

Reserve coverage

 

 

3.42

 

 

 

1.60

 

 

 

—

 

(1)

 

 

65.11

 

 

N/A

 

 

N/A

 

 

 

3.50

 

Delinquency status(2)

 

 

0.32

 

 

 

0.02

 

 

 

0.11

 

(1)

 

 

—

 

 

N/A

 

 

N/A

 

 

 

0.22

 

Charge-off (recovery) ratio(4)

 

 

(0.44

)

 

 

0.26

 

 

 

—

 

(3)

 

 

513.86

 

 

N/A

 

 

N/A

 

 

 

3.28

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
(4)
Negative balances indicate net recoveries for the period.

Six Months Ended June 30, 2021

 

Consumer Lending

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Recreation

 

 

Home
Improvement

 

 

Commercial
Lending

 

 

 

Medallion
Lending

 

 

RPAC

 

 

Corporate and Other Investments

 

 

Consolidated

 

Total interest income (loss)

 

$

56,328

 

 

$

16,146

 

 

$

2,865

 

 

 

$

(1,544

)

 

$

—

 

 

$

660

 

 

$

74,455

 

Total interest expense

 

 

5,657

 

 

 

2,351

 

 

 

1,288

 

 

 

 

3,894

 

 

 

75

 

 

 

3,027

 

 

 

16,292

 

Net interest income (loss)

 

 

50,671

 

 

 

13,795

 

 

 

1,577

 

 

 

 

(5,438

)

 

 

(75

)

 

 

(2,367

)

 

 

58,163

 

Provision for loan losses

 

 

4,630

 

 

 

1,206

 

 

 

—

 

 

 

 

(3,987

)

 

 

—

 

 

 

487

 

 

 

2,336

 

Net interest income (loss) after loss provision

 

 

46,041

 

 

 

12,589

 

 

 

1,577

 

 

 

 

(1,451

)

 

 

(75

)

 

 

(2,854

)

 

 

55,827

 

Sponsorship and race winnings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

6,818

 

 

 

—

 

 

 

6,818

 

Race team related expenses

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

(4,796

)

 

 

—

 

 

 

(4,796

)

Other income (expense), net

 

 

(12,918

)

 

 

(4,552

)

 

 

(529

)

 

 

 

(3,301

)

 

 

(3,623

)

 

 

(1,858

)

 

 

(26,781

)

Net income (loss) before taxes

 

 

33,123

 

 

 

8,037

 

 

 

1,048

 

 

 

 

(4,752

)

 

 

(1,676

)

 

 

(4,712

)

 

 

31,068

 

Income tax (provision) benefit

 

 

(8,529

)

 

 

(2,070

)

 

 

(263

)

 

 

 

1,193

 

 

 

421

 

 

 

(1,158

)

 

 

(10,406

)

Net income (loss) after taxes

 

$

24,594

 

 

$

5,967

 

 

$

785

 

 

 

$

(3,559

)

 

$

(1,255

)

 

$

(5,870

)

 

$

20,662

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total loans net

 

$

855,900

 

 

$

362,370

 

 

$

66,236

 

 

 

$

5,764

 

 

$

—

 

 

$

3,351

 

 

$

1,293,621

 

Total assets

 

 

868,709

 

 

 

375,189

 

 

 

90,563

 

 

 

 

101,205

 

 

 

31,877

 

 

 

272,204

 

 

 

1,739,747

 

Total funds borrowed

 

 

712,777

 

 

 

295,887

 

 

 

72,450

 

 

 

 

80,959

 

 

 

8,016

 

 

 

212,020

 

 

 

1,382,109

 

Selected Financial Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

6.06

%

 

 

3.39

%

 

 

1.95

%

 

 

 

(6.29

)%

 

 

(7.72

)%

 

 

(4.08

)%

 

 

2.08

%

Return on average equity

 

 

30.32

 

 

 

16.96

 

 

 

9.77

 

 

 

 

(31.44

)

 

 

(244.87

)

 

 

(30.46

)

 

 

11.09

 

Interest yield

 

 

14.18

 

 

 

9.56

 

 

 

9.66

 

 

 

 

(30.90

)

 

N/A

 

 

N/A

 

 

 

11.50

 

Net interest margin

 

 

12.76

 

 

 

8.17

 

 

 

5.32

 

 

 

 

(108.84

)

 

N/A

 

 

N/A

 

 

 

9.01

 

Reserve coverage

 

 

3.42

 

 

 

1.60

 

 

 

—

 

(1)

 

 

65.11

 

 

N/A

 

 

N/A

 

 

 

3.50

 

Delinquency status(2)

 

 

0.32

 

 

 

0.02

 

 

 

0.11

 

(1)

 

 

—

 

 

N/A

 

 

N/A

 

 

 

0.22

 

Charge-off (recovery) ratio

 

 

0.12

 

 

 

0.99

 

 

 

—

 

(3)

 

 

216.01

 

 

N/A

 

 

N/A

 

 

 

2.15

 
(1)
Ratio is based on total commercial lending balances, and relates solely to the legacy commercial loan business.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending balances, and relates to the total loan business.
v3.22.2
Fair Value of Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2022
Investments, All Other Investments [Abstract]  
Summary of Carrying Values and Fair Values of Financial Instruments The fair value of the debentures payable to the SBA is estimated based on current market interest rates for similar debt.

 

 

June 30, 2022

 

 

December 31, 2021

 

(Dollars in thousands)

 

Carrying
Amount

 

 

Fair
Value

 

 

Carrying
Amount

 

 

Fair
Value

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents, and federal funds sold (1)

 

$

126,330

 

 

$

126,330

 

 

$

124,484

 

 

$

124,484

 

Equity investments

 

 

10,942

 

 

 

10,942

 

 

 

9,726

 

 

 

9,726

 

Investment securities

 

 

50,358

 

 

 

50,358

 

 

 

44,772

 

 

 

44,772

 

Loans receivable

 

 

1,675,469

 

 

 

1,675,469

 

 

 

1,438,758

 

 

 

1,438,758

 

Accrued interest receivable (2)

 

 

11,534

 

 

 

11,534

 

 

 

10,621

 

 

 

10,621

 

Equity securities(3)

 

 

1,796

 

 

 

1,796

 

 

 

1,950

 

 

 

1,950

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Funds borrowed

 

 

1,696,005

 

 

 

1,696,005

 

 

 

1,478,001

 

 

 

1,478,001

 

Accrued interest payable (2)

 

 

3,548

 

 

 

3,548

 

 

 

3,395

 

 

 

3,395

 
(1)
Categorized as level 1 within the fair value hierarchy, excluding $1.3 million in interest bearing deposits categorized as level 2 as of June 30, 2022 and December 31, 2021. See Note 13.
(2)
Categorized as level 3 within the fair value hierarchy. See Note 13.
Included within other assets on the balance sheet.
v3.22.2
Fair Value of Assets and liabilities (Tables)
 6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]  
Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

—

 

 

$

1,250

 

 

$

—

 

 

$

1,250

 

Available for sale investment securities

 

 

—

 

 

 

50,358

 

 

 

—

 

 

 

50,358

 

Equity securities

 

 

1,796

 

 

 

—

 

 

 

—

 

 

 

1,796

 

Total(1)

 

$

1,796

 

 

$

51,608

 

 

$

—

 

 

$

53,404

 
(1)
Total unrealized losses of $1.4 million and $3.1 million, net of tax, was included in accumulated other comprehensive loss for the three and six months ended June 30, 2022 related to these assets.

December 31, 2021
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

—

 

 

$

1,250

 

 

$

—

 

 

$

1,250

 

Available for sale investment securities

 

 

—

 

 

 

44,772

 

 

 

—

 

 

 

44,772

 

Equity securities

 

 

1,950

 

 

 

—

 

 

 

—

 

 

 

1,950

 

Total(1)

 

$

1,950

 

 

$

46,022

 

 

$

—

 

 

$

47,972

 
(1)
Total unrealized losses of $1.0 million, net of tax, was included in accumulated other comprehensive income (loss) for the year ended December 31, 2021 related to these assets.
Summary of Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of June 30, 2022 and December 31, 2021.

June 30, 2022
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

—

 

 

$

—

 

 

$

10,942

 

 

$

10,942

 

Impaired loans

 

 

—

 

 

 

—

 

 

 

33,285

 

 

 

33,285

 

Loan collateral in process of foreclosure

 

 

—

 

 

 

—

 

 

 

26,974

 

 

 

26,974

 

Total

 

$

—

 

 

$

—

 

 

$

71,201

 

 

$

71,201

 

 

December 31, 2021
(Dollars in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

—

 

 

$

—

 

 

$

9,726

 

 

$

9,726

 

Impaired loans

 

 

—

 

 

 

—

 

 

 

35,571

 

 

 

35,571

 

Loan collateral in process of foreclosure

 

 

—

 

 

 

—

 

 

 

37,430

 

 

 

37,430

 

Total

 

$

—

 

 

$

—

 

 

$

82,727

 

 

$

82,727

 
Summary of Valuation Techniques and Significant Unobservable Inputs Used in Non-Recurring Level 3 Fair Value Measurements of Assets and Liabilities

The valuation techniques and significant unobservable inputs used in non-recurring level 3 fair value measurements of assets and liabilities as of June 30, 2022 and December 31, 2021.

(Dollars in thousands)

 

Fair Value
at June 30, 2022

 

 

Valuation Techniques

 

Unobservable Inputs

 

Range
(Weighted Average)

Equity investments

 

$

10,669

 

 

Investee financial analysis

 

Financial condition and operating performance of the borrower (1)

 

N/A

 

 

 

 

 

 

 

Collateral support

 

N/A

 

 

 

273

 

 

Precedent market transaction

 

Offering price

 

$8.73 / share

Impaired loans

 

 

33,285

 

 

Market approach

 

Historical and actual loss experience

 

0.00% - 5.52%

 

 

 

 

 

 

 

 

 

60% of balance

 

 

 

 

 

 

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value

 

N/A

Loan collateral in process of foreclosure

 

 

26,974

 

 

Market approach

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value (3)

 

$1.8 - 34.2
(1)
Includes projections based on revenue, EBITDA, leverage, and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry, and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(2)
Represents amount net of liquidation costs.
(3)
Relates to the recreation portfolio.

