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What changed in MEDALLION FINANCIAL CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MEDALLION FINANCIAL CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+420 added−423 removedSource: 10-K (2026-03-10) vs 10-K (2025-03-13)

Top changes in MEDALLION FINANCIAL CORP's 2025 10-K

420 paragraphs added · 423 removed · 332 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

84 edited+16 added−18 removed127 unchanged
Biggest changeSBIC regulations preclude investment in the following types of businesses: (1) business whose primary business activity is as a relender or reinvestor (that is, directly or indirectly, providing funds to others, purchasing debt obligations, factoring, or long term leasing of equipment with no provision for maintenance or repair); (2) many kinds of real estate projects; (3) single purpose projects that are not continuing businesses; (4) companies located outside the U.S. intending to use the proceeds of the investment outside of the U.S. or companies that are located in the U.S. that have more than 49% of their employees or tangible assets located outside of the US; (5) businesses that are passive and do not carry on an active trade or business; (6) businesses that use 50% or more of the funds to buy goods or services from an associated supplier; and (7) certain “sin businesses” such as gambling and the like.
Biggest changeSBIC regulations preclude investment in the following types of businesses: (1) business whose primary business activity is as a relender or reinvestor (that is, directly or indirectly, providing funds to others, purchasing debt obligations, factoring, or long term leasing of equipment with no provision for maintenance or repair); (2) many kinds of real estate projects; (3) single purpose projects that are not continuing businesses; (4) companies located outside the U.S. intending to use the proceeds of the investment outside of the U.S. or companies that are located in the U.S. that have more than 49% of their employees or tangible assets located outside of the US; (5) businesses that are passive and do not carry on an active trade or business; (6) businesses that use 50% or more of the funds to buy goods or services from an associated supplier; and (7) certain “sin businesses” such as gambling and the like. 14 Under current SBA regulations, the maximum rate of interest that Medallion Funding and Medallion Capital may charge may not exceed the higher of (i) 19% or (ii) the sum of (a) the higher of (i) that company’s weighted average cost of qualified borrowings, as determined under SBA regulations, or (ii) the current SBA debenture rate, plus (b) 11%, rounded to the next lower eighth of one percent.
We prohibit and do not tolerate any discrimination against employees, applicants, interns or any other covered persons, and we ensure equal employment opportunity without discrimination on the basis of race, color, creed, religion, national origin, ancestry, ethnicity, citizenship status, physical or mental disability, age, sex (including pregnancy), gender, gender identity or gender expression (including transgender status), marital status, familial status, veteran status, genetic information or any other protected characteristic as established by applicable federal, state or local law.
We prohibit and do not tolerate any discrimination against employees, applicants, interns or any other covered persons, and we ensure equal employment opportunity without discrimination on the basis of race, color, creed, religion, national origin, ancestry, ethnicity, citizenship status, physical or mental disability, age, sex (including pregnancy), gender, gender identity or gender expression, marital status, familial status, veteran status, genetic information or any other protected characteristic as established by applicable federal, state or local law.
The minimum Tier 1 leverage ratio requirement is 4%. The prompt corrective action framework, which generally applies to FDIC-insured depository institutions, including the Bank, also includes capital requirements the Bank must satisfy to, among other things, be able to accept brokered deposits without limitations. See “Prompt Corrective Action” and “Brokered Deposits” below.
The minimum Tier 1 leverage ratio requirement is 4%. 9 The prompt corrective action framework, which generally applies to FDIC-insured depository institutions, including the Bank, also includes capital requirements the Bank must satisfy to, among other things, be able to accept brokered deposits without limitations. See “Prompt Corrective Action” and “Brokered Deposits” below.
Federal banking regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer rescission rights, and civil money penalties. Failure to comply with consumer protection requirements may also result in substantial reputational harm that could adversely affect our business.
Federal banking regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, 12 including regulatory sanctions, customer rescission rights, and civil money penalties. Failure to comply with consumer protection requirements may also result in substantial reputational harm that could adversely affect our business.
The Bank is also subject to limits under federal law on its ability to extend credit to its directors, executive officers and principal shareholders (persons that beneficially own or control more than 10% of any class of our voting stock), as well as to entities owned or 13 controlled by such persons.
The Bank is also subject to limits under federal law on its ability to extend credit to its directors, executive officers and principal shareholders (persons that beneficially own or control more than 10% of any class of our voting stock), as well as to entities owned or controlled by such persons.
In recent years, several states have adopted regulations requiring certain financial institutions to implement and maintain cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also implemented or modified their data breach notification and data privacy requirements.
In recent years, several states adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also implemented or modified their data breach notification and data privacy requirements.
The PATRIOT Act, which includes the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, is intended to facilitate the detection and prosecution of terrorism and international money laundering. The PATRIOT Act establishes standards for verifying customer identification incidental to the opening of new accounts.
Treasury. The PATRIOT Act, which includes the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, is intended to facilitate the detection and prosecution of terrorism and international money laundering. The PATRIOT Act establishes standards for verifying customer identification incidental to the opening of new accounts.
These guidelines also prohibit excessive compensation as an unsafe and unsound practice, and describe compensation 12 as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.
These guidelines also prohibit excessive compensation as an unsafe and unsound practice, and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.
Future Legislation Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
Future Legislation 16 Congress may enact legislation from time to time that affects the regulation of the financial services industry, and state legislatures may enact legislation from time to time affecting the regulation of financial institutions chartered by or operating in those states.
Treasury’s Office of Financial Crimes Enforcement Network, or FinCEN, issued a final rule, applicable as of May 2018, to clarify and enhance customer due diligence requirements for financial institutions. The rule (among other things) imposes certain obligations on covered financial institutions with respect to their “legal entity customers,” including corporations, limited liability companies and other similar entities.
Treasury’s Office of Financial Crimes Enforcement Network, or FinCEN, issued a final rule, applicable as of May 2018, to clarify and enhance customer due diligence requirements for financial institutions. The rule (among other things) imposed certain obligations on covered financial institutions with respect to their “legal entity customers,” including corporations, limited liability companies and other similar entities.
We believe that our management team’s relationships with these dealers, contractors , and FSPs have provided and will continue to provide us with loan origination opportunities. In 2024, all of our consumer loans retained in the portfolio were generated by dealers, contractors, and FSPs. 6 Focus on niche industries and our expertise in these niche fields.
We believe that our management team’s relationships with these dealers, contractors, and FSPs have provided and will continue to provide us with loan origination opportunities. In 2025, all of our consumer loans retained in the portfolio were generated by dealers, contractors, and FSPs. 6 Focus on niche industries and our expertise in these niche fields.
We seek to manage our exposure to increases in market rates of interest to an acceptable level by incurring fixed-rate debt. Nevertheless, we accept varying degrees of interest rate risk depending on market conditions. For additional discussion of our funding sources and asset liability management strategy, see Asset/Liability Management on page 52.
We seek to manage our exposure to increases in market rates of interest to an acceptable level by incurring fixed-rate debt. Nevertheless, we accept varying degrees of interest rate risk depending on market conditions. For additional discussion of our funding sources and asset liability management strategy, see Asset/Liability Management on page 50.
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.
We maintain relationships with approximately 3,400 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.
Home improvement lending operates in a manner similar to recreation lending, with a few key differences. We currently maintain a smaller number of relationships, with approximately 900 contractors and FSPs. Management monitors the number of contractors and FSPs and their relative contributions as a means of assessing market share and segment growth.
Home improvement lending operates in a manner similar to recreation lending, with a few key differences. We currently maintain a smaller number of relationships, with approximately 700 contractors and FSPs. Management monitors the number of contractors and FSPs and their relative contributions as a means of assessing market share and segment growth.
Loans that conform to such criteria may be processed by a loan officer with the proper credit authority, and non-conforming loans (other than those by the Bank) must be approved by our Chief Executive Officer, President, and/or the Chief Credit Officer and the Investment Oversight Committee of our board of directors.
Loans that conform to such criteria may be processed by a loan officer with the proper credit authority, and non-conforming loans (other than those by the Bank) must be approved by our Executive Chairman, Chief Executive Officer, and/or the Chief Credit Officer and the Investment Oversight Committee of our board of directors.
We conduct our business through various wholly-owned subsidiaries, including: • Medallion Bank, or the Bank, a Federal Deposit Insurance Corporation, or FDIC, insured industrial bank that originates consumer loans, raises deposits and conducts other banking activities; • Medallion Capital, Inc., or Medallion Capital, a Small Business Investment Company, or SBIC, which conducts a mezzanine financing business; • Medallion Funding LLC, or Medallion Funding, an SBIC, historically our primary taxi medallion lending company; and • Freshstart Venture Capital Corp., or Freshstart, which historically originated and serviced taxi medallion and commercial loans and was an SBIC through 2023.
We conduct our business through various wholly-owned subsidiaries, including: • Medallion Bank, or the Bank, a Federal Deposit Insurance Corporation, or FDIC, insured industrial bank that originates consumer loans, raises deposits and conducts other banking activities; • Medallion Capital, Inc., or Medallion Capital, a Small Business Investment Company, or SBIC, which operates a mezzanine financing business; • Medallion Funding LLC, or Medallion Funding, an SBIC, historically our primary taxi medallion lending company; and • Freshstart Venture Capital Corp., or Freshstart, which historically originated and serviced taxi medallion and commercial loans.
We monitor our continued compliance with this exception and were compliant as of December 31, 2024. Regulation of Medallion Bank as an Industrial Bank In May 2002, we formed the Bank, which received approval from the FDIC for federal deposit insurance in October 2003.
