MEDALLION FINANCIAL CORP

Previous wording

The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the three months ended March 31, 2025 and the year ended December 31, 2024. This section is intended to provide management’s perspective of our financial condition and results of operations. In addition, this section contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are described in the Risk Factors section in our Annual Report on Form 10-K.

Current wording

The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the three and six months ended June 30, 2025 and the year ended December 31, 2024. This section is intended to provide management’s perspective of our financial condition and results of operations. In addition, this section contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are described in the Risk Factors section in our Annual Report on Form 10-K.

Previous wording

We are a specialty finance company whose focus and growth has been our consumer finance and commercial lending businesses operated by Medallion Bank, or the Bank, and Medallion Capital, Inc., or Medallion Capital. The Bank is a wholly-owned subsidiary that originates consumer loans for the purchase of recreational vehicles, boats, collector cars, and home improvements, and provides loan origination and other services to fintech partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of March 31, 2025, our consumer loans represented 95% of our gross loan portfolio, inclusive of loans held for sale, and commercial loans represented 5%. Total assets were $2.85 billion and $2.87 billion as of March 31, 2025 and December 31, 2024.

Current wording

We are a specialty finance company whose focus and growth has been our consumer finance and commercial lending businesses operated by Medallion Bank, or the Bank, and Medallion Capital, Inc., or Medallion Capital. The Bank is a wholly-owned subsidiary that originates consumer loans for the purchase of recreational vehicles, boats, collector cars, and home improvements, and provides loan origination and other services to fintech partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of June 30, 2025, our consumer loans represented 95% of our gross loan portfolio, inclusive of loans held for sale, and commercial loans represented 5%. Total assets were $2.88 billion and $2.87 billion as of June 30, 2025 and December 31, 2024.

Previous wording

Net interest income is also affected by economic, regulatory, and competitive factors that influence interest rates, loan demand, and the availability of funding to finance our lending activities. We, like other financial institutions, are subject to interest rate risk to the degree that our interest-earning assets reprice, either due to inflation or other factors, on a different basis than our interest-bearing liabilities. We continue to monitor global supply chain disruptions, the impact of tariffs, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation, the risk of recession and economic health, as well as other factors which contribute to competition and changes in the demand for our loan products. We have been, and continue to take, steps in the event of a potential economic downturn and in light of the current uncertainties and inflationary environment to moderate the pace of our recent growth.

Current wording

Net interest income is also affected by economic, regulatory, and competitive factors that influence interest rates, loan demand, and the availability of funding to finance our lending activities. We, like other financial institutions, are subject to interest rate risk to the degree that our interest-earning assets reprice, either due to inflation or other factors, on a different basis than our interest-bearing liabilities. We continue to monitor global supply chain disruptions, the impact of tariffs, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation, the risk of recession and economic health, as well as other factors which contribute to competition and changes in the demand for our loan products. We have been, and continue to, seek borrowers with strong credit ratings and moderate the pace of our recent growth in the event of a potential economic downturn and in light of the current uncertainties and inflationary environment.

Previous wording

For the three months ended March 31, 2025, our total loans yielded 12.04%, as compared to 11.84% for the three months ended March 31, 2024. The 20 basis point increase reflects a higher yield on our loan portfolios, as we have increased the rates charged on new consumer originations over the past year as prevailing market interest rates have remained high. We have continued to use the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, as well as seek to increase the credit quality of our new issuances, particularly in our recreation segment, with the weighted average FICO scores, measured at origination, of our outstanding recreation loans being 685 (683 exclusive of loans held for sale) as of March 31, 2025 compared to 684 as of March 31, 2024. We use weighted average FICO scores as an indicator of portfolio risk.

Current wording

For the three months ended June 30, 2025, our total loans yielded 12.27%, as compared to 11.98% for the three months ended June 30, 2024. The 29 basis point increase reflects a higher yield on our loan portfolios, as we have increased the rates charged on new consumer originations over the past year as prevailing market interest rates have remained high. Similarly, for the six months ended June 30, 2025, our total loans yielded 12.16%, as compared to 11.89% for the six months ended June 30, 2024.We have continued to use the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, as well as seek to increase the credit quality of our new issuances, particularly in our recreation segment, with the weighted average FICO scores, measured at origination, of our outstanding recreation loans being 685 (684 exclusive of loans held for sale) as of June 30, 2025, consistent with outstanding recreation loans as of June 30, 2024. We use weighted average FICO scores as an indicator of portfolio risk.