(Dollars in thousands)

 

Fair Value
at December 31, 2021

 

 

Valuation Techniques

 

Unobservable Inputs

 

Range
(Weighted Average)

Equity investments

 

$

9,453

 

 

Investee financial analysis

 

Financial condition and operating performance of the borrower (1)

 

N/A

 

 

 

 

 

 

 

Collateral support

 

N/A

 

 

 

273

 

 

Precedent market transaction

 

Offering price

 

$8.73 / share

Impaired loans

 

 

35,571

 

 

Market approach

 

Historical and actual loss experience

 

1.50% - 6.00%

 

 

 

 

 

 

 

 

 

60% of balance

 

 

 

 

 

 

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value

 

N/A

Loan collateral in process of foreclosure

 

 

37,430

 

 

Market approach

 

Transfer prices (2)

 

$0.0 - 79.5

 

 

 

 

 

 

 

Collateral value (3)

 

$3.6 - 49.8
(1)
Includes projections based on revenue, EBITDA, leverage, and liquidation amounts. These assumptions are based on a variety of factors, including economic conditions, industry, and market developments, market valuations of comparable companies, and company-specific developments, including exit strategies and realization opportunities.
(2)
Represents amount net of liquidation costs.
(3)
Relates to the recreation portfolio.
v3.22.2
Organization of Medallion Financial Corp. and its Subsidiaries - Additional Information (Detail)
$ in Millions
 6 Months Ended
Jun. 30, 2022
USD ($)
Medallion
Dec. 31, 2021
USD ($)
Subsidiary or Equity Method Investee [Line Items]    
Purchase price for City of Chicago taxi medallions out of foreclosure $ 8.7  
Number of medallions purchased out of foreclosure | Medallion 159  
Net realizable value of medallions $ 1.0 $ 1.0
Medallion Financing Trust I [Member]    
Subsidiary or Equity Method Investee [Line Items]    
Aggregate assets of trust $ 34.0  
v3.22.2
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Apr. 02, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Interest-bearing funds deposited in other banks $ 1,300,000     $ 1,300,000      
Non-marketable securities 10,900,000     10,900,000   $ 9,700,000  
Past Due 35,582,000 [1]     35,582,000 [1]   41,761,000  
Notes receivable net 79,500     79,500      
Investment securities Amortized to interest income 100,000   $ 100,000 100,000 $ 100,000    
Net loan origination costs       31,600,000   26,100,000  
Net amortization to income (2,400,000)   (2,100,000) $ (4,500,000) (3,700,000)    
Percentage of write down of loan balance       40.00%      
Principal portion of loans serviced, fair value 19,700,000     $ 19,700,000   20,500,000  
Loans write down to collateral value (6,182,000)   16,249,000 $ 13,968,000 23,097,000    
Intangible assets useful life       20 years      
Goodwill 150,803,000     $ 150,803,000   150,803,000  
Intangible assets, net 22,759,000     22,759,000   23,480,000  
Amortization of intangible assets 363,000   361,000 721,000 722,000    
Financing receivable, recorded investment, 90 days past due and still accruing 0     0   0  
Depreciation and amortization 100,000   200,000 100,000 200,000    
Amortization expense 700,000   600,000 1,300,000 $ 1,200,000    
Deferred costs 7,400,000     $ 7,400,000   $ 7,100,000  
Potential dilutive common shares excluded from EPS computation       832,895 396,373    
Stock based compensation award       0 317,398    
Stock based compensation award, Amount $ 900,000   $ 600,000 $ 1,500,000 $ 1,100,000    
Stock based compensation award per diluted common share $ 0.04   $ 0.02 $ 0.06 $ 0.04    
Unrecognized compensation cost related to unvested stock options and restricted stock, recognition period       11 months      
Tier 1 leverage capital to total assets ratio 15.00%     15.00%      
Tier 1 leverage capital ratio 17.00%     17.00%      
Capital conversation buffer       2.50%   2.50%  
Restricted Shares [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Stock based compensation award   383,925   383,925 163,561 258,120  
Restricted Stock Units [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Stock based compensation award       0 16,803    
RPAC [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Past Due             $ 12,400,000
Financing receivable, recorded investment, 90 days past due and still accruing $ 200,000     $ 200,000   $ 500,000  
Loan portfolio premium amortized to interest income 200,000   $ 1,700,000 300,000 $ 1,900,000    
Medallion Bank [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Amortization of intangible assets       0   0  
New York City [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Loans write down to collateral value       79,500      
91+ [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Past Due 4,280,000     4,280,000   4,024,000  
91+ [Member] | Loans [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Past Due $ 4,300,000     $ 4,300,000   $ 4,000,000.0  
Total loans more than 90 days past due ,percentage 0.25%     0.25%   0.28%  
Bank Holding Company Accounting [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Net premium on investment securities       $ 100,000   $ 300,000  
Other Assets [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Equity securities, fair value $ 1,800,000     $ 1,800,000   $ 2,000,000.0  
Equity Securities [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Purchased of equity securities with readily determinable fair value         $ 2,000,000.0    
Minimum [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Interest bearing loan term       4 years      
Estimated useful life of fixed assets       3 years      
Maximum [Member]              
New Accounting Pronouncements or Change in Accounting Principle [Line Items]              
Interest bearing loan term       7 years      
Estimated useful life of fixed assets       10 years      
[1] Excludes loan premiums of $0.2 million and $31.6 million of capitalized loan origination costs.
v3.22.2
Summary of Significant Accounting Policies - Summary of Unrealized Portion Related to Equity Securities (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Equity Securities, FV-NI, Gain (Loss) [Abstract]        
Net losses recognized during the period on equity securities $ (63) $ (3) $ (154) $ (31)
Less: Net gains (losses) recognized during the period on equity securities sold during the period 0 0 0 0
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date $ (63) $ (3) $ (154) $ (31)
v3.22.2
Summary of Significant Accounting Policies - Schedule of Intangible Assets (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Investments In Loans [Line Items]    
Intangibles assets $ 22,759 $ 23,480
Intellectual Property [Member]    
Investments In Loans [Line Items]    
Intangibles assets 17,325 17,874
Contractor Relationships [Member]    
Investments In Loans [Line Items]    
Intangibles assets $ 5,434 $ 5,606
v3.22.2
Summary of Significant Accounting Policies - Summary of the Calculation of Basic and Diluted EPS (Detail) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Accounting Policies [Abstract]          
Net income available to common stockholders $ 13,300   $ 10,267 $ 23,141 $ 18,698
Weighted average common shares outstanding applicable to basic EPS 24,153,015   24,595,822 24,459,870 24,557,511
Effect of dilutive stock options 84,232   127,493 86,869 74,331
Effect of restricted stock grants 184,620   227,197 204,273 291,181
Adjusted weighted average common shares outstanding applicable to diluted EPS 24,421,867   24,950,512 24,751,012 24,923,023
Basic income per share $ 0.55   $ 0.42 $ 0.95 $ 0.76
Diluted income per share $ 0.54 $ 0.54 $ 0.41 $ 0.93 $ 0.75
v3.22.2
Summary of Significant Accounting Policies - Summary of Bank's Actual Capital Amounts and Ratios, and the Regulatory Minimum Ratios (Detail)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2022
USD ($)
Dec. 31, 2021
USD ($)
Accounting Policies [Abstract]    
Regulatory, Minimum, Leverage ratio 4.0  
Regulatory, Minimum, Common equity tier 1 capital ratio 7.00%  
Regulatory, Minimum, Tier 1 capital ratio 8.5  
Regulatory, Minimum, Total capital ratio 10.5  
Regulatory, Well-Capitalized, Leverage ratio 5.0  
Regulatory, Well-Capitalized, Common equity tier 1 capital ratio 6.50%  
Regulatory, Well-Capitalized, Tier 1 capital ratio 8.0  
Regulatory, Well-Capitalized, Total capital ratio 10.0  
Common equity Tier 1 capital $ 217,079 $ 193,459
Tier 1 capital 285,867 262,247
Total capital 307,653 281,211
Average assets 1,681,043 1,495,726
Risk-weighted assets $ 1,706,568 $ 1,482,678
Leverage ratio 17.0 17.5
Common equity Tier 1 capital ratio 12.7 13.1
Tier 1 capital ratio 16.8 17.7
Total capital ratio 18.0 19.0
v3.22.2
Investment Securities - Summary of Fixed Maturity Securities Available for Sale (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost $ 54,435 $ 44,494
Gross Unrealized Gains 77 732
Gross Unrealized Losses (4,154) (454)
Fair Value 50,358 44,772
Mortgage-backed Securities, Principally Obligations of US Federal Agencies [Member]    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 44,155 35,469
Gross Unrealized Gains 4 672
Gross Unrealized Losses (3,680) (403)
Fair Value 40,479 35,738
State and Municipalities [Member]    
Debt Securities, Available-for-sale [Line Items]    
Amortized Cost 10,280 9,025
Gross Unrealized Gains 73 60
Gross Unrealized Losses (474) (51)
Fair Value $ 9,879 $ 9,034
v3.22.2
Investment Securities - Summary of Amortized Cost and Estimated Market Value of Investment Securities by Contractual Maturity (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Available-for-sale Securities, Debt Maturities [Abstract]    
Amortized Cost, due in one year or less $ 22  
Amortized Cost, due after one year through five years 9,435  
Amortized Cost, due after five years through ten years 9,568  
Amortized Cost, due after ten years 35,410  
Amortized Cost 54,435 $ 44,494
Market Value, due in one year or less 22  
Market Value, due after one year through five years 9,241  
Market Value, due after five years through ten years 8,737  
Market Value, due after ten years 32,358  
Market Value, total $ 50,358 $ 44,772
v3.22.2
Investment Securities - Summary of Securities with Gross Unrealized Losses (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]    
Gross Unrealized Losses, Less than Twelve Months $ (1,908) $ (412)
Fair Value, Less than Twelve Months 30,484 18,454
Gross Unrealized Losses, Twelve Months and Over (2,246) (42)
Fair Value, Twelve Months and Over 13,509 1,956
Mortgage-backed Securities, Principally Obligations of US Federal Agencies [Member]    
Debt Securities, Available-for-sale [Line Items]    
Gross Unrealized Losses, Less than Twelve Months (1,861) (403)
Fair Value, Less than Twelve Months 26,941 16,330
Gross Unrealized Losses, Twelve Months and Over (1,819) 0
Fair Value, Twelve Months and Over 10,263 0
State and Municipalities [Member]    
Debt Securities, Available-for-sale [Line Items]    
Gross Unrealized Losses, Less than Twelve Months (47) (9)
Fair Value, Less than Twelve Months 3,543 2,124
Gross Unrealized Losses, Twelve Months and Over (427) (42)
Fair Value, Twelve Months and Over $ 3,246 $ 1,956
v3.22.2
Investment Securities - Additional Information (Detail) - Securities
Jun. 30, 2022
Dec. 31, 2021
Debt Securities, Available-for-sale [Abstract]    
Number of Securities 54 15
v3.22.2
Loans and Allowance for Loan Losses - Summary of Inclusive Capitalized Loans (Detail) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Mar. 31, 2022
Jun. 30, 2021
Mar. 31, 2021
Dec. 31, 2020
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 1,702,831 $ 1,461,622 [1]        
Allowance for loan losses (59,152) [2],[3] (50,166) $ (50,686) $ (46,946) [2],[3] $ (57,809) $ (57,548)
Net loans receivable 1,675,469 1,438,758   1,293,621    
Bank Holding Company Accounting [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans 1,734,621 1,488,924 1,569,441 1,340,567 1,259,215 1,229,838
Allowance for loan losses 59,152 50,166        
Net loans receivable $ 1,675,469 $ 1,438,758        
Percentage of total gross loans 100.00% 100.00%        