We monitor our continued compliance with this exception and were compliant as of December 31, 2025. Regulation of Medallion Bank as an Industrial Bank In May 2002, we formed the Bank, which received approval from the FDIC for federal deposit insurance in October 2003.
Loan criteria for loans originated with the Bank is established by the Bank’s board of directors and senior management. The Bank’s policies identify specific approval authorities for its recreation and home improvement loans. Policy exceptions are reported to the Bank’s board of directors.
Loan criteria for loans originated with the Bank is established by the Bank’s board of directors and senior management. The Bank’s policies identify specific approval authorities for its recreation, home improvement and strategic partnership loans. Policy exceptions are reported to the Bank’s board of directors.
A New York City taxi medallion is the only permitted license to operate a taxi and accept street hails in New York City. As reported by the New York City Taxi and Limousine Commission, taxi medallions sold for a wide variety of prices during 2024 supporting our estimated value of $79,500, net of liquidation costs, as of December 31, 2024.
A New York City taxi medallion is the only permitted license to operate a taxi and accept street hails in New York City. As reported by the New York City Taxi and Limousine Commission, taxi medallions sold for a variety of prices during 2025 supporting our estimated value of $79,500, net of liquidation costs, as of December 31, 2025.
Each commercial and taxi medallion loan applicant is required to provide personal or corporate tax returns, premises leases, and/or property deeds. Our senior management establishes loan origination criteria.
Each commercial and taxi medallion loan applicant is required to provide personal or corporate tax returns, premises leases, and/or property deeds. Our senior management establishes loan origination criteria for commercial loans.
As of December 31, 2024, our risk-based capital ratios were above the regulatory minimums that incorporated the 2.5% capital conservation buffer and satisfies the aforementioned Utah law.
As of December 31, 2025, our risk-based capital ratios were above the regulatory minimums that incorporated the 2.5% capital conservation buffer and satisfies the aforementioned Utah law.
We also offer a variety of promotional loan options to help contractors close a challenging sale. Promotional loan options include same-as-cash, no interest, and deferred payment features, which allow borrowers to reduce the total cost of financing or start repayments when it is most convenient. Home improvement loans comprised 33% of our loans receivable as of December 31, 2024.
We also offer a variety of promotional loan options to help contractors close a challenging sale. Promotional loan options include same-as-cash, no interest, and deferred payment features, which allow borrowers to reduce the total cost of financing or start repayments when it is most convenient. Home improvement loans comprised 32% of our loans receivable as of December 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. We offer home improvement loans with only fixed rates, with an average term at origination of 15 years.
The percentage of new loan originations by the top ten contractors and/or 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. We offer home improvement loans with only fixed rates, with an average term at origination of approximately 15 years.
Our recreation loans are secured primarily by RVs, boats, collector cars, and other consumer recreational equipment with a small proportion of loans secured by other collateral such as motorcycles and boat motors. These loans, which together make up our largest and most profitable loan portfolio, have a weighted average yield of 13.30% at December 31, 2024.
Our recreation loans are secured primarily by RVs, boats, collector cars, and other consumer recreational equipment with a small proportion of loans secured by other collateral such as motorcycles and boat motors. These loans, which together make up our largest and most profitable loan portfolio, have a weighted average yield of 13.37% at December 31, 2025.
Since the inception of the Bank, substantially all of the Bank’s borrowings have been provided by FDIC insured brokered certificates of deposit. The table below presents our sources of available funds and amounts outstanding under credit facilities, exclusive of deferred financing costs of $8.2 million, and their weighted average interest rates at December 31, 2024.
Since the inception of the Bank, substantially all of the Bank’s borrowings have been provided by FDIC insured brokered certificates of deposit. The table below presents our sources of available funds and amounts outstanding under credit facilities, exclusive of deferred financing costs of $8.4 million, and their weighted average interest rates at December 31, 2025.
Under the banking charter, the Bank is authorized to make consumer and commercial loans, and may accept all FDIC-insured deposits other than demand deposits (checking accounts). As a state-charted, Federal Reserve non-member bank with FDIC-insured deposits, the Bank is examined, supervised and regulated by the FDIC and the Utah Department of Financial Institutions, or the Utah DFI.
Under the banking charter, the Bank is authorized to make consumer and commercial loans, and may accept all FDIC-insured deposits other than demand deposits (e.g. checking accounts). As a state-chartered, Federal Reserve non-member bank with FDIC-insured deposits, the Bank is examined, supervised and regulated by the FDIC and the Utah Department of Financial Institutions, or the Utah DFI.
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.
The percentage of new loan originations by the top ten dealers and/or 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.
Our home improvement loans are secured by the personal property installed on real property, and the security interest for some of these loans is perfected with a UCC fixture filing. As of December 31, 2024, these loans had a weighted average yield of 9.45%. Commercial Loans.
Our home improvement loans are secured by the personal property installed on real property, and the security interest for some of these loans is perfected with a UCC fixture filing. As of December 31, 2025, these loans had a weighted average yield of 9.95%. Commercial Loans.
Financial Privacy and Cybersecurity Federal and state law contains extensive consumer privacy protection provisions. The Gramm-Leach-Bliley Act requires financial institutions to periodically disclose their privacy policies and practices relating to sharing information and enables retail customers to opt out of institutions' ability to share information with unaffiliated third parties under certain circumstances.
Financial Privacy and Cybersecurity Federal and state laws contain extensive consumer privacy protection provisions. The Gramm-Leach-Bliley Act requires financial institutions to periodically disclose their privacy policies and practices relating to sharing such information and enables retail customers to opt out of institutions' ability to share information with unaffiliated third parties under certain circumstances.
The segment is a significant source of income, accounting for 67% of our interest income for the year ended December 31, 2024. All of our recreation loans are serviced by a third-party loan servicer that we have used since the business’s inception.
The segment is a significant source of income, accounting for 66% of our interest income for the year ended December 31, 2025. All of our recreation loans are serviced by a third-party loan servicer that we have used since the business’s inception.
As of December 31, 2024, 2023, and 2022, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding were 767, 764, and 753.
As of December 31, 2025, 2024, and 2023, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding were 767, 767, and 764.
Other Change in Control Because the Bank is an “insured depository institution” within the meaning of the FDIA and the Change in Bank Control Act as well as Medallion Financial Corp. being a “financial institution holding company” within the meaning of the Utah Financial Institutions Act, federal and Utah law and regulations prohibit any person or company from acquiring control of the Bank or Medallion Financial Corp., without, in most cases, prior written approval of the FDIC or the Commissioner of the Utah DFI, as applicable.
In addition, the timing of SBA’s approval, if received, is uncertain. 15 Other Change in Control Because the Bank is an “insured depository institution” within the meaning of the FDIA and the Change in Bank Control Act as well as Medallion Financial Corp. being a “financial institution holding company” within the meaning of the Utah Financial Institutions Act, federal and Utah law and regulations prohibit any person or company from acquiring control of the Bank or Medallion Financial Corp., without, in most cases, prior written approval of the FDIC or the Commissioner of the Utah DFI, as applicable.
Recreation loans are made to borrowers residing nationwide, with the highest concentrations in Texas and Florida, at 16% and 10% of loans outstanding as of December 31, 2024 with no other states at or above 10%.
Recreation loans are made to borrowers residing nationwide, with the highest concentrations in Texas and Florida, at 17% and 10% of loans outstanding as of December 31, 2025 with no other states at or above 10%.
As of December 31, 2024, 2023, and 2022, the weighted average FICO scores, measured at origination, of our recreation loans outstanding, inclusive of loans held for sale, were 685 (683 exclusive of loans held for sale), 683, and 671.
As of December 31, 2025, 2024, and 2023, the weighted average FICO scores, measured at origination, of our recreation loans outstanding, inclusive of loans held for sale, were 686, 685 (683 exclusive of loans held for sale), and 683.
As of December 31, 2024, the maximum rate of interest permitted on loans originated by our SBICs was 19%. As of December 31, 2024, our outstanding commercial loans had a weighted average rate of interest of 12.97%. Current SBA regulations also require that each loan originated by an SBIC has a term between one and 20 years.
As of December 31, 2025, the maximum rate of interest permitted on loans originated by our SBICs was 19%. As of December 31, 2025, our outstanding commercial loans had a weighted average rate of interest of 14.22%. Current SBA regulations also require that each loan originated by an SBIC has a term between one and 20 years.
The weighted average FICO scores at the time of origination for the loans funded in the years ended December 31, 2024, 2023, and 2022 were 685 (686 exclusive of loans held for sale), 686, and 676.
The weighted average FICO scores at the time of origination for the loans funded in the years ended December 31, 2025, 2024, and 2023 were 688, 685 (686 exclusive of loans held for sale), and 686.
Borrowers may prepay consumer loans without any prepayment penalty. In general, the Bank has established relationships with dealers, contractors, and FSPs, which are the sources for consumer loan volumes. The loans are made up of recreation loans and home improvement loans which were 65% and 35% of total consumer loans at December 31, 2024.
Borrowers may prepay consumer loans without any prepayment penalty. In general, the Bank has established relationships with dealers, contractors, and FSPs, which are the sources for consumer loan volumes. The loans are made up of recreation loans and home improvement loans which were 67% and 33% of total consumer loans at December 31, 2025.
The following table presents our loans receivable as of December 31, 2024.
The following table presents our loans receivable as of December 31, 2025.
