Medallion Financial Corp.

Good morning, and welcome to the Medallion Financial Corporation fourth quarter and full year 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I'd now like to turn the conference over to Ken Cooper of Investor Relations. Please go ahead.

Thank you and good morning, everyone. Welcome to Medallion Financial Corp's fourth quarter and full year earnings call. Joining me today are Andrew Merstein, President and Chief Operating Officer, and Anthony Catrone, Executive Vice President and Chief Financial Officer. Certain statements made during the call today constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued yesterday and in our filings with the SEC. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements. In addition to our earnings press release, you can find our fourth quarter supplement presentation on our website by visiting medallion.com and clicking investor relations. The presentation is near the top of the page. With that, I'll turn it over to Andrew Burstein, president.

Thank you, Ken. Good morning, everyone. With a tremendous team effort throughout our entire organization, Medallion Financial had an exceptional year with total earnings and earnings per share the highest in our history. We grew loans within our largest and most established business, the recreational lending segment, by 13% to $1.3 billion. We did this while increasing the average interest rate on the portfolio, which was 51 basis points higher at the end of the year compared to last year, and helped to cover some of the cost of funds increases we saw this year. We grew the segment while maintaining tighter credit standards and a sharp focus on the type of assets we lend against, which are generally smaller dollar assets such as towable RVs and small boats. These assets have not had the volatility that catches the headlines like large cruiser RVs and larger scale boats and yachts. The average loan size in our portfolio stayed roughly at just over $19,000. Our home improvement segment continues to be the fastest growing part of our business. As expected, the growth rate slowed in 2023 as we were another year removed from the unprecedented spike in pandemic-driven home remodel activity. However, with growth of 21% for this segment, there continues to be a steady flow of projects, especially for the smaller roofing, windows, or swimming pool projects that we are known for. Like our recreational segment, we maintain tighter credit standards and a consistent average loan size in our portfolio of approximately $20,000. Nearly this entire segment is made up of prime customers with an average FICO score of over 760. Our commercial lending segment also had a very strong year. We grew the loan portfolio 24% to $115 million with our average interest rate up 64 basis points at 12.87%. With a range of typical loan size generally around 3 million to 6 million, our goal is to continue to grow this segment prudently over time. The segment generated after-tax earnings of approximately 6.8 million during the year. Finally, our taxi medallion segment collected 45 million of cash during the year, $16.2 million of this coming in the fourth quarter. The majority of the cash generated from taxi Medallion collections was in Medallion Bank and was reinvested into consumer lending businesses. We continue to mention that these settlements are unpredictable, and we expect our collection activity to decrease in 2024. One item to note as a reminder, we adopted CECL at the beginning of the year, which now requires a larger allowance for credit loss to be booked upfront when loans are originated. This increased our provision this year. In addition, our current loss rates are more closely aligned with our historical trends and are consistent with what we have been indicating they would be as we come out of the low credit loss environment experienced during and after the pandemic. Even with the adoption of CECL and normalization of our loss rates, our strong execution across our entire company led to $0.60 of diluted earnings per share in the quarter and $2.37 for the year, which was an all-time high for us. Our strategy continues to be grow net interest income. We are doing this with smart loan growth and by offsetting elevated cost of funds with our own rate increases where possible. We expect that as we proceed through 2024, we will maintain our focus on high credit standards and using pricing to our advantage. We anticipate loan growth to continue to moderate from the levels we saw in 2022 and for us to maintain a conservative approach on credit and growth. Finally, during the fourth quarter, our board authorized a 25% increase in our quarterly dividend from $0.08 to $0.10 per share. which began with our last declared dividend. We feel great about what we have accomplished over the past three years and how we are positioned for the future success. With that, I will now turn the call over to Anthony, who will provide some additional insight into our quarter.