Medallion Financial Corp.

Good day, and welcome to the Medallion Financial Corporation first quarter earnings conference call. Today, all participants will be in a listen-only mode. Should you need assistance during today's call, please signal for 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 your telephone keypad. To withdraw your question, please press star, then two. Please note that today's event is being recorded. I would now like to turn the conference over to Ken Cooper with Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. Welcome to Medallion Financial Corp's first quarter 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 first 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 Merstein, President.

Thank you, Ken. Good morning, everyone. Coming off a record-breaking 2023, we had a nice start to 2024. This included growing our loan portfolio on strong bottom-line performance. Our recreational lending segment had a standout quarter and is now at $1.4 billion. Originations were up 4% versus the prior year quarter. We continue to originate new loans at elevated interest rates as compared to prior years, and the segment's average interest rate was up 38 basis points to 14.80% at quarter end. The average loan size in our portfolio stayed at roughly $20,000. Our allowance for credit loss level of 4.40% was up from 4.12% a year ago. Our other major consumer lending business, the home improvement lending segment, grew approximately 12% over the prior year quarter to $752 million. This growth rate came down from the last year or so as origination activity slowed due to credit tightening. This segment continues to be focused on super prime borrowers with credit scores in the mid to upper 700s, which keeps our delinquency and loss levels low. Our average interest rate for the home improvement lending segment was 9.60% of quarter end, with a 77 basis points of increase from a year ago, reflecting our ability to pass on some of the Fed rate increases to our borrowers, just like we have done in the REC lending segment. Our allowance for credit loss level of 2.38% was up slightly from the 2.19% a year ago. Our commercial lending segment had a strong quarter and included an equity investment exit, which resulted in a $4.2 million net gain. The loan portfolio is up 12% to $106 million, with our average interest rate up 58 basis points to 13.0%. Our goal is to grow this segment prudently over time, and although exits can be unpredictable, they are key elements of the return on the business. The segment generated after-tax earnings of $3.6 million during the quarter. Finally, our taxi medallion segment collected $3.1 million in the first quarter. As we indicated on our call last quarter, we expect a sizable slowdown in cash collections related to taxi medallion assets on our first quarter unfolded as expected. During the quarter, cash collections translated into $1.6 million of net benefits to the income statement, and the segment continued to be profitable, generating after-tax net income of approximately $600,000. Our strategy continues to be to increase net interest income through smart loan growth with pricing that is optimal given the markets and competitive pressures we face. We expect to maintain high credit standards and use pricing to our advantage. We anticipate loan growth to continue to moderate, similar to 2023, from the levels we saw in 2022. Finally, during the first quarter, we used some of our excess cash to buy back $2.1 million of our common stock. Our authorized share buyback plan has $17.9 million remaining of the $40 million approved. And going forward, you should expect us to use it opportunistically rather than on any regular cadence. Our share buyback activity, together with our $0.10 per quarter dividend and net income performance, continues to deliver positive results for our shareholders. With that, I will now turn the call over to Anthony, who will provide some additional insight into our quarter.