ITEM 1. OUR BUSINESS We, Medallion Financial Corp., or the Company, are a specialty finance company organized as a Delaware corporation. Our strategic focus is growing our consumer finance and commercial lending businesses. Our total assets were $2.9 billion as of December 31, 2024 and $2.6 billion as of December 31, 2023.
ITEM 1. OUR BUSINESS We, Medallion Financial Corp., or the Company, are a specialty finance company organized as a Delaware corporation. Our strategic focus is operating and growing our consumer finance and commercial lending businesses. Our total assets were $2.96 billion as of December 31, 2025 and $2.87 billion as of December 31, 2024.
We believe that relationships with dealers and brokers provide us with, in addition to loan origination opportunities, significant benefits, including an additional layer of due diligence and additional monitoring capabilities. We have assembled a management team that has developed an extensive network of dealers, contractors, and FSP relationships in our target markets over the last 50 years.
We believe that relationships with dealers and brokers provide us with, in addition to loan origination opportunities, significant benefits, including an additional layer of due diligence on borrowers and additional monitoring capabilities. We have assembled a management team that has developed an extensive network of dealers, contractors, and/or FSP relationships in our target markets.
In addition to increasing market share in existing lending markets and identifying new niches, we seek to acquire other financing businesses and related portfolios, and specialty finance companies that make secured loans to small businesses and consumers which have mitigated credit risk similar to our own.
We continue to evaluate possibilities for additional partnerships. Seek strategic acquisitions. In addition to increasing market share in existing lending markets and identifying new niches, we seek to acquire other financing businesses and related portfolios, and specialty finance companies that make secured loans to small businesses and consumers which have mitigated credit risk similar to our own.
In particular, the FDIA and the FDIC’s regulations prohibit an insured depository institution from accepting brokered deposits unless it is well-capitalized or is adequately capitalized and receives a waiver from the FDIC. 11 Under FDIC regulations governing brokered deposits and interest rate restrictions, a bank that is “adequately capitalized” and accepts brokered deposits under a waiver from the FDIC may not pay an interest rate, at the time any such deposit is accepted, in excess of (i) 75 basis points over certain national rates described in the FDIC’s regulations or (ii) 90% of the highest interest rate paid on a particular deposit product in the bank’s local market area, if the bank provides notice to the FDIC and evidence of such local rate.
Under FDIC regulations governing brokered deposits and interest rate restrictions, a bank that is “adequately capitalized” and accepts brokered deposits under a waiver from the FDIC may not pay an interest rate, at the time any such deposit is accepted, in excess of (i) 75 basis points over certain national rates described in the FDIC’s regulations or (ii) 90% of the highest interest rate paid on a particular deposit product in the bank’s local market area, if the bank provides notice to the FDIC and evidence of such local rate.
The Bank’s assessment (subject to adjustment by the FDIC) is currently based on the Bank’s average total consolidated assets less the Bank’s average tangible equity during the assessment period, the Bank’s supervisory ratings, and specified forward-looking financial measures used to calculate the assessment rate.
The Bank’s assessment (subject to adjustment by the FDIC) is currently based on the Bank’s average total consolidated assets less the Bank’s average tangible equity during the assessment period, the Bank’s supervisory ratings, and specified forward-looking financial measures used to calculate the assessment rate. From time to time, the FDIC increases base deposit insurance assessment rates.
Our top ten contractors and FSP relationships were responsible for 48% of home improvement lending’s new loan originations for the year ended December 31, 2024.
Our top ten contractors and/or FSP relationships were responsible for 61% of home improvement lending’s new loan originations for the year ended December 31, 2025.
Basel III capital rules adopted by the federal banking regulators. Under the risk-based capital standards, the Bank’s assets, exposures and certain off-balance sheet items are assigned to broad risk categories, each with designated weights, and the resulting capital ratios represent capital as a percentage of total risk-weighted assets.
Under the risk-based capital standards, the Bank’s assets, exposures and certain off-balance sheet items are assigned to broad risk categories, each with designated weights, and the resulting capital ratios represent capital as a percentage of total risk-weighted assets.
As a result, we cannot assure you that we will be able to identify and complete the financing transactions that will permit us to compete successfully. 8 Human Capital Resources As of December 31, 2024, we employed 174 persons: 135 at Medallion Bank, 29 at our parent company, and 10 at Medallion Capital.
As a result, we cannot assure you that we will be able to identify and complete the financing transactions that will permit us to compete successfully. Human Capital Resources As of December 31, 2025, we employed 179 persons: 141 at Medallion Bank, 29 at our parent company, and 9 at Medallion Capital.
Additionally, the SBA may appoint a receiver for the SBIC and for its liquidation in the event of a default on payment of a SBIC’s debentures or for serious regulatory violations.
Additionally, the SBA may appoint a receiver for the SBIC and for its liquidation in the event of a default on payment of a SBIC’s debentures or for serious regulatory violations. As further described under Item 1A.
If the Bank’s regulators were to determine that we have violated banking laws and regulations, including by engaging in unsafe and unsound practices, the Bank could be subject to enforcement and other regulatory actions, which could have an adverse effect on its business, results of operations and financial condition. 9 Capital Standards The Bank is subject to risk-based and leverage-based capital ratio requirements under the U.S.
If the Bank’s regulators were to determine that we have violated banking laws and regulations, including by engaging in unsafe and unsound practices, the Bank could be subject to enforcement and other regulatory actions, which could have an adverse effect on its business, results of operations and financial condition.
Taxi Medallion Lending Taxi medallion loans and assets of $7.7 million comprised less than 1% of our assets as of December 31, 2024. All taxi medallion loans and assets were located in the New York City metropolitan area.
Taxi Medallion Lending Taxi medallion loans and assets of $4.3 million comprised less than 0.2% of our assets as of December 31, 2025. All taxi medallion loans and assets were located in the New York City metropolitan area.
This compares to 169 persons at the end of 2023: 128 at Medallion Bank, 33 at our parent company, and 8 at Medallion Capital. Equal employment opportunity is a fundamental principle of ours, where employment is based upon personal capabilities and qualifications.
This compares to 174 persons at the end of 2024: 135 at Medallion Bank, 29 at our parent company, and 10 at Medallion Capital. Equal employment opportunity is a fundamental principle of ours, where employment is based upon personal capabilities and qualifications.
The Bank has not elected and currently does not expect to elect to apply the Community Bank Leverage Ratio framework but will continue to assess the framework and may choose to apply it in the future.
In November 2025, federal banking regulators proposed reducing the Community Bank Leverage Ratio from 9% to 8%. The Bank has not elected and currently does not expect to elect to apply the Community Bank Leverage Ratio framework but will continue to assess the framework and may choose to apply it in the future.
The federal banking regulators and the SEC proposed revised rules in 2016, which have not been finalized.
The federal banking regulators and the SEC proposed revised rules in 2016, some of which re-proposed revised rules in 2024, none of which have been finalized.
In addition, pursuant to requirements applicable to FDIC-supervised banking organizations, such as us, we are required to notify the FDIC within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or pose a threat to the financial stability of the United States.
In addition, pursuant to requirements applicable to FDIC-supervised banking organizations, such as us, we are required to notify the FDIC within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or pose a threat to the financial stability of the United States. 13 Anti-Money Laundering and the USA PATRIOT Act The Bank is subject to the anti-money laundering, or AML, provisions of the Bank Secrecy Act, or the BSA, as amended by the USA PATRIOT Act, or the PATRIOT Act, and implementing regulations issued by the FDIC and the U.S.
We originated $203.6 million and $118.3 million of strategic partnership loans for the years ended December 31, 2024 and 2023. We held $7.4 million and $0.6 million of strategic partnership loans as of both December 31, 2024 and 2023.
We originated $771.6 million and $203.6 million of strategic partnership loans for the years ended December 31, 2025 and 2024. We held $15.1 million and $7.4 million of strategic partnership loans as of December 31, 2025 and 2024.
As of December 31, 2024, home improvement loans were concentrated in roofs, swimming pools, and windows at 36%, 27%, and 13%. Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas at 12% and 11% of loans outstanding as of December 31, 2024, and with no other states at or above 10%.
Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas at 14% and 12% of loans outstanding as of December 31, 2025, and with no other states at or above 10%.
Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the manner in which existing regulations are applied. These legislative and regulatory changes are likely to accelerate under, and in response to, the new U.S. administration.
Federal and state regulatory agencies also periodically propose and adopt changes to their regulations or change the manner in which existing regulations are applied.
Strategic Partnerships In 2019, the Bank launched a strategic partnership program to provide lending and other services to financial technology, or fintech, companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans.
Strategic Partnerships In 2019, the Bank launched a strategic partnership program to provide lending and other services to financial technology, or fintech, companies.
The members of our management team have broad investment backgrounds, with prior experience in banking and non-bank consumer and commercial lending, at specialty finance companies, middle market commercial banks, and other financial services companies. We believe that the experience and contacts of our management team will continue to allow us to effectively implement the key aspects of our business strategy.
The members of our management team have broad investment and lending backgrounds, with prior experience in banking and non-bank consumer and commercial lending, at specialty finance companies, middle market commercial banks, and other financial services companies.
Under SBA regulations, without prior SBA approval, loans and other investments by licensees with outstanding SBA leverage to any single small business concern may not exceed 10% of the sum of an SBIC’s “private capital” and its total approved SBA leverage. 15 SBICs may invest idle funds that are not being used to make loans or other long-term investments in certain short-term investments permitted under SBA regulations.