Previous wording

Our debt, with certificates of deposits being our largest source, funds our growing lending business. Our average interest cost for the three months ended March 31, 2025 of 4.16% increased 49 basis points from the three months ended March 31, 2024, attributable to the current higher interest rate environment, particularly the higher cost associated with our deposits. To the extent that prevailing market interest rates remain at current levels, we expect our cost of funds to continue to increase as we issue new certificates of deposit to replace maturing certificates of deposit and fund our growth. During the three months ended March 31, 2025, we issued deposits at rates up to 4.45% and 4.33% for three and five year certificates of deposit, with the most recent three and five year issuances being at rates of 4.15%. As described above, we have taken, and continue to take, steps to pass along a portion of the interest rate increases on newly originated loans, the process for which is slower than the pace of funding cost increases, thereby compressing our net interest margins.

Current wording

Our debt, with certificates of deposits being our largest source, funds our growing lending business. Our average interest cost for the three and six months ended June 30, 2025 of 4.20% and 4.19% increased 38 and 44 basis points from the three and six months ended June 30, 2024, attributable to the current higher interest rate environment, particularly the higher cost associated with our deposits. To the extent that prevailing market interest rates remain at current levels, we expect our cost of funds to continue to increase as we issue new certificates of deposit to replace maturing certificates of deposit and fund our growth. During the three months ended June 30, 2025, we issued deposits at rates up to 4.23% and 4.28% for three and five year certificates of deposit. As described above, we have taken, and continue to take, steps to pass along a portion of the interest rate increases on newly originated loans, the process for which is slower than the pace of funding cost increases, thereby compressing our net interest margins.

Previous wording

During the three months ended March 31, 2025, the increase in interest income was mainly driven by the increase in the size of the consumer loan portfolios, as well as an increase in overall yield on interest-earning assets as we issue new loans at interest rates greater than the weighted average rates of our current portfolio. The increase in interest expense was driven by an increase in borrowing costs, primarily due to the increases in deposits as older deposits mature and are replaced at current market rates, as well as an overall increase in borrowings.

Current wording

During the three and six months ended June 30, 2025, the increase in interest income over the prior year periods was mainly driven by the increase in the size of the consumer loan portfolios, as well as an increase in overall yield on interest-earning assets as we issue new loans at interest rates greater than the weighted average rates of our current portfolio. The increase in interest expense was driven by an increase in borrowing costs, primarily due to the increases in deposits as older deposits mature and are replaced at current market rates, as well as an overall increase in borrowings.

Previous wording

Our interest expense is driven by the interest rates payable on our bank certificates of deposit, privately placed notes, fixed-rate, long-term debentures issued to the SBA, trust preferred securities, and has historically included credit facilities with banks and other short-term notes payable. The Bank issues brokered time certificates of deposit, which are, on average, our lowest borrowing costs. The Bank is able to bid on these deposits at a variety of maturity options, which allows for more flexible interest rate management strategies. In September 2023, we issued and sold $39.0 million aggregate principal amount of 9.25% senior notes due in September 2028, in June 2024, we amended our senior notes previously issued in December 2023, increasing the aggregate principal amount from $12.5 million to $17.5 million, reducing the interest rate to 8.875% from 9.0%, and extending the maturity date from December 2033 to June 2039, and in August 2024, we issued and sold $5.0 million aggregate principal amount of 8.625% senior notes due in August 2039. The net proceeds were used, in large part, to repurchase and settle, in full, $36.0 million aggregate principal amount of our 8.25% senior notes issued in 2019 and which matured in March 2024, as well as for general corporate purposes.