Recreation [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 1,062,573 $ 931,859 [1]        
Allowance for loan losses (37,772) (32,435)        
Recreation [Member] | Bank Holding Company Accounting [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 1,096,670 $ 961,320 1,004,091 886,206 822,932 792,686
Percentage of total gross loans 63.00% 65.00%        
Home Improvement [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 528,585 $ 438,931 [1]        
Allowance for loan losses (9,234) (7,356)        
Home Improvement [Member] | Bank Holding Company Accounting [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 526,278 $ 436,772 473,408 368,257 342,121 334,033
Percentage of total gross loans 30.00% 29.00%        
Commercial [Member]            
Student Loan Portfolio By Program [Line Items]            
Allowance for loan losses $ (2,720) $ (1,141)        
Commercial [Member] | Bank Holding Company Accounting [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 96,928 $ 76,696 77,867 69,520 58,854 65,327
Percentage of total gross loans 6.00% 5.00%        
Medallion [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 14,152 $ 14,046 [1]        
Allowance for loan losses (9,426) (9,234)        
Medallion [Member] | Bank Holding Company Accounting [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 14,152 $ 14,046 13,849 16,514 35,250 37,768
Percentage of total gross loans 1.00% 1.00%        
Strategic Partnership [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 593 $ 90 [1]        
Strategic Partnership [Member] | Bank Holding Company Accounting [Member]            
Student Loan Portfolio By Program [Line Items]            
Total gross loans $ 593 $ 90 $ 226 $ 70 $ 58 $ 24
[1] Excludes loan premiums of $0.5 million and $26.8 million of capitalized loan origination costs.
[2] As of June 30, 2022 and June 30, 2021, there were no allowance for loan losses and net charge-offs related to the strategic partnership loans.
[3] As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
v3.22.2
Loans and Allowance for Loan Losses - Schedule of Activity of Gross Loans (Detail) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance [1]     $ 1,461,622,000  
Net recoveries (charge-offs) [2] $ 707,000 $ (10,181,000) (2,013,000) $ (12,938,000)
Transfer to loan collateral in process of foreclosure, net (2,757,000) (6,913,000) (5,797,000) (10,663,000)
Amortization of origination costs     (4,670,000) (3,723,000)
Paid-in-kind interest     347,000 495,000
Gross loans, ending balance 1,702,831,000   1,702,831,000  
Recreation [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance [1]     931,859,000  
Transfer to loan collateral in process of foreclosure, net (2,618,000) (2,980,000) (5,529,000) (6,033,000)
Gross loans, ending balance 1,062,573,000   1,062,573,000  
Home Improvement [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance [1]     438,931,000  
Gross loans, ending balance 528,585,000   528,585,000  
Medallion [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance [1]     14,046,000  
Transfer to loan collateral in process of foreclosure, net (139,000) (3,933,000) (268,000) (4,630,000)
Gross loans, ending balance 14,152,000   14,152,000  
Strategic Partnership [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance [1]     90,000  
Net recoveries (charge-offs)     0 0
Gross loans, ending balance 593,000   593,000  
Bank Holding Company Accounting [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance 1,569,441,000 1,259,215,000 1,488,924,000 1,229,838,000
Loan originations 304,953,000 210,944,000 518,680,000 358,954,000
Principal payments, sales, maturities, and recoveries 133,999,000 (106,700,000) (258,054,000) (215,817,000)
Net recoveries (charge-offs) 6,182,000 (16,249,000) (13,968,000) 23,097,000
Transfer to loan collateral in process of foreclosure, net 2,757,000 (6,913,000) (5,797,000) (10,663,000)
Amortization of origination costs (2,551,000) (2,067,000) 4,670,000 (3,723,000)
Amortization of loan premium 150,000 1,695,000 (300,000) (1,882,000)
FASB origination costs 5,691,000 3,862,000 9,459,000 6,462,000
Paid-in-kind interest 175,000 170,000 347,000 495,000
Gross loans, ending balance 1,734,621,000 1,340,567,000 1,734,621,000 1,340,567,000
Bank Holding Company Accounting [Member] | Recreation [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance 1,004,091,000 822,932,000 961,320,000 792,686,000
Loan originations 170,207,000 134,467,000 284,613,000 228,317,000
Principal payments, sales, maturities, and recoveries 73,114,000 (67,084,000) (138,230,000) (123,043,000)
Net recoveries (charge-offs) 5,074,000 (2,672,000) (10,141,000) (7,725,000)
Transfer to loan collateral in process of foreclosure, net 2,618,000 (2,980,000) (5,529,000) (6,033,000)
Amortization of origination costs (2,931,000) (2,477,000) 5,370,000 4,639,000
Amortization of loan premium 60,000 60,000 (120,000) (101,000)
FASB origination costs 6,169,000 4,080,000 10,127,000 6,744,000
Paid-in-kind interest 0 0 0 0
Gross loans, ending balance 1,096,670,000 886,206,000 1,096,670,000 886,206,000
Bank Holding Company Accounting [Member] | Home Improvement [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance 473,408,000 342,121,000 436,772,000 334,033,000
Loan originations 105,172,000 62,992,000 194,992,000 111,051,000
Principal payments, sales, maturities, and recoveries 51,006,000 (36,171,000) (103,170,000) (75,807,000)
Net recoveries (charge-offs) 1,108,000 (786,000) (2,168,000) (1,467,000)
Transfer to loan collateral in process of foreclosure, net 0 0 0 0
Amortization of origination costs 380,000 410,000 700,000 907,000
Amortization of loan premium 90,000 90,000 (180,000) (166,000)
FASB origination costs (478,000) (219,000) 668,000 (294,000)
Paid-in-kind interest 0 0 0 0
Gross loans, ending balance 526,278,000 368,257,000 526,278,000 368,257,000
Bank Holding Company Accounting [Member] | Commercial [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance 77,867,000 58,854,000 76,696,000 65,327,000
Loan originations 19,272,000 11,059,000 23,672,000 15,216,000
Principal payments, sales, maturities, and recoveries 386,000 (564,000) (2,203,000) (11,541,000)
Net recoveries (charge-offs) 0 0 (1,584,000) 0
Transfer to loan collateral in process of foreclosure, net 0 0 0 0
Amortization of origination costs 0 0 0 11,000
Amortization of loan premium 0 0 0 0
FASB origination costs 0 1,000 0 12,000
Paid-in-kind interest 175,000 170,000 347,000 495,000
Gross loans, ending balance 96,928,000 69,520,000 96,928,000 69,520,000
Bank Holding Company Accounting [Member] | Medallion [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance 13,849,000 35,250,000 14,046,000 37,768,000
Loan originations 472,000 0 564,000 0
Principal payments, sales, maturities, and recoveries 30,000 (467,000) (115,000) (1,102,000)
Net recoveries (charge-offs) 0 (12,791,000) (75,000) (13,905,000)
Transfer to loan collateral in process of foreclosure, net 139,000 (3,933,000) (268,000) (4,630,000)
Amortization of origination costs 0 0 0 (2,000)
Amortization of loan premium 0 (1,545,000) 0 (1,615,000)
FASB origination costs 0 0 0 0
Paid-in-kind interest 0 0 0 0
Gross loans, ending balance 14,152,000 16,514,000 14,152,000 16,514,000
Bank Holding Company Accounting [Member] | Strategic Partnership [Member]        
Schedule Of Gross Real Estate And Loan Activity [Line Items]        
Gross loans, beginning balance 226,000 58,000 90,000 24,000
Loan originations 9,830,000 2,426,000 14,839,000 4,370,000
Principal payments, sales, maturities, and recoveries 9,463,000 (2,414,000) (14,336,000) (4,324,000)
Net recoveries (charge-offs) 0 0 0 0
Transfer to loan collateral in process of foreclosure, net 0 0 0 0
Amortization of origination costs 0 0 0 0
Amortization of loan premium 0 0 0 0
FASB origination costs 0 0 0 0
Paid-in-kind interest 0 0 0 0
Gross loans, ending balance $ 593,000 $ 70,000 $ 593,000 $ 70,000
[1] Excludes loan premiums of $0.5 million and $26.8 million of capitalized loan origination costs.
[2] As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
v3.22.2
Loans and Allowance for Loan Losses - Summary of Activity in Allowance for Loan Losses (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Financing Receivable, Allowance for Credit Losses [Line Items]        
Allowance for loan losses - beginning balance $ 50,686 $ 57,809 $ 50,166 $ 57,548
Total charge-offs 6,182 (16,249) (13,968) (23,097)
Total recoveries 6,889 6,068 11,955 10,159
Net recoveries (charge-offs) [1] 707 (10,181) (2,013) (12,938)
Provision (benefit) for loan losses 7,759 (682) 10,999 2,336
Allowance for loan losses - ending balance [1],[2] 59,152 46,946 59,152 46,946
Recreation [Member]        
Financing Receivable, Allowance for Credit Losses [Line Items]        
Allowance for loan losses - beginning balance     32,435  
Total charge-offs 5,074 (2,672) (10,141) (7,725)
Total recoveries 3,615 3,588 7,125 6,057
Allowance for loan losses - ending balance 37,772   37,772  
Home Improvement [Member]        
Financing Receivable, Allowance for Credit Losses [Line Items]        
Allowance for loan losses - beginning balance     7,356  
Total charge-offs 1,108 (786) (2,168) (1,467)
Total recoveries 585 558 1,144 990
Allowance for loan losses - ending balance 9,234   9,234  
Commercial [Member]        
Financing Receivable, Allowance for Credit Losses [Line Items]        
Allowance for loan losses - beginning balance     1,141  
Total charge-offs 0 0 (1,584) 0
Total recoveries 13 0 47 0
Allowance for loan losses - ending balance 2,720   2,720  
Medallion [Member]        
Financing Receivable, Allowance for Credit Losses [Line Items]        
Allowance for loan losses - beginning balance     9,234  
Total charge-offs 0 (12,791) (75) (13,905)
Total recoveries 2,676 $ 1,922 3,639 $ 3,112
Allowance for loan losses - ending balance $ 9,426   $ 9,426  
[1] As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
[2] As of June 30, 2022 and June 30, 2021, there were no allowance for loan losses and net charge-offs related to the strategic partnership loans.
v3.22.2
Loans and Allowance for Loan Losses - Summary of Activity in Allowance for Loan Losses (Parenthetical) (Detail) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Mar. 31, 2022
Dec. 31, 2021
 [1]
Mar. 31, 2021
Dec. 31, 2020
Financing Receivable, Allowance for Credit Losses [Line Items]                
Cumulative charges of loans and loan collateral process of foreclosure $ 26,974,000 [1] $ 49,039,000 $ 26,974,000 [1] $ 49,039,000 $ 33,834,000 $ 37,430,000 $ 50,733,000 $ 54,560,000
Net charge-offs [2] (707,000) $ 10,181,000 2,013,000 12,938,000        
Strategic Partnership [Member]                
Financing Receivable, Allowance for Credit Losses [Line Items]                
Net charge-offs     0 $ 0        
Medallion Bank [Member]                
Financing Receivable, Allowance for Credit Losses [Line Items]                
Cumulative charges of loans and loan collateral process of foreclosure $ 252,100,000   $ 252,100,000          
[1] Includes financed sales of this collateral to third parties that are reported separately from the loan portfolio, of $7.7 million as of June 30, 2022 and $7.4 million as of December 31, 2021
[2] As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
v3.22.2
Loans and Allowance for Loan Losses - Summary of Allowance for Loan Losses by Type (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Mar. 31, 2022
Dec. 31, 2021
Jun. 30, 2021
 [1],[2]
Mar. 31, 2021
Dec. 31, 2020
Financing Receivable Recorded Investment Past Due [Line Items]            
Amount $ 59,152 [1],[2] $ 50,686 $ 50,166 $ 46,946 $ 57,809 $ 57,548
Percentage of Allowance 100.00%   100.00%      
Allowance as a Percent of Loan Category 3.41%   3.37%      
Allowance as a Percent of Nonaccrual 177.71%   141.03%      
Recreation [Member]            
Financing Receivable Recorded Investment Past Due [Line Items]            
Amount $ 37,772   $ 32,435      
Percentage of Allowance 64.00%   64.00%      
Allowance as a Percent of Loan Category 3.44%   3.37%      
Allowance as a Percent of Nonaccrual 113.48%   91.18%      
Home Improvement [Member]            