Under SBA regulations, without prior SBA approval, loans and other investments by licensees with outstanding SBA leverage to any single small business concern may not exceed 10% of the sum of an SBIC’s “private capital” and its total approved SBA leverage.
(Dollars in thousands) Total Cash, cash equivalents, and federal funds sold $ 169,572 Brokered certificates of deposit & other funds borrowed 2,094,663 Average interest rate 3.71 % Privately placed notes 146,500 Average interest rate 8.12 % Maturity 2/26 - 8/39 SBA debentures and borrowings Amounts undisbursed 28,750 Amounts outstanding 70,250 Average interest rate 3.53 % Maturity 3/25- 3/34 Trust preferred securities 33,000 Average interest rate 6.83 % Maturity 9/37 Federal reserve and other borrowings 35,000 Average interest rate 4.50 % Total cash (1) $ 169,572 Total debt outstanding $ 2,379,413 (1) Includes $126.1 million at the Bank and $13.6 million at SBIC subsidiaries.
(Dollars in thousands) Total Cash, cash equivalents, and federal funds sold $ 201,564 Brokered certificates of deposit & other funds borrowed 2,089,416 Average interest rate 3.87 % Privately placed notes 146,500 Average interest rate 8.12 % Maturity 2/26 - 8/39 SBA debentures and borrowings Amounts outstanding 85,000 Average interest rate 3.98 % Maturity 3/25- 3/34 Trust preferred securities 33,000 Average interest rate 6.12 % Maturity 9/37 Federal reserve and other borrowings 50,000 Average interest rate 3.75 % Total cash (1) $ 201,564 Total debt outstanding $ 2,403,916 (1) Includes $147.4 million at the Bank and $32.1 million at SBIC subsidiaries.
The cost of examinations may be assessed against the examined institution as the agency deems necessary or appropriate. 16 Incentive Compensation The FDIC has issued comprehensive guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk taking.
Incentive Compensation The FDIC has issued comprehensive guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk taking.
The recreation loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $20,000 as of December 31, 2024. The loans are fixed rate with an average term at origination of 14 years. The weighted average maturity of our loans outstanding is 11 years.
The recreation loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $22,000 as of December 31, 2025, with an average loan size at origination during 2025 of approximately $29,000. The loans are fixed rate with an average term at origination of approximately 15 years.
Payment of Dividends The power of the board of directors of an insured depository institution to declare a cash dividend or other distribution with respect to capital is subject to statutory and regulatory restrictions that limit the amount available for such distribution, depending upon earnings, financial condition and cash needs of the institution, as well as general business conditions.
In addition, the FDIC must recover, by special assessment, losses to the FDIC deposit insurance fund as a result of the FDIC’s use of the systemic risk exception to the least cost resolution test under the FDIA. 11 Payment of Dividends The power of the board of directors of an insured depository institution to declare a cash dividend or other distribution with respect to capital is subject to statutory and regulatory restrictions that limit the amount available for such distribution, depending upon earnings, financial condition and cash needs of the institution, as well as general business conditions.
Commercial loans of $111.3 million comprised 4% of our loans receivable as of December 31, 2024. We focus our marketing efforts on the manufacturing, professional, scientific, and technical services, with California, Wisconsin, and Texas having 28%, 10%, and 10% of the segment portfolio, and no other states having a concentration at or above 10%.
Commercial loans of $123.1 million comprised 5% of our loans receivable as of December 31, 2025. We focus our marketing efforts primarily on domestic manufacturing and business services, with California, Wisconsin, and New York having 20%, 12%, and 11% of the segment portfolio, and no other states having a concentration at or above 10%.
The impact of the AMLA, including on our compliance costs and compliance risk relating to the BSA, will depend on, among other things, these additional rulemakings and implementation guidance. 14 In June 2024, FinCEN proposed to amend the anti-money laundering/countering the financing of terrorism cybercrime, or AML/CFT, program requirements for all financial institutions subject to the BSA that have AML/CFT program obligations, including us.
In June 2024, FinCEN proposed to amend the anti-money laundering/countering the financing of terrorism, or AML/CFT, cybercrime program requirements for all financial institutions subject to the BSA that have AML/CFT program obligations, including us.
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 38% of recreation lending’s new loan originations for the year ended December 31, 2024.
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.
The size, geographic dispersion, source and collateral variety of the loans reduces our risk. The loans are secured primarily by RVs, or recreational vehicles, boats, collector cars, and other consumer recreational equipment, of which RVs make up 55% of the portfolio, boat loans making up 20%, and collector cars making up 11% of the portfolio as of December 31, 2024.
The loans are secured primarily by RVs, or recreational vehicles, boats, collector cars, and other consumer recreational equipment, of which RVs make up 54% of the portfolio, boat loans making up 21%, and collector cars making up 13% of the portfolio as of December 31, 2025.
Our Compensation Committee reviews management’s recommendations and advises management and the Board of Directors on broad compensation policies such as salary ranges, annual incentive bonuses, long-term incentive plans, including equity-based compensation programs, and other benefit and perquisite programs.
Employee equity ownership helps us attract, retain, motivate and reward employees, while aligning employee compensation with our stockholders’ interests by linking realizable pay with stock performance. 8 Our Compensation Committee reviews management’s recommendations and advises management and the Board of Directors on broad compensation policies such as salary ranges, annual incentive bonuses, long-term incentive plans, including equity-based compensation programs, and other benefit and perquisite programs.
Sources of Funds Management determines our funding sources, based upon an analysis of the respective financial and other costs and burdens associated with funding sources. We also fund our lending operations through debt offerings and private placements, fixed-rate, senior secured notes, long-term subordinated debentures issued to the SBA, as well as preferred equity securities at our subsidiaries.
We also fund our lending operations through debt offerings and private placements, fixed-rate, senior secured notes, long-term subordinated debentures issued to the SBA, as well as preferred equity securities at our subsidiaries. In the past, we have utilized credit facilities with banks, as well as equity and debt offerings, to fund our lending operations.
Under SBA regulations, the maximum rate of interest permitted on loans originated by us is 19%; however, terms and interest rates are subject to market competition for all loans. 7 Marketing, Origination, and Loan Approval Process Each loan application is individually reviewed through analysis of several factors, including loan-to-value ratios, the borrower’s credit history, public records, personal interviews, trade references, personal inspection of the premises, and approval from the New York City Taxi and Limousine Commission, SBA, or other regulatory body, if applicable.
Marketing, Origination, and Loan Approval Process Each loan application is individually reviewed through analysis of several factors, including loan-to-value ratios, the borrower’s credit history, public records, personal interviews, trade references, personal inspection of the premises, and approval from the SBA, or other regulatory body, if applicable.
Prompt Corrective Action The Bank is subject to FDIC regulations which apply to every FDIC-insured depository institution, setting out a system of mandatory and discretionary supervisory actions that generally become more severe as the capital levels of an individual institution decline.
As a condition to receipt of FDIC insurance, the Bank entered into a capital maintenance agreement with the FDIC, or the 2003 Capital Maintenance Agreement, requiring it to maintain a 15% leverage ratio (Tier 1 capital to average assets) and an adequate allowance for credit losses. 10 Prompt Corrective Action The Bank is subject to FDIC regulations which apply to every FDIC-insured depository institution, setting out a system of mandatory and discretionary supervisory actions that generally become more severe as the capital levels of an individual institution decline.
The term of, and interest rate charged on, certain of our outstanding loans are subject to the regulations of the Small Business Administration, or the SBA.
The term of, and interest rate charged on, certain of our outstanding loans are subject to the regulations of the Small Business Administration, or the SBA. Under SBA regulations, the maximum rate of interest permitted on loans originated by us is 19%; however, terms and interest rates are subject to market competition for all loans.
Commercial loans are generally secured by equipment, accounts receivable, real estate, or other assets, and have interest rates averaging 547 basis points over the prevailing prime rate at the end of 2024, compared to 437 basis points over the prime rate at the end of 2023.
Commercial loans are secured by a lien on substantially all business assets, and have interest rates averaging 747 basis points over the prevailing prime rate at the end of 2025, compared to 547 basis points over the prime rate at the end of 2024.
Freshstart, through 2023, was licensed by the SBA to operate as an SBIC. The SBIA authorizes the licensing of privately held investment vehicles as SBICs in order to provide long term financing to small business concerns.
Regulation by the SBA Medallion Funding and Medallion Capital are each licensed by the SBA to operate as SBICs, under the Small Business Investment Act of 1958, as amended, or the SBIA. The SBIA authorizes the licensing of privately held investment vehicles as SBICs in order to provide long term financing to small business concerns.
The weighted average maturity of our loans outstanding is 13 years as of December 31, 2024. The average size of the loans in our home improvement portfolio at December 31, 2024 was approximately $21,000. The geographic dispersion of the home improvement loan portfolio supplements credit quality in reducing our risk.
The weighted average maturity of our loans outstanding was 13 years as of December 31, 2025. The home improvement loan portfolio had an average loan size of approximately $22,000 at December 31, 2025 and an average loan size at origination during 2025 of approximately $31,000.
We incentivize our employees through a combination of competitive salary, equity compensation and other benefits. We provide most employees with incentive bonuses in the form of cash and equity. Employee equity ownership helps us attract, retain, motivate and reward employees, while aligning employee compensation with our stockholders’ interests by linking realizable pay with stock performance.
We incentivize our employees through a combination of competitive salary, equity compensation and other benefits. We provide most employees with incentive compensation in the form of cash and equity.