Current wording

Our interest expense is driven by the interest rates payable on our bank certificates of deposit, privately placed notes, fixed-rate, long-term debentures issued to the SBA, trust preferred securities, and has historically included credit facilities with banks and other short-term notes payable. The Bank issues brokered time certificates of deposit, which are, on average, our lowest borrowing costs. The Bank is able to bid on these deposits at a variety of maturity options, which allows for more flexible interest rate management strategies. In June 2024, we amended our senior notes previously issued in December 2023, increasing the aggregate principal amount from $12.5 million to $17.5 million, reducing the interest rate to 8.875% from 9.0%, and extending the maturity date from December 2033 to June 2039, and in August 2024, we issued and sold $5.0 million aggregate principal amount of 8.625% senior notes due in August 2039. The net proceeds were used, in large part, to repurchase and settle, in full, $36.0 million aggregate principal amount of our 8.25% senior notes issued in 2019 and which matured in March 2024, as well as for general corporate purposes.

Previous wording

We measure our borrowing costs as our aggregate interest expense for all of our interest-bearing liabilities divided by the average amount of such liabilities outstanding during the period. The above table presents the average borrowings and related borrowing costs for the three months ended March 31, 2025 and 2024. We expect our borrowing costs to further increase as we take deposits and borrow other funds at the currently higher prevailing rates.

Current wording

We measure our borrowing costs as our aggregate interest expense for all of our interest-bearing liabilities divided by the average amount of such liabilities outstanding during the period. The above tables present the average borrowings and related borrowing costs for the three and six months ended June 30, 2025 and 2024. We expect our borrowing costs to further increase as we take deposits and borrow other funds at the currently higher prevailing rates.

Previous wording

We continue to seek SBA funding through Medallion Capital to the extent it offers attractive rates. SBA financing subjects recipients to limits on the amount of secured bank debt they may incur. We use SBA funding to fund loans that qualify under the Small Business Investment Act of 1985, as amended, or the SBIA, and SBA regulations. In July 2023, we obtained a $20.0 million commitment from the SBA, all of which has been utilized as of March 31, 2025. In February 2024, we obtained an $18.5 million commitment from the SBA, with $10.3 million currently drawable, and the balance of $8.2 million drawable upon the infusion of $4.1 million of capital.

Current wording

We continue to seek SBA funding through Medallion Capital to the extent it offers attractive rates. SBA financing subjects recipients to limits on the amount of secured bank debt they may incur. We use SBA funding to fund loans that qualify under the Small Business Investment Act of 1985, as amended, or the SBIA, and SBA regulations. In February 2024, we obtained an $18.5 million commitment from the SBA, with $10.3 million currently drawable.

Previous wording

Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three months ended March 31, 2025, there was continued growth in the recreation and home improvement lending segments as compared to the prior year quarter. The tables below present the activity of the loan portfolio, inclusive of loans held for sale and loans held for investment.

Current wording

Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three and six months ended June 30, 2025, there was continued growth in the recreation segment, but a decline in the home improvement lending segment, as compared to the prior year quarter. The tables below present the activity of the loan portfolio, inclusive of loans held for sale and loans held for investment.

Previous wording

The following table presents the approximate maturities and sensitivity to change in interest rates for our loans as of March 31, 2025.

Current wording

The following table presents the maturities and sensitivity to change in interest rates for our loans as of June 30, 2025.

Previous wording

The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of March 31, 2025 and December 31, 2024, the allowance totaled $100.4 million and $97.4 million, which represented 4.25% and 4.12% of total loans held for investment, respectively. The increase in allowance for credit losses were $22.0 million for the three months ended March 31, 2025 compared to $17.2 million for the three months ended March 31, 2024 as a result of rising loss rates, elevated delinquencies, and expected losses in our recreation loans, partially offset by a decrease in expected losses in our home improvement loans.

Current wording

The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of June 30, 2025 and December 31, 2024, the allowance totaled $106.9 million and $97.4 million, which represented 4.43% and 4.12% of total loans held for investment, respectively. The provision for credit losses was $21.6 million and $43.6 million for the three and six months ended June 30, 2025 compared to $18.6 million and $35.8 million for the three and six months ended June 30, 2024 as a result of rising loss rates, fluctuation in delinquencies, and expected losses in our recreation loans, partially offset by a decrease in expected losses in our home improvement loans.

