NEW YORK, Mar 4, 2003 /PRNewswire-FirstCall via COMTEX/ -- Medallion Financial Corp. (Nasdaq: TAXI), a specialty finance company with a leading position in servicing the taxi industry and small business commercial lending, and owner of the largest taxi top advertising company in the world, announced 2002 fourth quarter earnings of $188,171 or $0.01 per share, compared to a loss of $8,383,740 or $0.46 per share in the previous quarter. Net investment income was $0.01 per share, compared to a loss of $0.36 in the previous quarter.
Andrew Murstein, President of Medallion stated, "While we are unsatisfied with our full year numbers, we are very pleased to have regained profitability in the fourth quarter. We faced a difficult first nine months in 2002, primarily due to a prohibitive cost of funds, including one-time costs of debt extinguishment. With the closing of our new $250,000,000 Merrill Lynch credit facility in September, our margins improved gradually, and our fourth quarter was a start in that direction."
Mr. Murstein continued, "Credit quality remains strong. Non accrual loans and delinquencies in our medallion and commercial portfolios decreased substantially. Our non accrual loans dropped by almost $9,000,000 or 26% and our total delinquencies dropped by $28,000,000 or 32% from the third quarter of 2002 to the fourth quarter. Financial institutions sometimes have their delinquencies masked while they are growing their portfolios, but the picture becomes clearer when their portfolios stabilize or decline. When our balance sheet portfolio reduced, it became clear how strong our portfolio really is."
Mr. Murstein continued, "Taxicab medallion prices, which have historically risen during weak economic conditions, have performed very well. Over the last 18 months, Medallion prices have risen over 25%, partly because of low interest rates, a lot of manpower available to drive cabs, and corporate cutbacks on limousines and car services."
Total assets under Medallion Financial's management were approximately $647 million. This reflects the sales and participation of loans that Medallion originates to other banks that seek high quality loans, and who pay servicing fees to Medallion.
"During 2002, we experienced a charge of $9.4 million relating to additional interest and related costs on the partial early retirement of our Bank credit facility and Senior Note debt in 2002. This debt carried a higher cost of funds than our new Merrill Lynch credit facility," Mr. Murstein commented. "The current lower cost of funds, coupled with continued strong yields on our portfolio, have allowed Medallion to increase our net investment margin. The yield on the portfolios from the third quarter to the fourth quarter increased from 7.93% to 8.07% while the cost of funds declined from 5.00% to 4.67%. Taken together, our spreads thus increased 47 basis points from 2.93% to 3.40%, reflecting the lower costs of the Merrill Lynch line of credit. Our spreads show an increase due in part to an emphasis on improved yields in our niche markets that banks are not focused on."
James E. Jack, Medallion's Executive Vice President and Chief Financial Officer stated, "Management has done a very effective job in several areas. In what was a most challenging re-financing market, we were able to pay down our Bank and Senior Note debt from a high of $375,000,000 in 2001, to approximately $50,000,000 as of year-end. We just paid down an additional $21,007,000 on February 27th, leaving just $29,326,000 of Bank and Senior Note debt. We were not only able to pay this down, but we obtained better terms and lower pricing from our new Merrill Lynch credit facility. We also have significant cash on hand. Our capital ratio now stands at 38%, and our debt to equity ratio is just 1.6 to 1, which is the lowest it has been since we went public and one of the lowest of any financial institution in the U.S. We believe Medallion's strong balance sheet, improved liquidity, and lower funding costs will allow us to execute our growth strategy during 2003."
Larry Hall, Chief Accounting Officer stated, "We have been able to attract a lot of talented and experienced people over the past several years, and our investment in information technology has also paid off. In addition, we recently brought on Michael C. Carroll as Vice President and General Counsel to minimize our use of outside professionals and achieve greater efficiencies in our professional dealings. Mr. Carroll, formerly of the New York law firm Willkie Farr & Gallagher, further strengthens the experienced management team we have built over the last few years. We are positioned to add substantial growth to our existing infrastructure with no additional overhead costs, resulting in a significant incremental impact to earnings. We currently have more than $100,000,000 of unused credit lines with Merrill Lynch and $24,000,000 of unused commitments and availability with the U.S. Small Business Administration."
Medallion is also proud to announce that former Connecticut Governor and three-term United States Senator Lowell P. Weicker, Jr. has joined our Board of Directors. Senator Weicker has long been viewed as one of the most independent individuals in the history of U.S. politics. After graduation from Yale University and then entering the political arena, Senator Weicker, serving as a Republican, played an instrumental role in the Watergate investigation of President Richard Nixon. Later in his career, after disagreeing with certain of the Republican Party's policies, he ran as an Independent in the 1991 Connecticut Governor's race, and won. Mr. Murstein commented, "We could not be more pleased to have as a Board Member someone as distinguished as Senator Weicker. In addition to bringing a fresh approach and having possibly one of the most independent minds around, the Senator serves on numerous corporate Boards, including U.S.T. and a specialty finance company. Along with former New York Governor Mario Cuomo, another Medallion Board Member, he brings an extraordinary working knowledge of the business world, and great insight into the regulatory and governmental landscape." |