Certain of the statutory provisions in the AMLA require rulemakings beyond those that have already been finalized, reports and other measures.
Certain of the statutory provisions in the AMLA require rulemakings beyond those that have already been finalized, reports and other measures. The impact of the AMLA, including on our compliance costs and compliance risk relating to the BSA, will depend on, among other things, these additional rulemakings and implementation guidance.
These loans are generally retained and typically have maturities ranging from three to ten years and require monthly payments ranging from full amortization over the loan term to fully deferred interest and principal at maturity, with multiple payment options in between. All loans may be prepaid, and in the first five years, a prepayment fee may be owed to us.
These loans are generally retained, typically have terms of five to six years, are non-amortizing with principal due at maturity, and include cash interest payments with the ability to incorporate payment-in-kind interest when appropriate. All loans may be prepaid, and in the first five years, a prepayment fee may be owed to us.
Consumer loans are primarily sourced through relationships with RV and boat dealers, and home improvement contractors throughout our market area. Commercial loans are generally sourced through a network of private equity sponsors who we have long-standing relationships with and are also referred by contacts with banks.
Consumer loans are primarily sourced through relationships with RV and boat dealers, home improvement contractors and strategic partners throughout our market area.
In October 2023, the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency, or the OCC, jointly issued a final rule that significantly amended the agencies’ regulatory framework implementing the CRA.
In October 2023, the Federal Reserve, the FDIC and the OCC jointly issued a final rule that significantly amended the agencies’ regulatory framework implementing the CRA. Thereafter, a federal court issued a preliminary injunction enjoining the U.S. federal bank regulatory agencies from enforcing the revised regulations while litigation challenging those regulations remains pending.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny failure to manage our future growth effectively could have a material adverse effect on our business, financial condition, and results of operations. 26 Our business depends on our ability to adapt to rapid technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new, technology-driven products and services.
Biggest changeOur business depends on our ability to adapt to rapid technological change. The financial services industry is continually undergoing rapid technological change with frequent introductions of new, technology-driven products and services, including with the proliferation and increasing use of artificial intelligence, or AI. The effective use of technology increases efficiency and enables financial institutions to serve customers better.
Our balance sheet consists of a significant percentage of non-prime consumer loans, which are associated with higher-than-average delinquency rates. The actual rates of delinquencies, defaults, repossessions, and losses on these loans could be more dramatically affected by a general economic downturn.
Our balance sheet consists of a significant percentage of non-prime consumer loans, which are associated with higher-than-average delinquency rates and losses. The actual rates of delinquencies, defaults, repossessions, and losses on these loans could be more dramatically affected by a general economic downturn.
We are subject to various privacy, information security, and data protection laws, including requirements concerning security breach notification, and we could be negatively affected by these laws.
We are subject to various privacy, information security, and data protection laws, including requirements concerning data security breach notification, and we could be negatively affected by these laws.
Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification requirements in certain circumstances in the event of a security breach.
Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification requirements in certain circumstances in the event of a data security breach.
Compliance with current or future privacy, data protection, and information security laws (including those regarding security breach notification) could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a material adverse effect on our business, financial condition or results of operations.
Compliance with current or future privacy, data protection, and information security laws (including those regarding data security breach notification) could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a material adverse effect on our business, financial condition or results of operations.
Prior to being sold, any loans classified as held for sale may be adversely affected by market conditions, including changes in interest rates, and by changes in the borrower’s creditworthiness, and the fair value associated with these loans, including any loans originated for sale in the secondary market, may decline prior to being sold.
Prior to being sold, any loans classified as held for sale may be adversely affected by market conditions, including changes in interest rates, and by changes in the borrower’s creditworthiness, and the fair value associated with these loans, including any loans originated for sale to the secondary market, may decline prior to being sold.
Other changes in the laws or regulations applicable to us more generally, may negatively impact the profitability of our business activities, require us to change certain of our business practices, materially affect our business model, limit the activities in which we may engage, affect retention of key personnel, require us to raise additional regulatory capital, increase the amount of liquid assets that 22 we hold, or otherwise affect our funding profile or expose us to additional costs (including increased compliance costs).
Other changes in the laws or regulations applicable to us more generally, may negatively impact the profitability of our business activities, require us to change certain of our business practices, materially affect our business model, limit the activities in which we may engage, affect retention of key personnel, require us to raise additional regulatory capital, increase the amount of liquid assets that we hold, or otherwise affect our funding profile or expose us to additional costs (including increased compliance costs).
This includes, for example, the risk of recession, the impacts of inflation, which has in recent years and could continue to have an adverse effect on consumer spending, a rising interest rate environment, as well as the impact that geopolitical responses to international and regional wars have had on gasoline prices and the economic environment generally in the United States.
This includes, for example, the risk of recession, the impacts of inflation, which has in recent years and could continue to have an adverse effect on consumer spending, a rising interest rate environment, the impact of tariffs, as well as the impact that geopolitical responses to international and regional wars have had on gasoline prices and the economic environment generally in the United States.
We currently have $33.0 million of indebtedness of which the interest rate is SOFR-based. See Note 5 of our consolidated financial statements for a discussion of the current and new lending arrangements to date. Additional Risks Relating to Our Loan Portfolios and Investments Lending to small businesses involves a high degree of risk and is highly speculative.
We currently have $33.0 million of indebtedness of which the interest rate is SOFR-based. See Note 5 of our consolidated financial statements for a discussion of the current and new lending arrangements to date. 28 Additional Risks Relating to Our Loan Portfolios and Investments Lending to small businesses involves a high degree of risk and is highly speculative.
The failure to receive financial statements, credit reports or other financial or business information related to our customers on a timely basis, or the inadvertent reliance by us on inaccurate, incomplete, fraudulent or misleading forms of any of the foregoing information, could result in credit losses, reputational damage or other effects that could have a material adverse effect on our business, financial condition or results of operations.
The failure to receive financial statements, credit reports or other financial or business information related to our customers on a timely basis, or the inadvertent reliance by us on inaccurate, incomplete, 29 fraudulent or misleading forms of any of the foregoing information, could result in credit losses, reputational damage or other effects that could have a material adverse effect on our business, financial condition or results of operations.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us, which could have a material adverse effect on our business, financial condition or results of operations. 23 Increases in FDIC insurance premiums may adversely affect our earnings.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us, which could have a material adverse effect on our business, financial condition or results of operations. Increases in FDIC insurance premiums may adversely affect our earnings.
We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization, or public offering, which would allow us to sell the underlying equity interests. ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization, or public offering, which would allow us to sell the underlying equity interests. 31 ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
Our failure to comply with privacy, data protection, and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions, and damage to our reputation, which could have a material adverse effect on our business, financial condition, or results of operations.
Our failure to comply 23 with privacy, data protection, and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions, and damage to our reputation, which could have a material adverse effect on our business, financial condition, or results of operations.
We have been, and likely will continue to be, the target of attempted cyber-attacks, computer viruses, malicious code, phishing attacks, denial of service attacks and other information security threats. To date, cyber-attacks have not had a material impact on our financial condition, results, operations, or business.
We have been, and likely will continue to be, the target of attempted cyber-attacks, computer viruses, malicious code, phishing attacks, denial of service attacks and other information security threats. To date, cyber-attacks have not had a material impact on our financial condition, results or business.
We or our third-party vendors, service providers, Strategic Partners, dealers, contractors or FSPs with which we have relationships have in the past developed and incorporated, and may in the future develop or incorporate AI technology tools in certain business processes, services or products.
We or our third-party vendors, service providers, Strategic Partners, dealers, contractors or FSPs with which we have relationships have in the past developed and incorporated, and may in the future develop or incorporate AI technology in certain business processes, services or products.
Additionally, a downturn in any particular industry or sector in which we are invested could also negatively impact the aggregate returns we realize. 29 The lack of liquidity in our investments may adversely affect our business. We generally make investments in private companies.
Additionally, a downturn in any particular industry or sector in which we are invested could also negatively impact the aggregate returns we realize. The lack of liquidity in our investments may adversely affect our business. We generally make investments in private companies.
The degree of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates, which may, in turn, impact the reliability of the process and the quality of our assets. Our financial condition, liquidity and results of operations depend on the credit performance of our loans.
The degree of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates, which may, in turn, impact the reliability of the process and the quality of our assets. 18 Our financial condition, liquidity and results of operations depend on the credit performance of our loans.
We must obtain approval from our regulators before engaging in certain activities or acquisitions, and there is the risk that such approvals may not be obtained, either in a timely manner or at all.
We must obtain approval from our regulators before engaging in certain activities or acquisitions, and 22 there is the risk that such approvals may not be obtained, either in a timely manner or at all.
Historically, the cost of remediation has not been material to our business, but it could be in the future. 24 Our SBIC subsidiaries are licensed by the SBA and are therefore subject to SBA regulations. Our SBIC subsidiaries are licensed to operate as SBICs and are regulated by the SBA.
Historically, the cost of remediation has not been material to our business, but it could be in the future. Our SBIC subsidiaries are licensed by the SBA and are therefore subject to SBA regulations. Our SBIC subsidiaries are licensed to operate as SBICs and are regulated by the SBA.
In the event of a default on a 18 recreation loan, generally the most practical recovery method is repossession of the financed vehicle, although the collateral value of the vehicle usually does not fully cover the outstanding account balance and costs of recovery.