Previous wording

The following tables present the activity in the allowance for credit losses for the three months ended March 31, 2025 and 2024.

Current wording

The following tables present the activity in the allowance for credit losses for the three and six months ended June 30, 2025 and 2024.

Previous wording

As of March 31, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $161.7 million, including $95.2 million related to loans secured by New York City taxi medallions, some of which may represent collection opportunities for the Company.

Current wording

As of June 30, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $161.5 million, including $95.2 million related to loans secured by New York City taxi medallions, some of which may represent collection opportunities for the Company.

Previous wording

The following tables present the gross charge-offs for the three months ended March 31, 2025 and 2024, by the year of origination:

Current wording

The following tables present the gross charge-offs for the three and six months ended June 30, 2025, by the year of origination:

Previous wording

As of March 31, 2025, total allowance for credit losses as a percent of nonaccrual loans was 293.37%.

Current wording

As of June 30, 2025, total allowance for credit losses as a percent of nonaccrual loans was 288.09%.

Previous wording

As of March 31, 2025, the total allowance for credit losses as a percent of loans increased 13 basis points from December 31, 2024.

Current wording

As of June 30, 2025, the total allowance for credit losses as a percent of loans increased 31 basis points from December 31, 2024.

Previous wording

As of March 31, 2025, taxi medallion loans in the process of foreclosure included 307 taxi medallions in the New York City market, 187 taxi medallions in the Chicago market, 24 taxi medallions in the Newark market, and 31 taxi medallions in various other markets.

Current wording

As of June 30, 2025, taxi medallion loans in the process of foreclosure included 304 taxi medallions in the New York City market, 187 taxi medallions in the Chicago market, 24 taxi medallions in the Newark market, and 31 taxi medallions in various other markets.

Previous wording

Recreation lending is a return-oriented business focused on originating prime and non-prime recreation loans which is a significant source of income for us, accounting for 67% of our interest income for the three months ended March 31, 2025 and 65% for the three months ended March 31, 2024.

Current wording

Recreation lending is a return-oriented business focused on originating prime and non-prime recreation loans which is a significant source of income for us, accounting for 66% of our interest income for each of the three and six months ended June 30, 2025 and 67% and 66% for the three and six months ended June 30, 2024.

Previous wording

We maintain relationships with approximately 3,300 dealers and financial service providers, or FSPs, not all of which are active at any one time. FSPs are entities that provide finance and insurance, or F&I, services to small dealers that do not have the desire or ability to provide F&I services themselves. The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable to us. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten dealer and FSP relationships were responsible for 39% of recreation lending’s new loan originations for the three months ended March 31, 2025 and 46% for the three months ended March 31, 2024. The percentage of new loan originations by the top ten dealer and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Current wording

We maintain relationships with approximately 3,300 dealers and financial service providers, or FSPs, not all of which are active at any one time. FSPs are entities that provide finance and insurance, or F&I, services to small dealers that do not have the desire or ability to provide F&I services themselves. The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable to us. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten dealer and FSP relationships were responsible for 40% of recreation lending’s new loan originations for the six months ended June 30, 2025 and 41% for the six months ended June 30, 2024. The percentage of new loan originations by the top ten dealer and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Previous wording

The recreation loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $21,000 as of March 31, 2025. The loans are fixed rate with an average term at origination of approximately 15 years. The weighted average maturity of our loans outstanding as of March 31, 2025 is approximately 11 years.

Current wording

The recreation loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $21,000 as of June 30, 2025. The loans are fixed rate with an average term at origination of approximately 15 years. The weighted average maturity of our loans outstanding as of June 30, 2025 was approximately 11 years.

Previous wording

The loans are secured primarily by RVs, boats, collector cars, and trailers, with RV loans making up 55% of the portfolio, boat loans making up 19%, and collector cars making up 11% of the portfolio as of March 31, 2025, compared to 54%, 19%, and 10% as of March 31, 2024. Recreation loans are made to borrowers residing nationwide, with the highest concentrations in Texas and Florida at 16% and 10% of loans outstanding, compared to 16% and 10% as of March 31, 2024, and with no other states at or above 10%. As of March 31, 2025 and 2024, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 685 (683 exclusive of loans held for sale) and 684. The weighted average FICO scores at the time of origination for the loans funded in the three months ended March 31, 2025 and 2024 were 683 and 692.