Financing Receivable Recorded Investment Past Due [Line Items]            
Amount $ 9,234   $ 7,356      
Percentage of Allowance 16.00%   15.00%      
Allowance as a Percent of Loan Category 1.75%   1.68%      
Allowance as a Percent of Nonaccrual 27.74%   20.68%      
Commercial [Member]            
Financing Receivable Recorded Investment Past Due [Line Items]            
Amount $ 2,720   $ 1,141      
Percentage of Allowance 4.00%   2.00%      
Allowance as a Percent of Loan Category 2.81%   1.49%      
Allowance as a Percent of Nonaccrual 8.17%   3.21%      
Medallion [Member]            
Financing Receivable Recorded Investment Past Due [Line Items]            
Amount $ 9,426   $ 9,234      
Percentage of Allowance 16.00%   19.00%      
Allowance as a Percent of Loan Category 66.61%   65.74%      
Allowance as a Percent of Nonaccrual 28.32%   25.96%      
[1] As of June 30, 2022 and June 30, 2021, there were no allowance for loan losses and net charge-offs related to the strategic partnership loans.
[2] As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
v3.22.2
Loans and Allowance for Loan Losses - Summary of Non Accrual Loan (Detail) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Receivables [Abstract]    
Total nonaccrual loans $ 33,285 $ 35,571
Interest foregone quarter to date 536 466
Amount of foregone interest applied to principal in the quarter 104 114
Interest foregone year to date 1,224 1,620
Amount of foregone interest applied to principal year to date 216 432
Interest foregone life to date 2,877 3,623
Amount of foregone interest applied to principal life-to-date $ 1,110 $ 942
Percentage of nonaccrual loans to gross loan portfolio 2.00% 2.00%
Percentage of allowance for loan losses to nonaccrual loans 178.00% 141.00%
v3.22.2
Loans and Allowance for Loan Losses - Summary of Performance Status of Loan (Detail) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 1,734,621 $ 1,488,924
Percentage of Nonperforming to Total 1.94% 2.42%
Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 1,700,980 $ 1,452,859
Non - Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans 33,641 36,065
Recreation [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 1,096,670 $ 961,320
Percentage of Nonperforming to Total 0.51% 0.58%
Recreation [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 1,091,093 $ 955,763
Recreation [Member] | Non - Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans 5,577 5,557
Home Improvement [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 526,278 $ 436,772
Percentage of Nonperforming to Total 0.08% 0.03%
Home Improvement [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 525,883 $ 436,640
Home Improvement [Member] | Non - Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans 395 132
Commercial [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 96,928 $ 76,696
Percentage of Nonperforming to Total 13.95% 21.29%
Commercial [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 83,411 $ 60,366
Commercial [Member] | Non - Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans 13,517 16,330
Medallion [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 14,152 $ 14,046
Percentage of Nonperforming to Total 100.00% 100.00%
Medallion [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 0 $ 0
Medallion [Member] | Non - Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans 14,152 14,046
Strategic Partnership [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 593 $ 90
Percentage of Nonperforming to Total 0.00% 0.00%
Strategic Partnership [Member] | Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 593 $ 90
Strategic Partnership [Member] | Non - Performing [Member]    
Financing Receivable, Recorded Investment [Line Items]    
Status of loans $ 0 $ 0
v3.22.2
Loans and Allowance for Loan Losses - Summary of Nonperforming Loan Portfolio (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Financing Receivable, Recorded Investment [Line Items]          
Recorded Investment, With related allowance $ 33,641   $ 33,641   $ 36,065
Unpaid principal balance, With related allowance 34,751   34,751   37,007
Related Allowance, With related allowance 12,345   12,345   10,168
Average Investment Recorded, With related allowance 35,265 $ 42,600 36,012 $ 43,343  
Interest Income Recognized, With related allowance 119 180 223 323  
Recreation [Member]          
Financing Receivable, Recorded Investment [Line Items]          
Recorded Investment, With related allowance 5,577   5,577   5,557
Unpaid principal balance, With related allowance 5,577   5,577   5,557
Related Allowance, With related allowance 192   192   188
Average Investment Recorded, With related allowance 5,197 4,799 5,265 4,912  
Interest Income Recognized, With related allowance 119 180 223 323  
Home Improvement [Member]          
Financing Receivable, Recorded Investment [Line Items]          
Recorded Investment, With related allowance 395   395   132
Unpaid principal balance, With related allowance 395   395   132
Related Allowance, With related allowance 7   7   2
Average Investment Recorded, With related allowance 396 74 388 75  
Interest Income Recognized, With related allowance 0 0 0 0  
Commercial [Member]          
Financing Receivable, Recorded Investment [Line Items]          
Recorded Investment, With related allowance 13,517   13,517   16,330
Unpaid principal balance, With related allowance 13,577   13,577   16,360
Related Allowance, With related allowance 2,720   2,720   1,141
Average Investment Recorded, With related allowance 13,577 19,210 13,561 19,788  
Interest Income Recognized, With related allowance 0 0 0 0  
Medallion [Member]          
Financing Receivable, Recorded Investment [Line Items]          
Recorded Investment, With related allowance 14,152   14,152   14,046
Unpaid principal balance, With related allowance 15,202   15,202   14,958
Related Allowance, With related allowance 9,426   9,426   $ 8,837
Average Investment Recorded, With related allowance 16,095 18,517 16,798 18,568  
Interest Income Recognized, With related allowance $ 0 $ 0 $ 0 $ 0  
v3.22.2
Loans and Allowance for Loan Losses - Summary of Aging of Loans (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due $ 35,582 [1] $ 41,761
Total 1,702,831 1,461,622 [2]
Accruing 0 0
30-59 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 23,303 23,564
60-89 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 7,999 14,173
91+ [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 4,280 4,024
Financial Asset, Not Past Due [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 1,667,249 1,419,861
Recreation [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 31,076 [1] 30,424
Total 1,062,573 931,859 [2]
Accruing 0 0
Recreation [Member] | 30-59 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 19,813 20,037
Recreation [Member] | 60-89 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 7,453 6,569
Recreation [Member] | 91+ [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 3,810 3,818
Recreation [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 1,031,497 901,435
Home Improvement [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 2,667 [1] 2,128
Total 528,585 438,931 [2]
Accruing 0 0
Home Improvement [Member] | 30-59 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 1,725 1,517
Home Improvement [Member] | 60-89 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 546 479
Home Improvement [Member] | 91+ [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 396 132
Home Improvement [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 525,918 436,803
Commercial Loans [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 1,839 [1] 1,869
Total 96,928 76,696 [2]
Accruing 0 0
Commercial Loans [Member] | 30-59 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 1,765 1,795
Commercial Loans [Member] | 60-89 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 0
Commercial Loans [Member] | 91+ [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 74 74
Commercial Loans [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 95,089 74,827
Medallion [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 [1] 7,340
Total 14,152 14,046 [2]
Accruing 0 0
Medallion [Member] | 30-59 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 215
Medallion [Member] | 60-89 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 7,125
Medallion [Member] | 91+ [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 0
Medallion [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 14,152 6,706
Strategic Partnership [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 [1] 0
Total 593 90 [2]
Accruing 0 0
Strategic Partnership [Member] | 30-59 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 0
Strategic Partnership [Member] | 60-89 [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 0
Strategic Partnership [Member] | 91+ [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due 0 0
Strategic Partnership [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable Recorded Investment Past Due [Line Items]    
Past Due $ 593 $ 90
[1] Excludes loan premiums of $0.2 million and $31.6 million of capitalized loan origination costs.
[2] Excludes loan premiums of $0.5 million and $26.8 million of capitalized loan origination costs.
v3.22.2
Loans and Allowance for Loan Losses - Summary of Aging of Loans (Parenthetical) (Detail) - USD ($)
$ in Millions
 6 Months Ended 12 Months Ended
Jun. 30, 2022
Dec. 31, 2021
Receivables [Abstract]    
Loan premiums $ 0.2 $ 0.5
Capitalized loan origination costs $ 31.6 $ 26.8
v3.22.2
Loans and Allowance for Loan Losses - Additional Information (Detail)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
USD ($)
TDR
Jun. 30, 2021
USD ($)
TDR
Jun. 30, 2022
USD ($)
TDR
Jun. 30, 2021
USD ($)
TDR
Medallion
Mar. 31, 2022
USD ($)
Dec. 31, 2021
USD ($)
Mar. 31, 2021
USD ($)
Dec. 31, 2020
USD ($)
Financing Receivable Recorded Investment Past Due [Line Items]                
Weighted average loan-to-value ratio 320.00%   320.00%     295.00%    
Allowance for loan loss $ 59,152 [1],[2] $ 46,946 [1],[2] $ 59,152 [1],[2] $ 46,946 [1],[2] $ 50,686 $ 50,166 $ 57,809 $ 57,548
Medallion [Member]                
Financing Receivable Recorded Investment Past Due [Line Items]                
Number of loans modified as TDRs defaulted | TDR 0 2 2 10        
Allowance for loan loss $ 9,426   $ 9,426     9,234    
Recreation [Member]                
Financing Receivable Recorded Investment Past Due [Line Items]                
Number of loans modified as TDRs defaulted | TDR 12 21 22 39        
Allowance for loan loss $ 37,772   $ 37,772     $ 32,435    
Troubled Debt Restructuring Defaulted [Member] | Medallion [Member]                
Financing Receivable Recorded Investment Past Due [Line Items]                
Number of loans modified as TDRs defaulted | Medallion       43        
Troubled Debt Restructuring Defaulted [Member] | Recreation [Member]                
Financing Receivable Recorded Investment Past Due [Line Items]                
Number of loans modified as TDRs defaulted | TDR     20 37        
TDR investment value $ 200 $ 400 $ 200 $ 400        
[1] As of June 30, 2022 and June 30, 2021, there were no allowance for loan losses and net charge-offs related to the strategic partnership loans.
[2] As of June 30, 2022, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the medallion loan portfolio were $252.1 million, some of which may represent collection opportunities for the Company.
v3.22.2
Loans and Allowance for Loan Losses - Summary of TDRs (Detail)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
USD ($)
TDR
Jun. 30, 2021
USD ($)
TDR
Jun. 30, 2022
USD ($)
TDR
Jun. 30, 2021
USD ($)
TDR
Financing Receivable Recorded Investment Past Due [Line Items]        
Pre- Modification Investment   $ 302    
Recreation [Member]        
Financing Receivable Recorded Investment Past Due [Line Items]        
Number of Loans | TDR 12 21 22 39
Pre- Modification Investment $ 147   $ 276 $ 474
Post- Modification Investment $ 147 $ 302 $ 276 $ 468
Medallion [Member]        
