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Medallion Financial Corp's Q3 2017 Guidance On NYC Taxi Medallion Values

|About: Medallion Financial (MFIN)
Summary

MFIN reduced its net NYC taxi medallion marks to $359,000

MFIN did not put all taxi medallion loans on non-accrual status

Note: This piece is focused narrowly on NYC taxi medallions

On its Q3 2017 quarterly earnings conference call held on November 8, 2017, and in its quarterly 10-Q filed on November 9, MFIN discussed New York City taxi medallion prices.  MFIN's aggregate managed (MFIN consolidated subsidiaries plus Medallion Bank) taxi medallion loan book totals 9% of the aggregate value of all NYC taxi medallions.

As of September 30, 2017 MFIN reduced its valuation per NYC taxi medallion from $411,000 net of liquidation costs ($424,000 gross) as of June 30, 2017 to $359,000 net of liquidation costs ($370,000 gross) as of September 30, 2017.

On the Q3 conference call, in the Q&A, President Murstein stated that "although we provided financing to help complete the deal, we took it as a positive that we sold seven repossessed medallions last month for $450 thousand to a high net worth borrower".

Unlike many peer banks that put their entire taxi medallion loan portfolio on non-accrual status, MFIN did not.  In contrast, MFIN continued to take a case-by-case approach.  On page 10 of its 10-Q, MFIN states: "Taxicab 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."

As of September 30, 2017, MFIN and consolidated subsidiaries' total nonaccrual loans represented 36% of their gross medallion and commercial loan portfolio (page 10 of 10-Q).  At Medallion Bank, on the same date, 15% of medallion loans were on nonaccrual (page 19 of 10-Q).

Disclosure: I have no position in MFIN common stock.  I am short MFINL bonds.

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