In the event of a default on a recreation loan, generally the most practical recovery method is repossession of the financed vehicle, although the collateral value of the vehicle usually does not fully cover the outstanding account balance and costs of recovery.
The loss of any of these relationships, our failure to develop additional relationships, and circumstances in which our existing dealership, contractor, and FSP relationships generate decreased sales and loan volume all may have a material adverse effect on a substantial part of our business, financial condition and results of operations. 19 A reduction in demand for our products and failure by us to adapt to such reduction could adversely affect our business, financial condition and results of operations.
The loss of any of these relationships, our failure to develop additional relationships, and circumstances in which our existing dealer, contractor, and FSP relationships generate decreased sales and loan volume all may have a material adverse effect on a substantial part of our business, financial condition and results of operations. 19 A reduction in demand for our products and failure by us to adapt to such reduction could adversely affect our business, financial condition and results of operations.
Although the dealers, contractors, FSPs and Strategic Partners that we contract with are required to fulfill their contractual commitments to consumers and to comply with applicable law, from time to time they might not, or a consumer might allege that they did not. This, in turn, can result in claims against us or in loans being uncollectible.
Although the dealers, contractors, FSPs and Strategic Partners that we contract with are required to fulfill their contractual commitments to consumers and to comply with applicable law, from time to time they might not, or a borrower might allege that they did not. This, in turn, can result in claims against us or in loans being uncollectible.
As noted above, the Federal Reserve has raised certain benchmark interest rates in the past in an effort to combat inflation. Additionally, because we borrow to fund our loans and investments, a portion of our income is dependent upon the difference between the interest rate at which we borrow funds and the interest rate at which we invest these funds.
As noted above, the Federal Reserve has raised certain benchmark interest rates in the recent past in an effort to combat inflation. Additionally, we borrow to fund our loans and investments, a portion of our income is dependent upon the difference between the interest rate at which we borrow funds and the interest rate at which we invest these funds.
In those cases, we may decide that it is beneficial to remediate the situation, either by assisting the consumers to get a refund, working with the dealers, contractors, FSPs or Strategic Partners to modify the terms of the loans or reducing the amount due by making a concession to the consumer or otherwise.
In those cases, we may decide that it is beneficial to remediate the situation, either by assisting the borrowers to get a refund, working with the dealers, contractors, FSPs or Strategic Partners to modify the terms of the loans or reducing the amount due by making a concession to the consumer or otherwise.
AI models, notably generative AI models, may produce output or take action that is incorrect, result in the release of private, confidential or proprietary information, reflect biases included in the data on which they are trained, infringe on the intellectual property rights of others, or that is otherwise harmful.
AI models, notably generative and agentic AI models, may produce output or take action that is incorrect, result in the release of private, confidential or proprietary information, reflect biases included in the data on which they are trained, infringe on the intellectual property rights of others, or that is otherwise harmful.
Although we currently do not use any AI tools or models in critical areas of our business, and are not aware of any third-parties that use AI tools or models in a manner that would materially affect our business, the development and use of AI present a number of risks and challenges to our business.
Although we currently do not use any AI tools or models in critical areas of our business, and are not aware of any third-parties that use AI tools or models in a manner that would materially affect our business, the rapidly expanding development and use of AI present a number of risks and challenges to our business.
As a result, our ability to originate consumer loans depends on our relationships with a limited number of dealers, contractors, and FSPs. Although we have relationships with various dealers, contractors, and FSPs, none of our relationships are exclusive and each may be terminated at any time.
As a result, our ability to originate consumer loans for our portfolio depends on our relationships with a limited number of dealers, contractors and FSPs. Although we have relationships with various dealers, contractors and FSPs, none of our relationships are exclusive and each may be terminated at any time.
Climate change and the transition to a less carbon-dependent economy could also have a negative impact on origination volumes in our Recreation Lending segment if demand for recreational vehicles decreases due to climate-related concerns.
The transition to a less carbon-dependent economy could also have a negative impact on origination volumes in our recreation lending segment if demand for recreational vehicles decreases due to climate-related concerns.
For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to share nonpublic personal information about our customers with nonaffiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with nonaffiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program comprised of safeguards appropriately based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches.
For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to share nonpublic personal information about our customers with nonaffiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of nonpublic personal information sharing by us with nonaffiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program containing safeguards considered appropriate based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches.
Accordingly, if attractive sale opportunities were not available, or the Bank were to decide not to pursue sales of loan portfolios in order to support its growth, we may not sell any loans, which, in turn, could have a material adverse effect on our non-interest income. We may not control many of Medallion Capital’s portfolio companies.
Accordingly, if attractive sale opportunities were not available, or we were to decide not to pursue sales of loan portfolios in order to support our growth objectives, we may not sell any loans, which, in turn, could have a material adverse effect on our non-interest income. We may not control many of Medallion Capital’s portfolio companies.
The Patriot Act and the BSA require financial institutions to design and implement programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with FinCEN.
The USA Patriot Act of 2001 and the BSA require financial institutions to design and implement programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with FinCEN.
These members of senior management include Alvin Murstein, our Chairman and Chief Executive Officer, Andrew M. Murstein, our President and Chief Operating Officer, Anthony N. Cutrone, our Executive Vice President and Chief Financial Officer, Donald S. Poulton, President and Chief Executive Officer, Medallion Bank, D. Justin Haley , Executive Vice President and Chief Financial Officer, Medallion Bank, and Steven M.
These members of senior management include Alvin Murstein, our Executive Chairman of the Board of Directors, Andrew M. Murstein, our President, Chief Executive Officer and Chief Operating Officer, Anthony N. Cutrone, our Executive Vice President and Chief Financial Officer, Donald S. Poulton, Chief Executive Officer, Medallion Bank, D. Justin Haley , President Medallion Bank, and Steven M.
Any such breach or disruption could compromise our systems and the information stored there could be accessed, publicly disclosed, destroyed, lost, or stolen.
Any such breach or disruption could compromise our networks, and the information stored there could be accessed, publicly disclosed, destroyed, lost or stolen.
If our underwriting processes do not adequately assess risk, contain errors or are otherwise ineffective, whether due to automation or otherwise, our reputation and relationships with dealers, contractors and FSPs could be harmed, our market share could decline and our financial condition, liquidity and result of operations could be adversely affected.
If our underwriting processes do not adequately assess risk, contain errors or are otherwise ineffective, whether due to automation, inaccurate or incomplete customer information, or otherwise, our reputation and relationships with dealers, contractors and FSPs could be harmed, our market share could decline and our financial condition, liquidity and result of operations could be adversely affected.
We operate in a highly regulated environment, and if we are found to be in violation of any of the federal, state, or local laws or regulations applicable to us, our business could suffer.
Legal and Regulatory Risks We operate in a highly regulated environment, and if we are found to be in violation of any of the federal, state, or local laws or regulations applicable to us, our business could suffer.
In addition, our increasing interconnectivity with service providers, dealers, contractors, FSPs, and Strategic Partners including through application programming interfaces, increases the risk that a security breach or other disruption affecting a third party materially affects our ability to conduct business.
In addition, our increasing interconnectivity with service providers, dealers, contractors, Strategic Partners and FSPs, including through APIs, increases the risk that a security breach or other disruption affecting a third party materially affects our ability to conduct business.
We borrow from the brokered CD market, private and public note placements and issue senior debt securities to banks and other lenders, and through long-term subordinated SBA debentures. These creditors have fixed dollar claims on our assets that are superior to the claims of our stockholders.
We historically have borrowed from the brokered CD market, private and public note placements, issuance of senior debt securities to banks and other lenders, and through long-term subordinated SBA debentures. These creditors have fixed dollar claims on our assets that are superior to the claims of our stockholders.
To the extent our funding costs increase in response to an increase in market rates of interest, an abrupt increase in market rates of interest may have an adverse impact on our earnings until we are able to originate new loans at higher prevailing interest rates.
To the extent our funding costs increase in response to an increase in market rates of interest, an abrupt increase in market rates of interest may have an adverse impact on our results of operations until we are able to originate new consumer loans at higher prevailing interest rates.
Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of December 31, 2024 by $2.2 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $2.7 million at December 31, 2024.
Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of December 31, 2025 by $1.3 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $5.4 million at December 31, 2025.
In addition, as a condition to receipt of FDIC insurance, Medallion Bank entered into a capital maintenance agreement with the FDIC requiring it to maintain a 15% Tier 1 leverage ratio (Tier 1 capital to average assets). As of December 31, 2024, Medallion Bank’s Tier 1 leverage ratio was 15.7%.
In addition, as a condition to receipt of FDIC insurance, Medallion Bank entered into a capital maintenance agreement with the FDIC requiring it to maintain a 15% Tier 1 leverage ratio (Tier 1 capital to average assets). As of December 31, 2025, Medallion Bank’s Tier 1 leverage ratio was 17.8%.
Additionally, if these models fail to adequately assess the creditworthiness of our borrowers, whether due to flaws in model design, inaccurate or insufficient data or otherwise, we may experience higher than forecasted losses and our financial condition, liquidity and results of operations could be adversely affected. We regularly refine these algorithms based on new data and changing macro-economic conditions.
Additionally, if these models fail to adequately assess the creditworthiness of our borrowers, whether due to flaws in model design, inaccurate or insufficient data (whether acquired by us or provided by our dealers, contractors and FSPs), or otherwise, we may experience higher than forecasted losses and our financial condition, liquidity and results of operations could be adversely affected. 30 We regularly refine these algorithms based on new data and changing macro-economic conditions.
