Medallion Financial (NASDAQ:MFIN) reported record quarterly originations in its home improvement and recreation lending businesses during the second quarter of 2026, driving sequential loan growth of 7% and pushing total assets above $3 billion, executives said on the company’s earnings call.
President and Chief Executive Officer Andrew Murstein said home improvement originations reached $128.6 million, more than double the level recorded in the prior-year quarter and the highest quarterly total in the company’s history for that segment. Recreation originations rose 60% year over year to a record $228.5 million.
Income Growth Accompanied by Higher Credit Provisioning
Net interest income increased 7% year over year to a quarterly record of $57.2 million, supported by growth in the loan portfolio. Net interest margin was 7.94%, down 15 basis points from the year-earlier quarter and six basis points from the first quarter.
Chief Financial Officer Anthony Cutrone said loan yields averaged 12.28% during the quarter, while the average cost of borrowings rose to 4.32% from 4.20% a year earlier. The average cost of deposits at Medallion Bank was 3.96%, compared with 3.84% in the prior-year period.
The provision for credit losses was $22.3 million, slightly below the first-quarter level of $22.5 million but above $21.6 million a year earlier. The current-quarter provision included about $6.5 million in day-one provisioning associated with newly originated loans, versus roughly $2.5 million in the first quarter and a $400,000 benefit in the prior-year quarter.
Cutrone said the additional day-one provisioning reduced quarterly earnings by about $0.18 per share. He said the company views the associated expense as part of supporting loan growth, particularly in recreation lending.
Net charge-offs in the recreation portfolio totaled $13.3 million, or 3.14% of average loans, compared with 3.11% in the comparable 2025 quarter. Home improvement net charge-offs were $2.9 million, or 1.37% of average loans, improving from 1.87% a year earlier.
Management said it was encouraged by the improvement in home improvement credit performance. Recreation charge-offs remained elevated but were not increasing, Cutrone said, adding that pricing changes discussed in the prior quarter are expected to support improved charge-off-adjusted net interest margin over time.
Profit Declines as Expenses Rise
Net income attributable to shareholders was $7.4 million, or $0.31 per diluted share, compared with $11.1 million, or $0.46 per diluted share, in the prior-year quarter. Cutrone said the year-earlier result included $5.9 million more in gains on equity investments than the current quarter, while the current period carried higher growth-related credit provisions.
Operating expenses rose to $25 million from $21.5 million a year earlier, reflecting higher employee and servicing costs tied to loan growth, as well as elevated professional fees related to the company’s proxy process. Management said it expects operating costs to rise as the platform expands, though it expects net interest income growth to outpace expense growth over the long term.
Book value per share was $17.62 at June 30, compared with $17.66 a year earlier. Tangible book value per share rose to $12.17 from $11.32.
Origination Strategy and Platform Investments
During the question-and-answer session, Murstein said current origination volumes are sustainable, though home improvement and recreation lending are subject to seasonal patterns and the second and third quarters tend to be stronger.
Medallion Bank President and CEO Justin Haley said recreation growth reflected changes to pricing and program delivery designed to improve the company’s competitiveness with existing relationships. In home improvement, Haley cited new personnel, including hires from EnerBank and Regions, increased active contractors from 700 to 800, and efforts to expand contractor acquisition through marketing.
Haley said Medallion Bank is investing in talent across technology, analytics, credit analytics, collections and recovery. The company also plans to replace its loan origination system in the first quarter of 2027, ahead of its busy season. Management said the system replacement is intended to support new credit-scoring models and the incorporation of alternative data into underwriting.
Management reiterated its expectation for mid-teens loan growth for the full year, while noting that activity typically slows later in the third quarter, particularly in recreation lending.
Loan Sales, Partnerships and Capital Allocation
The company sold about $50 million of recreation loans during the quarter, according to Haley. He said demand for the loans was strong and that Medallion expects to make periodic sales to manage capital as originations grow. Cutrone said the sale did not prevent recreation loans from growing 5% during the quarter.
Medallion added a fifth strategic partnership-program partner during the quarter. The program generated $247.1 million of loan originations and more than $1.1 million in fee income. Murstein said the company is working through a pipeline of prospective partners and expects to add partners over time through a measured approach.
The commercial lending portfolio grew 5% during the quarter to $126 million, after the company originated two loans totaling $7.1 million. The portfolio’s weighted average coupon was 14.37%.
The board approved a quarterly dividend of $0.14 per share, a 16.7% increase from the prior quarter. The company also repurchased nearly 780,000 shares during the period. Murstein said Medallion had about $6 million remaining under its existing $ൂറ40 million repurchase authorization and expects it could be completed within six months, depending on the share price.
Murstein also said the company relocated to a smaller New York office, reducing space by roughly half. He estimated annual occupancy savings of about $500,000 and approximately $5 million in savings over the term of the new lease.
About Medallion Financial (NASDAQ:MFIN)
Medallion Financial Corporation is a specialty finance company that provides asset-based lending solutions to small and mid-sized businesses in the United States. The company’s core business activities include secured loans collateralized by business assets such as insurance premiums, commercial real estate, maritime assets and portfolio receivables. Through its insurance premium finance division, Medallion offers short-term loans that allow policyholders to spread insurance costs over multiple payments, while its portfolio financing arm provides funding against a borrower’s existing asset portfolios.
Founded in 1998 and headquartered in Minneapolis, Minnesota, Medallion Financial originally established itself in the taxi medallion lending market, extending loans secured by New York City cab medallions.