Financing Receivable Recorded Investment Past Due [Line Items]        
Number of Loans | TDR 0 2 2 10
Pre- Modification Investment $ 0 $ 256 $ 252 $ 2,994
Post- Modification Investment $ 0 $ 256 $ 252 $ 2,994
v3.22.2
Loans and Allowance for Loan Losses - Summary of Activities of the Loan Collateral in Process of Foreclosure Related to Recreation and Medallion Loans (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Loans and Leases Receivable Disclosure [Line Items]        
Loans collateral in process of foreclosure - beginning balance $ 33,834 $ 50,733 $ 37,430 [1] $ 54,560
Transfer from loans, net 2,757 6,913 5,797 10,663
Sales (4,145) (2,220) 6,513 (4,519)
Cash payments received (4,381) (3,146) 7,253 (4,423)
Collateral valuation adjustments (1,091) (3,241) 2,487 (7,242)
Loans collateral in process of foreclosure - ending balance 26,974 [1] 49,039 26,974 [1] 49,039
Recreation [Member]        
Loans and Leases Receivable Disclosure [Line Items]        
Loans collateral in process of foreclosure - beginning balance 1,369 970 1,720 1,432
Transfer from loans, net 2,618 2,980 5,529 6,033
Sales (2,146) (1,989) 4,398 (4,288)
Cash payments received 0 0 0 0
Collateral valuation adjustments (963) (1,079) 1,973 (2,295)
Loans collateral in process of foreclosure - ending balance 878 882 878 882
Medallion [Member]        
Loans and Leases Receivable Disclosure [Line Items]        
Loans collateral in process of foreclosure - beginning balance 32,465 49,763 35,710 53,128
Transfer from loans, net 139 3,933 268 4,630
Sales (1,999) (231) 2,115 (231)
Cash payments received (4,381) (3,146) 7,253 (4,423)
Collateral valuation adjustments (128) (2,162) 514 (4,947)
Loans collateral in process of foreclosure - ending balance $ 26,096 $ 48,157 $ 26,096 $ 48,157
[1] Includes financed sales of this collateral to third parties that are reported separately from the loan portfolio, of $7.7 million as of June 30, 2022 and $7.4 million as of December 31, 2021
v3.22.2
Funds Borrowed - Schedule of Outstanding Balances of Funds Borrowed (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Debt Instrument [Line Items]    
2023 $ 399,619  
2024 393,977  
2025 424,880  
2026 177,827  
2027 190,952  
Thereafter 107,750  
Long term debt [1] $ 1,695,005 $ 1,477,251
Interest Rate [2] 2.00%  
Deposits [Member]    
Debt Instrument [Line Items]    
2023 [3] $ 394,619  
2024 [3] 347,548  
2025 [3] 412,380  
2026 [3] 131,077  
2027 [3] 186,452  
Thereafter [3] 0  
Long term debt [1],[3] $ 1,472,076 1,253,288
Interest Rate [2],[3] 1.46%  
Small Business Administration Debentures and Borrowings [Member]    
Debt Instrument [Line Items]    
2023 $ 5,000  
2024 10,429  
2025 12,500  
2026 15,500  
2027 4,500  
Thereafter 21,000  
Long term debt [1] $ 68,929 69,963
Interest Rate [2] 2.94%  
Privately Placed Notes [Member]    
Debt Instrument [Line Items]    
2023 $ 0  
2024 36,000  
2025 0  
2026 31,250  
2027 0  
Thereafter 53,750  
Long term debt [1] $ 121,000 121,000
Interest Rate [2] 7.66%  
Preferred Securities [Member]    
Debt Instrument [Line Items]    
2023 $ 0  
2024 0  
2025 0  
2026 0  
2027 0  
Thereafter 33,000  
Long term debt [1] $ 33,000 $ 33,000
Interest Rate [2] 3.75%  
[1] Excludes deferred financing costs of $7.4 million and $7.1 million as of June 30, 2022 and December 31, 2021.
[2] Weighted average contractual rate as of June 30, 2022.
[3] Balance excludes $1.0 million and $0.8 million of strategic partner reserve deposits as of June 30, 2022 and December 31, 2021.
v3.22.2
Funds Borrowed - Schedule of Outstanding Balances of Funds Borrowed (Parenthetical) (Detail) - USD ($)
$ in Millions
Jun. 30, 2022
Dec. 31, 2021
Debt Disclosure [Abstract]    
Deferred costs $ 7.4 $ 7.1
Reserve Deposits $ 1.0 $ 0.8
v3.22.2
Funds Borrowed - Additional Information (Detail)
 3 Months Ended 6 Months Ended 12 Months Ended
Feb. 28, 2021
USD ($)
Jul. 31, 2020
USD ($)
Dec. 31, 2007
USD ($)
Jun. 30, 2022
USD ($)
shares
Jun. 30, 2021
USD ($)
Jun. 30, 2022
USD ($)
Deposit
shares
Jun. 30, 2021
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2021
USD ($)
shares
Apr. 30, 2021
USD ($)
Mar. 15, 2021
USD ($)
Dec. 31, 2020
USD ($)
Aug. 31, 2019
USD ($)
Mar. 31, 2019
USD ($)
Dec. 31, 2017
USD ($)
Debt Instrument [Line Items]                              
Number of individual with time deposits greater than $100,000 | Deposit           0                  
Listing services deposits from other financial institutions.       $ 8,700,000   $ 8,700,000     $ 8,700,000            
Maturity date Feb. 28, 2026 Sep. 24, 2024                          
Debt instrument face amount   $ 25,000,000.0                          
Issue of common stock | shares       28,530,373   28,530,373     28,124,629            
Preferred securities repurchased from a third party investor     $ 2,000,000.0                        
Long-term debt [1]       $ 219,377,000   $ 219,377,000     $ 219,973,000            
Gain on debt extinguishment       0 $ 2,859,000 0 $ 4,626,000                
Debenture Mature 2021 [Member]                              
Debt Instrument [Line Items]                              
Debt instrument commitments drawn       15,500,000   15,500,000                  
Long-term debt       8,500,000   $ 8,500,000                  
Preferred Securities [Member]                              
Debt Instrument [Line Items]                              
Maturity date           Sep. 30, 2037                  
Preferred securities outstanding       $ 33,000,000.0   $ 33,000,000.0                  
Preferred Securities [Member] | 90 day LIBOR [Member]                              
Debt Instrument [Line Items]                              
Basis spread on variable rate           (2.29%)                  
Preferred Securities [Member] | LIBOR Rate [Member]                              
Debt Instrument [Line Items]                              
Basis spread on variable rate           2.13%                  
Small Business Administration Debentures and Borrowings [Member]                              
Debt Instrument [Line Items]                              
Debt instrument interest rate Percentage       3.25%   3.25%                  
Loan commitment term           4 years 6 months                  
Commitment fee percentage   1.00%       1.00%                  
Principal amount of loan                             $ 34,000,000.0
Extended maturity date           Apr. 30, 2024                  
Debt instrument commitments available       $ 9,500,000   $ 9,500,000                  
Debt instrument outstanding amount       68,900,000   68,900,000                  
Debt instrument remaining amount       7,900,000   $ 7,900,000                  
Remaining amount of debenture after deducting leverage fee kept for capitalization of retained earning or capital infusion   $ 9,500,000                          
FSVC's [Member]                              
Debt Instrument [Line Items]                              
Principal amount of loan                             $ 33,500,000
7.25% Unsecured Senior Notes Due February 2026 [Member]                              
Debt Instrument [Line Items]                              
Aggregate principal amount                   $ 3,000,000.0 $ 3,300,000        
7.50% Unsecured Senior Notes Due December 2027 [Member]                              
Debt Instrument [Line Items]                              
Aggregate principal amount                   $ 11,700,000          
Privately Placed Notes [Member]                              
Debt Instrument [Line Items]                              
Aggregate principal amount $ 25,000,000.0                   $ 8,500,000 $ 33,600,000 $ 6,000,000.0 $ 30,000,000.0  
Debt instrument interest rate Percentage 7.25%                     7.50%   8.25%  
Maturity date           2024                  
Maturity date           Dec. 31, 2027                  
Gain loss on sales of loans net               $ 4,100,000              
Minimum [Member]                              
Debt Instrument [Line Items]                              
Time deposits       $ 250,000   $ 250,000                  
Brokerage [Member] | Maximum [Member]                              
Debt Instrument [Line Items]                              
Average brokerage fee percentage in relation to the maturity of deposits           0.15%                  
[1] Includes $3.6 million and $4.0 million of deferred financing costs as of June 30, 2022 and December 31, 2021. Refer to Note 5 for more details.
v3.22.2
Funds Borrowed - Summary of Maturity of Broker Pools, Excluding Strategic Partner Reserve Deposits (Detail)
$ in Thousands
Jun. 30, 2022
USD ($)
Debt Disclosure [Abstract]  
Three months or less $ 83,985
Over three months through six months 85,568
Over six months through one year 225,066
Over one year 1,077,457
Total Deposits $ 1,472,076
v3.22.2
Leases - Schedule of Operating Lease Costs and Additional Information (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Leases [Abstract]        
Operating lease costs $ 590 $ 572 $ 1,179 $ 1,144
Operating cash flows from operating leases 435 590 1,080 1,265
Right-of-use asset obtained in exchange for lease liability $ (40) $ (18) $ (85) $ (36)
v3.22.2
Leases - Schedule of Breakout of Operating leases (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Leases [Abstract]    
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Property Equipment And Right Of Use Asset Net Property Equipment And Right Of Use Asset Net
Operating lease right-of-use assets $ 10,156 $ 10,045
Other current liabilities $ 2,103 $ 2,159
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] Operating lease liabilities Operating lease liabilities
Operating lease liabilities $ 9,078 $ 9,053
Total operating lease liabilities $ 11,181 $ 11,212
Weighted average remaining lease term 5 years 10 months 24 days 5 years 4 months 24 days
Weighted average discount rate 5.54% 5.54%
v3.22.2
Leases - Schedule of Maturities of the Lease Liabilities (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Leases [Abstract]    
Remainder of 2022 $ 1,259  
2023 2,506  
2024 2,526  
2025 2,505  
2026 2,440  
Thereafter 2,502  
Total lease payments 13,738  
Less imputed interest 2,557  
Total operating lease liabilities $ 11,181 $ 11,212
v3.22.2
Income Taxes - Summary of Components of Deferred and Other Tax Assets and Liabilities (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Income Tax Disclosure [Abstract]    
Goodwill and other intangibles $ (43,637) $ (43,894)
Provision for loan losses 11,065 11,057
Net operating loss carryforwards [1] 4,661 12,167
Accrued expenses, compensation, and other assets 2,961 2,579
Unrealized gains on other investments 3,197 2,176
Total deferred tax liability (21,753) (15,915)
Valuation allowance (2,295) (2,295)
Deferred tax liability, net $ (24,048) $ (18,210)
[1] As of June 30, 2022, the Company and its subsidiaries had an estimated $22.5 million of net operating loss carryforwards, $1.7 million of which expires at various dates between December 31, 2026 and December 31, 2035, which had a net carrying value of $2.4 million as of June 30, 2022.
v3.22.2
Income Taxes - Summary of Components of Deferred and Other Tax Assets and Liabilities (Parenthetical) (Detail) - Medallion Chicago [Member]
$ in Millions
 3 Months Ended
Jun. 30, 2022
USD ($)
Income Tax Rate Reconciliation [Line Items]  
Net operating loss carryforwards $ 22.5
Net operating loss carryforwards expiration period expires at various dates between December 31, 2026 and December 31, 2035
Net operating loss carryforwards assets $ 2.4
December 31, 2026 To December 31, 2035 [Member]  
Income Tax Rate Reconciliation [Line Items]  
Net operating loss carryforwards $ 1.7
v3.22.2
Income Taxes - Summary of Components of Tax Provision (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Current        
Federal $ 984 $ 795 $ 1,488 $ 795
State 447 100 769 270
Deferred        
Federal 2,378 3,001 5,598 6,054
State 1,047 2,632 1,832 3,287
Net provision for income taxes $ 4,856 $ 6,528 $ 9,687 $ 10,406
v3.22.2