Additionally, the risk of recession, higher gasoline prices, volatile real estate values and market conditions, resets of adjustable rate mortgages to higher interest rates, increases in inflation, general availability of consumer credit, or other factors that impact consumer confidence or disposable income, could increase loss frequency and decrease consumer demand for RVs, boats, collector cars, and other consumer recreational equipment (including in connection with home improvement projects), as well as weaken collateral values on certain types of consumer products.
Additionally, the risk of recession, higher gasoline prices, volatile real estate values and market conditions, resets of adjustable rate mortgages to higher interest rates, increases in inflation, tariffs on products or component parts of the collateral we finance, general availability of consumer credit, or other factors that impact consumer confidence or disposable income, could increase loss frequency and decrease consumer demand for RVs, boats, trailers, and other consumer products (including in connection with home improvement projects), as well as weaken collateral values on certain types of consumer products.
Such a decline could reduce the amount available for distribution payments. As of December 31, 2024, we had $2.4 billion of outstanding indebtedness with a weighted average borrowing cost of 4.03%. Approximately $0.9 billion of our borrowing relationships have maturity dates during 2025, a vast majority of which are brokered certificates of deposit.
Such a decline could reduce the amount available for distribution payments. As of December 31, 2025, we had $2.4 billion of outstanding indebtedness with a weighted average borrowing cost of 4.16%. Approximately $777.4 million of our borrowing relationships have maturity dates during 2026, a vast majority of which are brokered certificates of deposit.
We have in the past and may in the future pursue new strategies and lines of business, such as our Strategic Partnership Program, and we may face enhanced risks as a result of these changes in strategy, including from transacting with a broader array of customers and exposure to new assets, activities and markets .
We have in the past and may in the future pursue new strategies and lines of business, and we may face enhanced risks as a result of these changes in strategy, including from transacting with a broader array of customers and exposure to new assets, activities markets, and regulatory requirements .
We expect that new technologies and business processes applicable to the banking industry will continue to emerge, and these new technologies and business processes may be better than those we currently use.
We expect that new technologies and business processes applicable to the banking industry will continue to emerge, whether AI-related or otherwise, and these new technologies and business processes may be better than those we currently use.
Despite our security and business continuity measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, or other disruptions, or vulnerable to disruptions, including those resulting from systems failures, operational events, employee error, or incidents affecting our third-party service providers (or providers to those third-party service providers).
Despite our security and business continuity measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions, or vulnerable to other disruptions as a result of systems failures, operational events, employee error or incidents affecting our third-party and cloud service providers (or providers to those third-party service providers).
Moreover, numerous states have adopted, or are considering adopting, privacy, information security, and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection, and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities.
Moreover, legislators and regulators are increasingly adopting or revising, privacy, information security, and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection, and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities.
The risk associated with, and the perspective of regulators, employees and other stakeholders regarding, climate change is evolving rapidly, which makes it difficult to assess the ultimate impact on us of climate change-related risks and uncertainties, and we expect that climate change-related risk will increase over time.
The risk associated with, and the perspective of regulators, employees and other stakeholders regarding, climate change is evolving rapidly, which makes it difficult to assess the ultimate impact on us of climate change-related risks and uncertainties.
As a result, our results of operations could be materially adversely affected if a substantial number of our portfolio companies elect to prepay amounts owed to us and we are not able to reinvest the proceeds for comparable yields in a timely fashion. Our profitability may be directly affected by interest rate levels and fluctuations in interest rates.
As a result, our results of operations could be materially adversely affected if a substantial number of our portfolio companies elect to prepay amounts owed to us and we are not able to reinvest the proceeds for comparable yields in a timely fashion.
In addition, a large proportion of our new loan originations is concentrated in our top ten relationships (48% in our home improvement portfolio and 38% in our recreation portfolio in 2024), and the loss of a significant relationship could have a negative effect on demand for our products and our new loan originations.
In addition, a large proportion of our new loan originations is concentrated in our top ten relationships, and the loss of a significant relationship could have a negative effect on demand for our products and our new loan originations.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our customers and the personal information of our customers and employees, in third-party data centers, and on our systems. The secure processing, maintenance, and transmission of this information is critical to our operations.
In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our customers, and personally identifiable information of our customers and employees, in third-party data centers (including in the cloud or services), and on our networks. The secure processing, maintenance, and transmission of this information is critical to our operations.
Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the current global economic and political environment, our work-from home arrangements, the outsourcing of some of our business operations, the ongoing shortage of qualified cybersecurity professionals, and the interconnectivity and interdependence of third parties to our systems.
Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the current global economic and political environment, our work-from-home arrangements, our use of cloud service providers, the outsourcing of some of our business operations, and the interconnectivity and interdependence of third 26 parties to our systems.
In addition, if a third-party provider fails to provide the services we require, fails to meet contractual requirements, such as compliance with applicable laws and regulations, or suffers a cyber-attack or other security breach, our business could suffer economic and reputational harm that could have a material adverse effect on our business, financial condition or results of operations. 28 Misconduct by current or former employees could expose us to significant legal liability and reputational harm.
In addition, if a third-party provider fails to provide the services we require, fails to meet contractual requirements, such as compliance with applicable laws and regulations, or suffers a cyberattack or other security breach, our business could suffer economic and reputational harm that could have a material adverse effect on our business, financial condition or results of operations.
As interest rates change, our gross interest rate spread on originations either increases or decreases because the rates charged on the loans originated are limited by market and competitive conditions, sometimes restricting our ability to pass on increased interest costs to the consumer. For example, in 2024, as interest rates increased, our net interest margin decreased by 33 basis points.
As interest rates change, our gross interest rate spread on originations either increases or decreases because the rates charged on the loans originated are limited by market and competitive conditions, sometimes restricting our ability to pass on increased interest costs to the consumer.
In addition, during an economic slow-down or recession, our servicing costs may increase without a corresponding increase in our net interest income. Furthermore, our business is significantly affected by monetary and regulatory policies of the U.S. Federal Government and its agencies, which are in a greater state of flux under the new administration.
In addition, during an economic slowdown or recession, our servicing costs may increase without a corresponding increase in our net interest income. Furthermore, our business is significantly affected by monetary and regulatory policies of the U.S. Federal Government and its agencies.
Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of capital markets investors or other disruptions in capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity.
We may not be able to obtain capital on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of capital markets investors or other disruptions in capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity.
For example, in 2024 our net interest margin on gross loans decreased to 8.05% from 8.38%. Essentially all of our loans have fixed interest rates, while a portion of our borrowings may reprice at current higher rates. As a result, a significant change in market interest rates could have a material adverse effect on our net investment income.
Essentially all of our loans have fixed interest rates, while a portion of our borrowings may reprice at current higher rates. As a result, a significant change in market interest rates could have a material adverse effect on our net investment income.
Additionally, our ability to obtain additional sources of funds including through credit facilities or other alternative sources of financing may be difficult, and we cannot guarantee that we will be able to do so on terms favorable to us or at all.
We cannot assure you that we will be successful in obtaining such additional financing on acceptable terms, if it all. 20 Similarly, our ability to obtain additional sources of funds including through credit facilities or other alternative sources of financing may be difficult, and we cannot guarantee that we will be able to do so on terms favorable to us or at all.
We do not have fixed guidelines for diversification, and while we are not targeting any specific industries, our investments are, and could continue to be, concentrated in relatively few industries.
Our portfolio is and may continue to be concentrated in a limited number of portfolio companies, industries and sectors. We do not have fixed guidelines for diversification, and while we are not targeting any specific industries, our investments are, and could continue to be, concentrated in relatively few industries.
The risks would increase as we may increase our use of AI models, and in doing so, rely on AI models developed by third parties.
Further, we may increase our use of AI tools or models in the future, and in doing so, we may rely on AI models developed by third parties.
Any new business initiatives, including our Strategic Partnership Program, have in the past and may in the future expose us to new and enhanced risks, including new credit-related, compliance, fraud, market and operational risks, increased compliance and operating costs, different and potentially greater regulatory scrutiny of such new activities and assets, and may expose us to new types of customers as well as asset classes, activities and markets.
Any new business initiatives have in the past and may in the future expose us to new and enhanced risks, including new credit-related, compliance, fraud, market and operational risks, increased compliance and operating costs, different and potentially greater regulatory scrutiny of such new activities and assets, and may expose us to new types of customers as well as asset classes, activities and markets. 25 Any new business initiatives and strategies we may pursue in the future may be less successful than anticipated and may not advance our intended business strategy.
Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
Security breaches and other disruptions could compromise our information and expose us to liability, which may negatively impact our business and reputation.
Although Medallion Bank has developed contractual relationships with a diversified group of investment brokers, and the brokered deposit market is well developed and utilized by many banking institutions, conditions arise that might affect the availability of brokered deposits. In particular, recent industry events have highlighted that the availability of deposits can change suddenly and in unpredictable ways.
Although Medallion Bank has developed contractual relationships with a diversified group of investment brokers, and the brokered deposit market is well developed and utilized by many banking institutions, conditions could arise that might affect the availability of brokered deposits.
We are vulnerable to reputational harm because we operate in an industry in which integrity and the confidence of the dealers, contractors, FSPs, and Strategic Partners that sell our consumer products are of critical importance. Our current and former directors, and employees could engage or could have engaged in misconduct that adversely affects our business.
Misconduct by current or former employees could expose us to significant legal liability and reputational harm. We are vulnerable to reputational harm because we operate in an industry in which integrity and the confidence of the dealers, contractors, FSPs, and Strategic Partners that sell our loan products are of critical importance.
