Medallion Financial Q2 net income falls on lower equity investment gains

Overview

• US specialty lender's Q2 net income and EPS fell yr/yr on lower equity investment gains

• Net interest income grew 7% yr/yr; total assets exceeded $3 bln for first time

• Company repurchased 779,799 shares for $7.7 mln during Q2

Outlook

• Company expects continued profitable growth supported by disciplined underwriting and expanding partnerships

• Company says demand remains healthy in recreation and home improvement lending businesses

• Company sees recent loan originations providing visibility into future portfolio and earnings growth

Result Drivers

• LOAN ORIGINATION GROWTH - Co said Q2 loan originations rose 63% yr/yr, driven by recreation, home improvement, and strategic partnership lending

• LOWER EQUITY INVESTMENT GAINS - Net income declined yr/yr due to a much smaller gain on equity investments compared to the prior year

• HIGHER CREDIT LOSS PROVISIONS - Credit loss provision increased as loan portfolio expanded, reflecting up front reserve requirements for new originations

Company press release: ID:nGNX29bn1X

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 1 "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the banks peer group is "buy"

• Wall Street's median 12-month price target for Medallion Financial Corp is $10.50, about 5.8% above its July 28 closing price of $9.92

• The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 6 three months ago

Reuters Recommended Reads

• July 29 - SoFi's unchanged profit forecast tempers record quarter, revenue outlook lift

• July 27 - Happen Q2 EPS rises 52% as loan originations grow

• July 27 - Principal Financial profit rises on higher premiums, strength in retirement business

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)