Income Taxes - Summary of Reconciliation of Statutory Federal Income Tax Provision to Consolidated Actual Income Tax Provision (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Income Tax Disclosure [Abstract]        
Statutory Federal income tax provision at 21% $ 4,130 $ 3,805 $ 7,529 $ 6,524
State and local income taxes, net of federal income tax 808 743 1,473 1,275
Change in state income tax accruals 0 1,833 0 1,833
Change in effective state income tax rates and accrual 0 1,399 0 1,369
Income attributable to non-controlling interest 0 (47) 0 (266)
Non deductible expenses 362 (385) (1,075) (213)
Other (444) (820) (390) (116)
Total income tax provision $ 4,856 $ 6,528 $ 9,687 $ 10,406
v3.22.2
Income Taxes - Summary of Reconciliation of Statutory Federal Income Tax Provision to Consolidated Actual Income Tax Provision (Parenthetical) (Detail)
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2022
Income Tax Disclosure [Abstract]    
Statutory Federal income tax provision percentage 21.00% 21.00%
v3.22.2
Stock Options and Restricted Stock - Additional Information (Detail) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 15, 2018
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Dec. 31, 2020
Mar. 01, 2016
Feb. 29, 2016
Jun. 16, 2006
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares available for grant               700,000    
Stock option outstanding   1,081,609 [1] 1,083,712 [1] 1,081,609 [1]   1,111,687 951,669 [1]      
Stock option exercisable   552,381   552,381   320,922        
Unvested shares under restricted common stock plan   529,228 529,593 529,228   790,765        
Intrinsic value of options vested   $ 0   $ 100            
Restricted Stock Units [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares outstanding, unvested restricted stock units   60,391   60,391            
Number of shares outstanding, vested restricted stock units   60,391   60,391            
Restricted Stock Units [Member] | Vest on June 17, 2022 [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares, granted   0   0            
Exercise price for grant per share       $ 8.87            
Restricted Stock Units [Member] | Vest on June 19, 2021 [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares, granted           16,803        
Restricted Shares [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares outstanding, unvested restricted stock units   744,687 [2] 745,270 [2] 744,687 [2]   493,326 [2] 416,140      
Number of shares, vested [3]     (126,234)     (158,994)        
Weighted average fair value of options granted       $ 3.50            
Number of shares, granted     383,925 383,925 163,561 258,120        
Exercise price for grant per share     $ 7.68     $ 7.38        
2018 Equity Incentive Plan [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares available for grant 241,919 5,710,968   5,710,968            
Shares were rolled into the 2018 Plan   3,528,019   3,528,019            
2018 Equity Incentive Plan [Member] | Restricted Stock Units [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares outstanding, unvested restricted stock units   0   0            
2015 Restricted Stock Plan [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Unvested shares under restricted common stock plan   744,687   744,687            
2006 Stock Option Plan [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Issuance of maximum number of shares approved                   800,000
Number of additional shares available for issuance   0   0            
2006 Stock Option Plan [Member] | Maximum [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Share based compensation, options term       10 years            
2015 Director Plan [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares available for grant 258,334               300,000  
2015 Director Plan [Member] | Non Employee Director One [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares available for grant 12,000                  
2015 Director Plan [Member] | Maximum [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Share based compensation, options term 10 years                  
Amended Director Plan [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares available for grant                 200,000  
Number of additional shares available for issuance   0   0            
Amended Director Plan [Member] | Director [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Number of shares available for grant   9,000   9,000            
Amended Director Plan [Member] | Maximum [Member]                    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]                    
Share based compensation, options term         10 years          
[1] The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at June 30, 2022 and the related exercise price of the underlying options, was $0.2 million for outstanding options and $0.1 million for exercisable options as of June 30, 2022. The remaining contractual life was 7.5 years for outstanding options and 7.1 years for exercisable options at June 30, 2022.
[2] The aggregate fair value of the restricted stock was $4.8 million as of June 30, 2022. The remaining vesting period was 2.7 years at June 30, 2022.
[3] The aggregate fair value of the restricted stock vested was $0 and $1.0 million for the three and six months ended June 30, 2022 and was $0 and $0.8 million for the three and six months ended June 30, 2021.
v3.22.2
Stock Options and Restricted Stock - Summary of Assumption Categories Used to Determine Value of Option Grants (Detail)
 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Sharebased Compensation Arrangement By Sharebased Payment Award Stock Options Shares Outstanding Weighted Average Exercise Price And Additional Disclosures [Abstract]    
Risk free interest rate 0.00% 0.97%
Expected dividend yield 0.00% 0.00%
Expected life of option in years [1]   6 years 3 months
Expected volatility [2] 0.00% 53.98%
[1] Expected life is calculated using the simplified method.
[2] We determine our expected volatility based on our historical volatility
v3.22.2
Stock Options and Restricted Stock - Summary of Activity for Stock Option Programs (Detail) - $ / shares
 3 Months Ended 12 Months Ended
Jun. 30, 2022
Mar. 31, 2022
Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Number of options beginning balance 1,083,712 [1] 1,111,687 951,669 [1]
Granted 0 0 317,398
Cancelled (2,103) (4,783) (113,310)
Exercised 0 (23,192) [2] (44,070) [2]
Number of options ending balance 1,081,609 [1] 1,083,712 [1] 1,111,687
Options exercisable 552,381   320,922
Exercise price per share, lower range limit beginning balance $ 2.14 [1] $ 2.14 $ 2.14 [1]
Exercise price per share, upper range limit beginning balance 12.55 [1] 12.55 12.55 [1]
Exercise price per share, granted   0 6.79
Exercise price per share, lower range limit ending balance 2.14 [1] 2.14 [1] 2.14
Exercise price per share, upper range limit ending balance 12.55 [1] 12.55 [1] 12.55
Exercise price per share, option exercisable lower range limit 2.14   2.14
Exercise price per share, option exercisable upper range limit 12.55   12.55
Weighted average exercise price, beginning balance 6.53 [1] 6.41 6.41 [1]
Weighted average exercise price, granted   0 6.79
Weighted average exercise price, cancelled 6.37 5.69 6.64
Weighted average exercise price, exercised [2]   6.53 5.58
Weighted average exercise price, ending balance 6.53 [1] 6.53 [1] 6.41
Weighted average exercise price, options exercisable 6.54   6.53
Minimum [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Exercise price per share, cancelled 4.89 4.89 4.89
Exercise price per share, exercised [2]   4.89 5.21
Maximum [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Exercise price per share, cancelled $ 7.25 7.25 11.53
Exercise price per share, exercised [2]   $ 7.25 $ 7.25
[1] The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at June 30, 2022 and the related exercise price of the underlying options, was $0.2 million for outstanding options and $0.1 million for exercisable options as of June 30, 2022. The remaining contractual life was 7.5 years for outstanding options and 7.1 years for exercisable options at June 30, 2022.
[2] The aggregate intrinsic value, which represents the difference between the price of the Company’s common stock at the exercise date and the related exercise price of the underlying options, was $0 and less than $0.1 million for the three and six months ended June 30, 2022 and was $0.2 million for the year ended December 31, 2021.
v3.22.2
Stock Options and Restricted Stock - Summary of Activity for Stock Option Programs (Parenthetical) (Detail) - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2022
Jun. 30, 2022
Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]      
Aggregate intrinsic value for option exercised $ 0.0 $ 0.1 $ 0.2
Aggregate intrinsic value of option outstanding 0.2 0.2  
Aggregate intrinsic value of option exercisable $ 0.1 $ 0.1  
Remaining contractual life of option outstanding   7 years 6 months  
Remaining contractual life of option exercisable   7 years 1 month 6 days  
v3.22.2
Stock Options and Restricted Stock - Summary of Activity for Restricted Stock Programs (Detail) - $ / shares
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Grant price per share, cancelled, lower limit $ 4.89 $ 4.89      
Grant price per share, cancelled, upper limit $ 7.25 $ 7.25      
Restricted Shares [Member]          
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]          
Number of shares, beginning balance 745,270 [1] 493,326 [1] 493,326 [1] 416,140 416,140
Number of shares, granted   383,925 383,925 163,561 258,120
Number of shares, cancelled (583) (5,747)     (21,940)
Number of shares, vested [2]   (126,234)     (158,994)
Number of shares, ending balance [1] 744,687 745,270 744,687   493,326
Grant price per share, lower range limit beginning balance $ 4.89 [1] $ 4.89 [1] $ 4.89 [1] $ 4.39 $ 4.39
Grant price per share, upper range limit beginning balance 8.40 [1] 8.40 [1] 8.40 [1] 7.25 7.25
Grant price per share, granted, lower limit         6.79
Grant price per share, granted, upper limit   7.68     8.40
Grant price per share, cancelled, lower limit 4.89 4.89     4.89
Grant price per share, cancelled, upper limit 8.40 8.40     7.25
Grant price per share, vested, lower limit [2]   4.89     4.39
Grant price per share, vested, upper limit [2]   7.25     7.25
Grant price per share, lower range limit ending balance [1] 4.89 4.89 4.89   4.89
Grant price per share, upper range limit ending balance [1] 8.40 8.40 8.40   8.40
Weighted average grant price beginning balance 7.34 [1] 6.87 [1] 6.87 [1] $ 6.24 6.24
Weighted average grant price, granted   7.68     7.38
Weighted average grant price, cancelled 7.58 7.33     5.98
Weighted average grant price, vested [2]   6.55     6.16
Weighted average grant price, ending balance [1] $ 7.34 $ 7.34 $ 7.34   $ 6.87
[1] The aggregate fair value of the restricted stock was $4.8 million as of June 30, 2022. The remaining vesting period was 2.7 years at June 30, 2022.
[2] The aggregate fair value of the restricted stock vested was $0 and $1.0 million for the three and six months ended June 30, 2022 and was $0 and $0.8 million for the three and six months ended June 30, 2021.
v3.22.2
Stock Options and Restricted Stock - Summary of Activity for Restricted Stock Programs (Parenthetical) (Detail) - Restricted Shares [Member] - USD ($)
$ in Millions
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Aggregate fair value of restricted stock vested $ 0.0 $ 0.0 $ 1.0 $ 0.8
Aggregate fair value of restricted stock outstanding $ 4.8   $ 4.8  
Remaining vesting period of restricted stock     2 years 8 months 12 days  
v3.22.2
Stock Options and Restricted Stock - Summary of Activity for Unvested Options Outstanding (Detail) - $ / shares
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2022
Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]        
Number of options beginning balance 529,593 790,765 790,765  
Number of options, granted 0 0   317,398
Number of options, cancelled (365) (4,200)    
Number of options, vested   (256,972)    