Current wording

The loans are secured primarily by RVs, boats, collector cars, and trailers, with RV loans making up 54% of the portfolio, boat loans making up 21%, and collector car loans making up 12% of the portfolio as of June 30, 2025, compared to 54%, 21%, and 11% as of June 30, 2024. Recreation loans are made to borrowers residing nationwide, with the highest concentrations as of June 30, 2025 in Texas and Florida at 16% and 10% of loans outstanding, consistent with concentrations as of June 30, 2024, and with no other states at or above 10%. As of June 30, 2025, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 685 (684 exclusive of loans held for sale) consistent with FICO scores as of June 30, 2024. The weighted average FICO scores at the time of origination for the loans funded in the six months ended June 30, 2025 and 2024 were 687 and 689.

Previous wording

As of March 31, 2025, the recreation loan portfolio was $1.5 billion, with the average interest rate increasing 21 basis points to 15.01% from a year ago. Additionally, the allowance for credit losses increased 19% from March 31, 2024, reflecting the 13% growth in the portfolio as well as rising loss rates and various economic factors.

Current wording

As of June 30, 2025, the recreation loan portfolio was $1.5 billion, with the average interest rate increasing 32 basis points to 15.12% from a year ago. Additionally, the allowance for credit losses increased 15% from June 30, 2024, reflecting rising loss rates and various economic factors.

Previous wording

As of March 31, 2025, 37.0% of the recreation loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the three months ended March 31, 2025 and years ended December 31, 2024 and 2023.

Current wording

As of June 30, 2025, 37% of the recreation loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the six months ended June 30, 2025 and years ended December 31, 2024 and 2023.

Previous wording

The charge-off ratio in the recreation lending segment was 4.32% when including loans held for sale.

Current wording

The charge-off ratio in the recreation lending segment was 3.11% and 3.71% for the three and six months ended June 30, 2025 when including loans held for sale.

Previous wording

The home improvement lending segment works with contractors and FSPs to finance home improvements and is concentrated in roofs, swimming pools, and windows at 35%, 29%, and 13% of total home improvement loans outstanding as of March 31, 2025, as compared to 40%, 20%, and 13% as of March 31, 2024, with no other collateral types at or above 10%. Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas representing 13% and 11% of loans outstanding as of March 31, 2025, with each state representing 10% as of March 31, 2024 and no other states at or above 10%. As of March 31, 2025 and 2024, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, measured at origination, were 767 and 764. The weighted average FICO scores at the time of origination for the loans funded in the three months ended March 31, 2025 and 2024 were 783 and 776.

Current wording

The home improvement lending segment works with contractors and FSPs to finance home improvements and is concentrated in roofs, swimming pools, and windows at 30%, 30%, and 11% of total home improvement loans outstanding as of June 30, 2025, as compared to 40%, 21%, and 13% as of June 30, 2024, with no other collateral types at or above 10%. Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas representing 13% and 12% of loans outstanding as of June 30, 2025, with each state representing 10% as of June 30, 2024 and no other states at or above 10%. As of June 30, 2025 and 2024, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, measured at origination, were 769 and 764. The weighted average FICO scores at the time of origination for the loans funded in the six months ended June 30, 2025 and 2024 were 781 and 778.

Previous wording

A large proportion of our home improvement-financed sales are facilitated by contractor salespeople with limited financing backgrounds rather than by contractor employees who provide F&I services. The result is contractor demand for financing services that facilitate an in-home transaction (e.g., digital tools, including mobile applications for phone or tablet, support for E-SIGN compliant electronic signatures, and extended operating hours), and additional resources for the salesperson throughout the financing process. We currently maintain relationships with approximately 900 contractors and FSPs. Our top ten contractors and FSP relationships were responsible for 57% of home improvement lending’s new loan originations for the three months ended March 31, 2025. The percentage of new loan originations by the top ten contractor and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Current wording