Number of options ending balance 529,228 529,593 529,228 790,765
Exercise price per share beginning balance, Lower limit $ 4.89 $ 4.89 $ 4.89  
Exercise price per share beginning balance, Upper limit 7.25 7.25 7.25  
Exercise price per share, Cancelled, Lower limit   4.89    
Exercise price per share, Cancelled, Upper limit   7.25    
Exercise price per share, Vested, Lower limit 4.89 4.89    
Exercise price per share, Vested, Upper limit 7.25 7.25    
Exercise price per share ending balance, Lower limit 4.89 4.89 4.89 $ 4.89
Exercise price per share ending balance, Upper limit 7.25 7.25 7.25 7.25
Weighted average exercise price 6.52 6.52 6.52  
Weighted average exercise price, cancelled   5.48    
Weighted average exercise price, vested 5.78 6.55    
Weighted average exercise price $ 6.52 $ 6.52 $ 6.52 $ 6.52
v3.22.2
Segment Reporting - Additional Information (Detail)
 6 Months Ended
Jun. 30, 2022
Segment
Dec. 31, 2021
Segment Reporting Disclosure [Line Items]    
Number of business segments 5  
Number of operating segments 4  
Capital ratios for operating segments 12.7 13.1
Roofs [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 36.00%  
Swimming Pools [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 25.00%  
Windows [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 12.00%  
Solar Panels [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 10.00%  
Other Product Lines [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 10.00%  
Texas [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 16.00%  
Texas [Member] | Home Improvement [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 11.00%  
Florida [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 10.00%  
Florida [Member] | Home Improvement [Member]    
Segment Reporting Disclosure [Line Items]    
Loan outstanding percent 10.00%  
Geographic Concentration Risk [Member] | Sales Revenue Net [Member] | Recreational Vehicles [Member]    
Segment Reporting Disclosure [Line Items]    
Aggregate percentage of loans lending 59.00%  
Geographic Concentration Risk [Member] | Sales Revenue Net [Member] | Boats [Member]    
Segment Reporting Disclosure [Line Items]    
Aggregate percentage of loans lending 20.00%  
Geographic Concentration Risk [Member] | Sales Revenue Net [Member] | Trailers [Member]    
Segment Reporting Disclosure [Line Items]    
Aggregate percentage of loans lending 13.00%  
Geographic Concentration Risk [Member] | Sales Revenue Net [Member] | Midwest [Member]    
Segment Reporting Disclosure [Line Items]    
Aggregate percentage of loans lending 47.00%  
v3.22.2
Segment Reporting - Schedule of Segment Data (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2021
Mar. 31, 2021
Jun. 30, 2022
Jun. 30, 2021
Dec. 31, 2021
Segment Reporting Disclosure [Line Items]              
Total interest income (loss) $ 47,111   $ 37,375   $ 90,414 $ 74,455  
Total interest expense 8,230   7,884   15,605 16,292  
Net interest income (loss) 38,881   29,491   74,809 58,163  
Provision (benefit) for loan losses 7,759   (682)   10,999 2,336  
Net interest income (loss) after loss provision 31,122   30,173   63,810 55,827  
Sponsorship and race winnings 0   4,345   0 6,818  
Race team related expenses 0   (2,674)   0 (4,796)  
Other income (expense), net (11,455)   (13,724)   (27,958) (26,781)  
Income before income taxes 19,667   18,120   35,852 31,068  
Net income (loss) before taxes 19,667   18,120   35,852 31,068  
Income tax (provision) benefit (4,856)   (6,528)   (9,687) (10,406)  
Net income (loss) after taxes/net increase (decrease) on net assets resulting from operations 14,811 $ 11,353 11,592 $ 9,071 26,165 20,662  
Net income (loss) after taxes 14,811       26,165    
Balance Sheet Data              
Total loans, net 1,675,469   1,293,621   1,675,469 1,293,621 $ 1,438,758
total loans net 1,675,469       1,675,469    
Total assets 2,112,131   1,739,747   2,112,131 1,739,747 $ 1,873,057
Total funds borrowed $ 1,696,005   $ 1,382,109   $ 1,696,005 $ 1,382,109  
Selected Financial Ratios              
Return on average assets 2.63%   2.43%   2.37% 2.08%  
Return on average stockholders' equity 18.11%   12.90%   15.93% 11.09%  
Interest yield 11.00%   11.17%   11.04% 11.50%  
Net interest margin 9.07%   8.84%   9.15% 9.01%  
Reserve coverage 3.41%   3.50%   3.41% 3.50%  
Delinquency status 0.25% [1]   0.22% [1]   0.25% [2] 0.22% [1]  
Charge-off (recovery) ratio 0.18% [3]   3.28% [4]   0.26% [4] 2.15%  
RPAC [Member]              
Segment Reporting Disclosure [Line Items]              
Total interest income (loss)     $ 0     $ 0  
Total interest expense     34     75  
Net interest income (loss)     (34)     (75)  
Provision (benefit) for loan losses     0     0  
Net interest income (loss) after loss provision     (34)     (75)  
Sponsorship and race winnings     4,345     6,818  
Race team related expenses     (2,674)     (4,796)  
Other income (expense), net     (1,862)     (3,623)  
Income before income taxes     (225)     (1,676)  
Income tax (provision) benefit     57     421  
Net income (loss) after taxes/net increase (decrease) on net assets resulting from operations     (168)     (1,255)  
Balance Sheet Data              
Total loans, net     0     0  
Total assets     31,877     31,877  
Total funds borrowed     $ 8,016     $ 8,016  
Selected Financial Ratios              
Return on average assets     (1.05%)     (7.72%)  
Return on average stockholders' equity     (39.70%)     (244.87%)  
Operating Segments [Member] | Consumer Lending [Member] | Recreation [Member]              
Segment Reporting Disclosure [Line Items]              
Total interest income (loss) $ 33,514   $ 28,886   $ 64,650 $ 56,328  
Total interest expense 4,096   2,863   7,697 5,657  
Net interest income (loss) 29,418   26,023   56,953 50,671  
Provision (benefit) for loan losses 6,674   1,017   8,354 4,630  
Net interest income (loss) after loss provision 22,744   25,006   48,599 46,041  
Sponsorship and race winnings     0     0  
Race team related expenses     0     0  
Other income (expense), net (7,551)   (7,455)   (14,371) (12,918)  
Income before income taxes 15,193   17,551   34,228 33,123  
Income tax (provision) benefit (3,567)   (4,519)   (9,248) (8,529)  
Net income (loss) after taxes/net increase (decrease) on net assets resulting from operations 11,626   13,032   24,980 24,594  
Balance Sheet Data              
Total loans, net 1,058,898   855,900   1,058,898 855,900  
Total assets 1,072,356   868,709   1,072,356 868,709  
Total funds borrowed $ 861,083   $ 712,777   $ 861,083 $ 712,777  
Selected Financial Ratios              
Return on average assets 4.53%   6.24%   5.04% 6.06%  
Return on average stockholders' equity 25.52%   31.19%   27.27% 30.32%  
Interest yield 13.27%   14.03%   13.29% 14.18%  
Net interest margin 11.65%   12.64%   11.71% 12.76%  
Reserve coverage 3.44%   3.42%   3.44% 3.42%  
Delinquency status 0.36% [1]   0.32% [1]   0.36% [2] 0.32% [1]  
Charge-off (recovery) ratio 0.43% [3]   (0.44%) [4]   0.44% [4] 0.12%  
Operating Segments [Member] | Consumer Lending [Member] | Home Improvement [Member]              
Segment Reporting Disclosure [Line Items]              
Total interest income (loss) $ 10,587   $ 8,228   $ 20,288 $ 16,146  
Total interest expense 1,625   1,143   2,967 2,351  
Net interest income (loss) 8,962   7,085   17,321 13,795  
Provision (benefit) for loan losses 1,697   756   2,902 1,206  
Net interest income (loss) after loss provision 7,265   6,329   14,419 12,589  
Sponsorship and race winnings     0     0  
Race team related expenses     0     0  
Other income (expense), net (3,210)   (2,638)   (6,106) (4,552)  
Income before income taxes 4,055   3,691   8,313 8,037  
Income tax (provision) benefit (975)   (951)   (2,246) (2,070)  
Net income (loss) after taxes/net increase (decrease) on net assets resulting from operations 3,080   2,740   6,067 5,967  
Balance Sheet Data              
Total loans, net 517,044   362,370   517,044 362,370  
Total assets 521,931   375,189   521,931 375,189  
Total funds borrowed $ 419,101   $ 295,887   $ 419,101 $ 295,887  
Selected Financial Ratios              
Return on average assets 2.49%   3.04%   2.56% 3.39%  
Return on average stockholders' equity 14.02%   15.19%   13.87% 16.96%  
Interest yield 8.65%   9.48%   8.72% 9.56%  
Net interest margin 7.33%   8.16%   7.45% 8.17%  
Reserve coverage 1.75%   1.60%   1.75% 1.60%  
Delinquency status 0.07% [1]   0.02% [1]   0.07% [2] 0.02% [1]  
Charge-off (recovery) ratio 0.58% [3]   0.26% [4]   0.62% [4] 0.99%  
Operating Segments [Member] | Commercial Lending [Member]              
Segment Reporting Disclosure [Line Items]              
Total interest income (loss) $ 2,278   $ 1,383   $ 4,208 $ 2,865  
Total interest expense 785   716   1,507 1,288  
Net interest income (loss) 1,493   667   2,701 1,577  
Provision (benefit) for loan losses 1,879   0   3,134 0  
Net interest income (loss) after loss provision (386)   667   (433) 1,577  
Sponsorship and race winnings     0     0  
Race team related expenses     0     0  
Other income (expense), net 3,263   (69)   1,932 (529)  
Income before income taxes 2,877   598   1,499 1,048  
Income tax (provision) benefit (817)   (150)   (405) (263)  
Net income (loss) after taxes/net increase (decrease) on net assets resulting from operations 2,060   448   1,094 785  
Balance Sheet Data              
Total loans, net 94,208   66,236   94,208 66,236  
Total assets 103,643   90,563   103,643 90,563  
Total funds borrowed $ 83,223   $ 72,450   $ 83,223 $ 72,450  
Selected Financial Ratios              
Return on average assets 8.06%   2.36%   2.15% 1.95%  
Return on average stockholders' equity 49.17%   11.78%   12.21% 9.77%  
Interest yield 10.60%   9.16%   10.28% 9.66%  
Net interest margin 6.95%   4.42%   6.60% 5.32%  
Reserve coverage 2.81%   0.00%   2.81% 0.00%  
Delinquency status 0.08% [1]   0.11% [1]   0.08% [2] 0.11% [1]  
Charge-off (recovery) ratio (0.00%) [3]   0.00% [4]   3.75% [4] 0.00%  
Operating Segments [Member] | Medallion Lending [Member]              
Segment Reporting Disclosure [Line Items]              
Total interest income (loss) $ 231   $ (1,475)   $ 377 $ (1,544)  
Total interest expense 140   2,524   293 3,894  
Net interest income (loss) 91   (3,999)   84 (5,438)  
Provision (benefit) for loan losses (2,675)   (2,943)   (3,544) (3,987)  
Net interest income (loss) after loss provision 2,766   (1,056)   3,628 (1,451)  
Sponsorship and race winnings     0     0  
Race team related expenses     0     0  
Other income (expense), net (760)   (1,157)   (1,566) (3,301)  
Income before income taxes 2,006   (2,213)   2,062 (4,752)  
Income tax (provision) benefit (541)   556   (557) 1,193  
Net income (loss) after taxes/net increase (decrease) on net assets resulting from operations 1,465   (1,657)   1,505 (3,559)  
Balance Sheet Data              
Total loans, net 4,726   5,764   4,726 5,764  
Total assets 31,258   101,205   31,258 101,205  
Total funds borrowed $ 25,099   $ 80,959   $ 25,099 $ 80,959  
Selected Financial Ratios              
Return on average assets 17.05%   (6.10%)   5.86% (6.29%)  
Return on average stockholders' equity 95.49%   (30.51%)   30.74% (31.44%)  
Interest yield 19.61%   (70.71%)   16.07% (30.90%)  
Net interest margin 7.78%   (189.15%)   3.58% (108.84%)  
Reserve coverage 66.61%   65.11%   66.61% 65.11%  
Delinquency status 0.00% [1]   0.00% [1]   0.00% [2] 0.00% [1]  
Charge-off (recovery) ratio (232.80%) [3]   513.86% [4]   (153.24%) [4] 216.01%  
Intersegment Eliminations [Member]              
Segment Reporting Disclosure [Line Items]              
Total interest income (loss) $ 501   $ 353   $ 891 $ 660  
Total interest expense 1,584   604   3,141 3,027  
Net interest income (loss) (1,083)   (251)   (2,250) (2,367)  
Provision (benefit) for loan losses 184   488   153 487  
Net interest income (loss) after loss provision (1,267)   (739)   (2,403) (2,854)  
Sponsorship and race winnings     0     0  
Race team related expenses     0     0  
Other income (expense), net (3,197)   (543)   (7,847) (1,858)  
Income before income taxes (4,464)   (1,282)   (10,250) (4,712)  
Income tax (provision) benefit 1,044   (1,521)   2,769 (1,158)  
Net income (loss) after taxes/net increase (decrease) on net assets resulting from operations (3,420)   (2,803)   (7,481) (5,870)  
Balance Sheet Data              
Total loans, net 593   3,351   593 3,351  
Total assets 382,943   272,204   382,943 272,204  
Total funds borrowed $ 307,499   $ 212,020   $ 307,499 $ 212,020  
Selected Financial Ratios              
Return on average assets (3.56%)   (3.85%)   (4.24%) (4.08%)  
Return on average stockholders' equity (20.01%)   (1.95%)   (24.85%) (30.46%)  
[1] Loans 90 days or more past due.
[2] Loans 90 days or more past due.
[3] Negative balances indicate net recoveries for the period.
[4] Negative balances indicate net recoveries for the period.
v3.22.2
Commitments and Contingencies - Additional Information (Detail)
$ in Millions
 6 Months Ended
Jun. 30, 2022
USD ($)
Commitments And Contingencies [Abstract]  
Employment agreements expiration description Employment agreements expire at various dates through 2026
Future minimum payments $ 13.9
Other commitment $ 1.8
v3.22.2
Related Party Transactions - Additional Information (Detail) - Senior Vice President [Member] - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Related Party Transaction [Line Items]    
Salary from related party $ 239,000 $ 195,000
Annual cash bonus 75,000 32,500
Equity bonus $ 45,019 $ 30,000
v3.22.2
Fair Value of Financial Instruments - Summary of Carrying Values and Fair Values of Financial Instruments (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Financial assets    
Equity investments $ 10,942 $ 9,726
Investment securities 50,358 44,772
Loans receivable 1,734,621 1,488,924
Carrying Amount [Member]    
Financial assets    
Cash, cash equivalents and federal funds sold [1] 126,330 124,484
Equity investments 10,942 9,726
Investment securities 50,358 44,772
Loans receivable 1,675,469 1,438,758
Accrued interest receivable [2] 11,534 10,621
Equity securities, fair value [3] 1,796 1,950
Financial liabilities    
Funds borrowed 1,696,005 1,478,001
Accrued interest payable [2] 3,548 3,395
Fair Value Recurring [Member]    
Financial assets    
Cash, cash equivalents and federal funds sold [1] 126,330 124,484
Equity investments 10,942 9,726
Investment securities 50,358 44,772
Loans receivable 1,675,469 1,438,758
Accrued interest receivable [2] 11,534 10,621
Equity securities, fair value [3] 1,796 1,950
Financial liabilities    
Funds borrowed 1,696,005 1,478,001
Accrued interest payable [2] $ 3,548 $ 3,395
[1] Categorized as level 1 within the fair value hierarchy, excluding $1.3 million in interest bearing deposits categorized as level 2 as of June 30, 2022 and December 31, 2021. See Note 13.
[2] Categorized as level 3 within the fair value hierarchy. See Note 13.
[3] Included within other assets on the balance sheet.
v3.22.2
Fair Value of Financial Instruments - Summary of Carrying Values and Fair Values of Financial Instruments (Parenthetical) (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Interest-bearing funds deposited in other banks $ 1,300  
Fair Value Recurring [Member]    
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Interest-bearing funds deposited in other banks 1,250 $ 1,250
Fair Value Recurring [Member] | Level 2 [Member]    
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]    
Interest-bearing funds deposited in other banks $ 1,250 $ 1,250
v3.22.2
Fair Value of Assets and Liabilities - Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Dec. 31, 2021
Assets    
Interest-bearing deposits $ 1,300  
Fair Value Recurring [Member]    
Assets    
Interest-bearing deposits 1,250 $ 1,250
Available for sale investment securities 50,358 44,772
Equity securities, fair value [1] 1,796 1,950
Total 53,404 [2] 47,972 [3]
Fair Value Recurring [Member] | Level 1 [Member]    
Assets    
Equity securities, fair value 1,796 1,950
Total 1,796 [2] 1,950 [3]
Fair Value Recurring [Member] | Level 2 [Member]    
Assets    
Interest-bearing deposits 1,250 1,250
Available for sale investment securities 50,358 44,772
Total $ 51,608 [2] $ 46,022 [3]
[1] Included within other assets on the balance sheet.
[2] Total unrealized losses of $1.4 million and $3.1 million, net of tax, was included in accumulated other comprehensive loss for the three and six months ended June 30, 2022 related to these assets.
[3] Total unrealized losses of $1.0 million, net of tax, was included in accumulated other comprehensive income (loss) for the year ended December 31, 2021 related to these assets.
v3.22.2
Fair Value of Assets and Liabilities - Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Parenthetical) (Detail) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2022
Jun. 30, 2021
Jun. 30, 2022
Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]        
Net change in unrealized losses on investments, net of tax $ 1,400 $ (27) $ 3,100 $ 1,000
v3.22.2
Fair Value of Assets and Liabilities - Summary of Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis (Detail) - USD ($)
$ in Thousands
Jun. 30, 2022
Mar. 31, 2022
Dec. 31, 2021
Jun. 30, 2021
Mar. 31, 2021
Dec. 31, 2020
Assets            
Impaired loans $ 19,700   $ 20,500      
Mortgage Loans in Process of Foreclosure, Amount 26,974 [1] $ 33,834 37,430 [1] $ 49,039 $ 50,733 $ 54,560
Fair Value, Nonrecurring            
Assets            
Equity investments 10,942   9,726      
Impaired loans 33,285   35,571      
Mortgage Loans in Process of Foreclosure, Amount 26,974   37,430      
Total 71,201   82,727      
Fair Value, Nonrecurring | Level 3 [Member]            
Assets            
Equity investments 10,942   9,726      
Impaired loans 33,285   35,571      
Mortgage Loans in Process of Foreclosure, Amount 26,974   37,430      
Total $ 71,201   $ 82,727      
[1] Includes financed sales of this collateral to third parties that are reported separately from the loan portfolio, of $7.7 million as of June 30, 2022 and $7.4 million as of December 31, 2021
v3.22.2
Fair Value of Assets and Liabilities - Summary of Valuation Techniques and Significant Unobservable Inputs Used in Non-Recurring Level 3 Fair Value Measurements of Assets and Liabilities (Detail)
 6 Months Ended 12 Months Ended
Jun. 30, 2022
USD ($)
$ / shares
Dec. 31, 2021
USD ($)
$ / shares
Mar. 31, 2022
USD ($)
Jun. 30, 2021
USD ($)
Mar. 31, 2021
USD ($)
Dec. 31, 2020
USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Principal portion of loans serviced, fair value $ 19,700,000 $ 20,500,000        
Loan collateral in process of foreclosure $ 26,974,000 [1] $ 37,430,000 [1] $ 33,834,000 $ 49,039,000 $ 50,733,000 $ 54,560,000
Equity Investments [Member] | Precedent Market Transactions [Member] | Equity Method Offering Price [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Equity Value | $ / shares $ 8.73 $ 8.73        
Impaired Loans [Member] | Market Approach [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Impaired loans, balance percentage 0.60 0.60        
Impaired Loans [Member] | Market Approach [Member] | Historical and Actual Loss Experience [Member] | Minimum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Impaired loans value 0.0000 0.0150        
Impaired Loans [Member] | Market Approach [Member] | Historical and Actual Loss Experience [Member] | Maximum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Impaired loans value 0.0552 0.0600        
Impaired Loans [Member] | Market Approach [Member] | Measurement Input Transfer Prices [Member] | Minimum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Principal portion of loans serviced, fair value [2] $ 0.0 $ 0.0        
Impaired Loans [Member] | Market Approach [Member] | Measurement Input Transfer Prices [Member] | Maximum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Principal portion of loans serviced, fair value [2] 79,500 79,500        
Loan Collateral in Process of Foreclosure [Member] | Market Approach [Member] | Collateral Value [Member] | Minimum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Loan collateral in process of foreclosure value 1,800 [3] 3,600 [4]        
Loan Collateral in Process of Foreclosure [Member] | Market Approach [Member] | Collateral Value [Member] | Maximum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Loan collateral in process of foreclosure value 34,200 [3] 49,800 [4]        
Loan Collateral in Process of Foreclosure [Member] | Market Approach [Member] | Measurement Input Transfer Prices [Member] | Minimum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Loan collateral in process of foreclosure value 0.0 [5] 0.0 [2]        
Loan Collateral in Process of Foreclosure [Member] | Market Approach [Member] | Measurement Input Transfer Prices [Member] | Maximum [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Loan collateral in process of foreclosure value 79,500 [5] 79,500 [2]        
Level 3 [Member] | Equity Investments [Member] | Investee Financial Analysis [Member] | Measurement Input Financial Condition and Operational Performance [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Equity investments 10,669,000 9,453,000        
Level 3 [Member] | Impaired Loans [Member] | Precedent Market Transactions [Member] | Equity Method Offering Price [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Equity investments 273,000 273,000        
Level 3 [Member] | Impaired Loans [Member] | Market Approach [Member] | Historical and Actual Loss Experience [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Principal portion of loans serviced, fair value 33,285,000 35,571,000        
Level 3 [Member] | Loan Collateral in Process of Foreclosure [Member] | Market Approach [Member] | Measurement Input Transfer Prices [Member]            
Fair Value Measurement Inputs and Valuation Techniques [Line Items]            
Loan collateral in process of foreclosure $ 26,974,000 $ 37,430,000        
[1] Includes financed sales of this collateral to third parties that are reported separately from the loan portfolio, of $7.7 million as of June 30, 2022 and $7.4 million as of December 31, 2021
[2] Represents amount net of liquidation costs.
[3] Relates to the recreation portfolio.
[4] Relates to the recreation portfolio.
[5] Represents amount net of liquidation costs.
v3.22.2
Medallion Bank Preferred Stock (Non-controlling Interest) - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Millions
 6 Months Ended
Dec. 17, 2019
Jul. 21, 2011
Jun. 30, 2022
Capital Purchase Program [Member]      
Changes In Equity And Comprehensive Income Line Items [Line Items]      
Preferred stock, liquidation preference per share     $ 1,000
U.S. Treasury Securities [Member] | Capital Purchase Program [Member]      
Changes In Equity And Comprehensive Income Line Items [Line Items]      
US Treasury shares purchased   26,303  
Series F Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock [Member]      
Changes In Equity And Comprehensive Income Line Items [Line Items]      
Initial public offering shares 1,840,000    
Preferred stock, aggregate liquidation amount $ 46.0    
Preferred stock, net of liquidation amount $ 42.5    
Percentage of dividend payment rate 8.00%    
Series F Fixed-to-Floating Rate Non-cumulative Perpetual Preferred Stock [Member] | SOFR [Member]      
Changes In Equity And Comprehensive Income Line Items [Line Items]      
Percentage of liquidation rate basis 6.46%    
Dividend description of variable rate basis three-month Secured Overnight Financing Rate, or SOFR    
Series E Senior Non-Cumulative Perpetual Preferred Stock [Member] | Capital Purchase Program [Member]      
Changes In Equity And Comprehensive Income Line Items [Line Items]      
Percentage of dividend payment rate     9.00%
Aggregate purchase price   $ 26.3  
v3.22.2
Variable Interest Entities - Additional Information (Detail) - USD ($)
$ in Thousands
Feb. 28, 2021
Jul. 31, 2020
Jun. 30, 2022
Dec. 31, 2021
Variable Interest Entity [Line Items]        
Equity investments     $ 10,942 $ 9,726
Maturity date Feb. 28, 2026 Sep. 24, 2024