A large proportion of our home improvement-financed sales are facilitated by contractor salespeople with limited financing backgrounds rather than by contractor employees who provide F&I services. The result is contractor demand for financing services that facilitate an in-home transaction (e.g., digital tools, including mobile applications for phone or tablet, support for E-SIGN compliant electronic signatures, and extended operating hours), and additional resources for the salesperson throughout the financing process. We currently maintain relationships with approximately 700 contractors and FSPs. Our top ten contractors and FSP relationships were responsible for 64% of home improvement lending’s new loan originations for the six months ended June 30, 2025. The percentage of new loan originations by the top ten contractor and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Previous wording

The home improvement loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $22,000 as of March 31, 2025. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 15 years. The weighted average maturity of our loans outstanding as of March 31, 2025 is approximately 13 years.

Current wording

The home improvement loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $22,000 as of June 30, 2025. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 15 years. The weighted average maturity of our loans outstanding as of June 30, 2025 was approximately 13 years.

Previous wording

As of March 31, 2025, the home improvement portfolio totaled $812.4 million, with allowance for credit losses increasing 11 basis points to 2.49% from a year ago reflecting higher delinquency and potential losses. The average interest rate charged on our loans increased 23 basis points to 9.83% at March 31, 2025 from a year ago.

Current wording

As of June 30, 2025, the home improvement portfolio totaled $803.5 million, with allowance for credit losses increasing 11% from a year ago reflecting higher delinquency and potential losses. The average interest rate charged on our loans increased 16 basis points to 9.87% at June 30, 2025 from a year ago.

Previous wording

As of March 31, 2025, less than 1% of the home improvement loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the three months ended March 31, 2025 and years ended December 31, 2024 and 2023.

Current wording

As of June 30, 2025, less than 1% of the home improvement loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the six months ended June 30, 2025 and years ended December 31, 2024 and 2023.

Previous wording

We originate both senior and subordinated loans nationwide to businesses in a variety of industries, with California and Illinois having 31% and 10% of the segment portfolio, and no other states having a concentration at or above 10%. These mezzanine loans are primarily secured by a second position on all assets of the businesses and generally range in amount from $2.5 million to $6.0 million at origination, and typically include an equity component as part of the financing. These equity components, although a small portion of the overall financing, have the potential to generate significant yield enhancement when the underlying portfolio company enters a capital transaction. During the three months ended March 31, 2025, net gains of $9.4 million were recognized with respect to these equity investments. The commercial lending business has concentrations in manufacturing, construction, and wholesale trade making up 58%, 13%, and 12%, of the loans outstanding as of March 31, 2025. During the three months ended March 31, 2025, we originated $9.7 million of new commercial loans.

Current wording

We originate both senior and subordinated loans nationwide to businesses in a variety of industries, with California having 29% of the segment portfolio, and no other states having a concentration at or above 10%. These mezzanine loans are primarily secured by a second position on all assets of the businesses and generally range in amount from $2.5 million to $6.0 million at origination, and typically include an equity component as part of the financing. These equity components, although a small portion of the overall financing, have the potential to generate significant yield enhancement when the underlying portfolio company enters a capital transaction. During the three and six months ended June 30, 2025, net gains of $6.1 million and $15.5 million were recognized with respect to these equity investments. The commercial lending business has concentrations in manufacturing, construction, and wholesale trade making up 57%, 18%, and 11%, of the loans outstanding as of June 30, 2025. During the six months ended June 30, 2025, we originated $19.1 million of new commercial loans.

Previous wording

The following table presents selected financial data and ratios as of and for the three months ended March 31, 2025 and 2024. The commercial segment encompasses the mezzanine lending business, and the other legacy commercial loans (immaterial to total) have been allocated to corporate and other investments.

Current wording

The following table presents selected financial data and ratios as of and for the three and six months ended June 30, 2025 and 2024. The commercial segment encompasses the mezzanine lending business, and the other legacy commercial loans (immaterial to total) have been allocated to corporate and other investments.

Previous wording

The taxi medallion lending segment operates in the New York City metropolitan area. During the three months ended March 31, 2025, we continued to utilize a taxi medallion value of $79,500 in the New York City and Newark markets despite fluctuating transfer prices that have exceeded that value, with all other markets being valued at $0 at the end of the quarter. We continued to not recognize interest income with all loans being placed on nonaccrual (except for settled loans with interest being paid in excess of the loan balance), and by transferring underperforming loans from the portfolio to loan collateral in process of foreclosure with charge-offs to collateral value, once loans become more than 120 days past due.

Current wording

The taxi medallion lending segment operates in the New York City metropolitan area. During the three and six months ended June 30, 2025, we continued to utilize a taxi medallion value of $79,500 in the New York City and Newark markets despite fluctuating transfer prices that have exceeded that value, with all other markets being valued at $0 at the end of the quarter. We continued to not recognize interest income with all loans being placed on nonaccrual (except for settled loans with interest being paid in excess of the loan balance), and by transferring underperforming loans from the portfolio to loan collateral in process of foreclosure with charge-offs to collateral value, once loans become more than 120 days past due.

Previous wording

During the three months ended March 31, 2025, we collected $2.6 million related to taxi medallion and related assets, which resulted in net recoveries and gains of $1.7 million in the quarter. The amount of cash collected as well as recoveries recorded vary greatly from period to period due to a wide variety of circumstances surrounding each of the underlying assets, and while we continue to focus on collection and recovery efforts, it is unlikely that there will be future collections at the higher levels experienced in prior years.

Current wording

During the three and six months ended June 30, 2025, we collected $2.3 million and $5.0 million related to taxi medallion and related assets, which resulted in net recoveries and gains of $1.4 million and $3.0 million. The amount of cash collected as well as recoveries recorded vary greatly from period to period due to a wide variety of circumstances surrounding each of the underlying assets, and while we continue to focus on collection and recovery efforts, it is unlikely that there will be future collections at the higher levels experienced in prior years.

Previous wording

This segment includes loans related to our strategic partnership program, which are issued by the Bank. The associated activities of the strategic partnership program are currently limited to originating loans or other receivables facilitated by our strategic partners and selling those loans or receivables to our strategic partners or other third parties, without recourse, within a specified time after origination, such as three business days. Strategic partnership loans were $10.5 million as of March 31, 2025 and $0.9 million as of March 31, 2024, with originations of $136.2 million during the three months ended March 31, 2025 and $15.8 million during the three months ended March 31, 2024.

Current wording

This segment includes loans related to our strategic partnership program, which are issued by the Bank. The associated activities of the strategic partnership program are currently limited to originating loans or other receivables facilitated by our strategic partners and selling those loans or receivables to our strategic partners or other third parties, without recourse, within a specified time after origination, such as three business days. Strategic partnership loans were $12.3 million as of June 30, 2025 and $1.3 million as of June 30, 2024, with originations of $168.6 million and $304.9 million during the three and six months ended June 30, 2025 and $24.3 million and $40.0 million during the three and six months ended June 30, 2024.

Previous wording

The table below presents our selected financial data for the three months ended March 31, 2025 and 2024.

Current wording

The table below presents our selected financial data for the three and six months ended June 30, 2025 and 2024.

Previous wording

Includes $68.8 million related to non-controlling interests in consolidated subsidiaries as of both March 31, 2025 and 2024.

Current wording

Includes $142.7 million and $68.8 million related to non-controlling interests in consolidated subsidiaries as of June 30, 2025 and 2024.

Previous wording

Excludes deferred financing costs of $8.1 million and $8.5 million as of March 31, 2025 and 2024.

Current wording

Excludes deferred financing costs of $8.5 million as of both June 30, 2025 and 2024.

Previous wording

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Current wording

Three and Six Months Ended June 30, 2025 Compared to the Three and Six Months Ended June 30, 2024

Previous wording

Net income attributable to shareholders was $12.0 million, or $0.50 per diluted share, for the three months ended March 31, 2025, compared to $10.0 million, or $0.42 per diluted share, for the three months ended March 31, 2024.

Current wording

Net income attributable to shareholders was $11.1 million and $23.1 million, or $0.46 and $0.96 per diluted share, for the three and six months ended June 30, 2025, compared to $7.1 million and $17.1 million, or $0.30 and $0.73 per diluted share, for the three and six months ended June 30, 2024.