As of December 31, 2024, 37% of our recreation loans originated 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.
During the year ended December 31, 2025, 36% of our recreation loans originated were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit histories. As of December 31, 2025, 25% of our entire consumer loan portfolio consisted of non-prime receivables.
Based on the foregoing factors, the operating and financial restrictions and covenants in our current debt agreements and any future financing agreements could adversely affect our ability to finance future operations or capital needs or to engage in other business activities.
Based on the foregoing factors, the operating and financial restrictions and covenants in our current debt agreements and any future financing agreements could adversely affect our ability to finance future operations or capital needs or to engage in other business activities. Medallion Bank’s use of brokered deposits for its deposit-gathering activities may not be available when needed.
We received dividends from Medallion Bank of $24.0 million and $20.0 million for the years ended December 31, 2024 and 2023 and received dividends from Medallion Capital of $1.6 million and $4.8 million for the years ended December 31, 2024 and 2023. All of the amounts received from Medallion Capital in 2023 were reinvested in Medallion Capital.
We received dividends from Medallion Bank of $24.0 million in each of the years ended December 31, 2025 and 2024 and received dividends from Medallion Capital of $5.6 million and $1.6 million for the years ended December 31, 2025 and 2024.
The consumer lending market is very competitive and is served by a variety of entities, including banks, savings and loan associations, credit unions, independent finance companies, and financial technology companies.
Risk Relating to Our Growth and Operations Competition with other lenders could adversely affect us. The consumer lending market is very competitive and is served by a variety of entities, including banks, savings and loan associations, credit unions, independent finance companies, and financial technology companies.
In order to grow, we will need to hire, train, supervise, and manage new employees. However, we cannot assure you that any such employees will contribute to the success of our business.
In order to grow, we will need to hire, train, supervise, and manage new employees. However, we cannot assure you that any such employees will contribute to the success of our business. Any failure to manage our future growth effectively could have a material adverse effect on our business, financial condition, and results of operations.
In addition, we may need to raise additional capital in the future to have sufficient capital resources and liquidity to meet our commitments, including the terms of the 2003 Capital Maintenance Agreement, and fund our business needs and future growth, particularly if the quality of our assets or earnings were to deteriorate significantly.
We seek to raise additional capital to have sufficient capital resources and liquidity to meet our commitments, including the terms of the 2003 Capital Maintenance Agreement, and fund our business needs and future growth.
These loan sales subject us to a variety of risks, which we discuss further below. 31 When we sell consumer loans, we are required to make customary representations and warranties to the purchaser about the loans and the manner in which they were originated and serviced.
When we sell consumer loans, we are required to make customary representations and warranties to the purchaser about the loans and the manner in which they were originated and serviced.
Many of our competitors have substantially greater resources to invest in technological improvements than we do. We may not be able to effectively implement new, technology-driven products and services or be successful in marketing these products and services to our customers.
We may not be able to implement new, technology-driven products and services effectively or be successful in marketing these products and services to our customers.
Accordingly, following those transactions, the overall credit characteristics of our loan portfolio declined due to the transfer of the loans with stronger credit characteristics. The credit characteristics of our loan portfolio could change as a result of the foregoing loan sale and future loan sales, and other characteristics could change as well.
Accordingly, following those transactions, the overall credit characteristics of our loan portfolio declined due to the transfer of the loans with stronger credit characteristics.
The effective use of technology increases efficiency and enables financial institutions to serve customers better. Our future success depends, in part, upon our ability to address the needs of customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations.
Our future success depends, in part, upon our ability to address the needs of customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements than we do.
Any of these results could ultimately have an adverse effect on our business, financial condition or results of operations. Our financial condition and results of operations will depend on our ability to manage growth effectively.
Our financial condition and results of operations will depend on our ability to manage growth effectively.
Although we have engaged in sales of loan portfolios in the past and anticipate completing a loan sale in the near future, there can be no assurance that we will continue do so in the future.
Although we have engaged in sales of loan portfolios in the past and believe it is likely we will sell loans in the future, there can be no assurance that we will continue to sell loans.
The departure of any member of our senior management or the senior management team at Medallion Bank could have a material adverse effect on our ability to manage or grow our business and effectively mitigate risk. 27 The development and use of Artificial Intelligence, or AI, present risks and challenges that may adversely impact our business .
Hannay, Executive Vice President and Chief Lending Officer, Medallion Bank. The departure of any member of our senior management or the senior management team at Medallion Bank could have a material adverse effect on our ability to manage or grow our business and effectively mitigate risk.
Our ability to enter into transactions with our affiliates is restricted. The SBA restricts the ability of SBICs to lend money to any of their officers, directors, and employees, or invest in any affiliates thereof. Medallion Bank is subject to certain federal laws that restrict and control its ability to engage in transactions with its affiliates.
In addition, the timing of SBA’s approval, if received, is uncertain. 24 Our ability to enter into transactions with our affiliates is restricted. The SBA restricts the ability of SBICs to lend money to any of their officers, directors, and employees, or invest in any affiliates thereof.
Any new business initiatives and strategies we may pursue in the future may be less successful than anticipated and may not advance our intended business strategy. We may not realize a satisfactory return on investments or acquisitions, we may experience difficulty in managing new portfolios or integrating operations, and management’s attention from our other businesses could be diverted.
We may not realize a satisfactory return on investments or acquisitions, we may experience difficulty in managing new portfolios or integrating operations, and management’s attention from our other businesses could be diverted. Any of these results could ultimately have an adverse effect on our business, financial condition or results of operations.
Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of our common stock in excess of the amount which can be acquired without regulatory approval.
Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of our common stock in excess of the amount which can be acquired without regulatory approval. These provisions could delay or prevent a third party from acquiring us, despite the possible benefit to our stockholders, or otherwise adversely affect the market price of our common stock.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−0 removed13 unchanged
Biggest changeWe continue to integrate our cybersecurity programs into our enterprise risk management program, which is led by various senior representatives of the Company and overseen by the Audit Committee of the Company’s Board of Directors. 32 Medallion Financial Corp., the Bank and Medallion Capital are each responsible for developing cybersecurity programs appropriate for their respective entities, including as may be required by applicable law or regulation.
Biggest changeWe continue to integrate our cybersecurity programs into our enterprise risk management program, which is led by various senior representatives of the Company and overseen by the Audit Committee of the Company’s Board of Directors.
Our busine ss strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, and we currently do not expect that risks from cybersecurity threats are reasonably likely to materially affect us, but we cannot provide assurance that we will not be materially affected in the future by such risks or any future material incidents.
Our busine ss strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, and we currently do not expect that risks from cybersecurity threats are reasonably likely to materially affect us, but we cannot provide assurance that we will not be materially affected in the future by such risks or any future material cybersecurity incidents.
Our programs also assess and manage third party risks, and we perform third-party risk management to identify and mitigate risks from third parties such as vendors and other business partners associated with our use of third-party service providers .
Our programs also assess and manage third party risks, and we perform third-party risk management to identify and mitigate risks from our use of third parties such as vendors, service providers, and other business partners .
Added
Medallion Financial Corp., the Bank and Medallion Capital are each responsible for developing cybersecurity programs appropriate for their respective entities, including as may be required by applicable law or regulation.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeWe do not own any real property, other than foreclosed properties obtained as a result of lending relationships. We believe that our leased properties, taken as a whole, are in good operating condition and are suitable for our current business operations.
Biggest changeWe do not own any real property, other than foreclosed properties obtained as a result of lending relationships. We believe that our leased properties, taken as a whole, are in good operating condition and are suitable for our current business operations. 32
Medallion Bank leases office space in Salt Lake City, Utah under a lease expiring in November 2030, which handles the recreation and home improvement lending segments. We also lease office space in Excelsior, Minnesota under a lease expiring February 2031, which handles our commercial lending segment.
Medallion Bank leases office space in Salt Lake City, Utah under a lease expiring in November 2033, which handles the recreation and home improvement lending segments. We also lease office space in Excelsior, Minnesota under a lease expiring February 2031, which handles our commercial lending segment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS See Note 10 “Commitments and Contingencies” subsections (c) and (d) to the consolidated financial statements included in Item 15 of this Annual Report on Form 10-K for details of the Company’s legal proceedings, including the pending SEC litigation. ITEM 4. MINE SAFE TY DISCLOSURES Not applicable. 33 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS See Note 10 “Commitments and Contingencies” subsections (c) and (d) to the consolidated financial statements included in Item 15 of this Annual Report on Form 10-K for details of the Company’s legal proceedings, including the pending SEC litigation. ITEM 4. MINE SAFE TY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+1 added−1 removed5 unchanged
Biggest changeA dividend of $0.10 per share was paid in March, May, and August 2024. On October 25, 2024, the Company’s board of directors authorized and increased the quarterly dividend to $0.11 per share, and a dividend of $0.11 per share was paid in November 2024.
Biggest changeThe Company’s board of directors authorized and increased the quarterly dividend to $0.10 per share on October 24, 2023, to $0.11 per share on October 25, 2024, and to $0.12 per share on April 25, 2025, beginning with the dividend paid on May 30, 2025 to holders of record as of May 15, 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES STOCK PERFORMANCE GRAPH The following graph commences as of December 31, 2019 and compares the Company’s common stock with the cumulative total return for the NASDAQ Composite Index and the Russell 2000 Index.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES STOCK PERFORMANCE GRAPH The following graph commences as of December 31, 2020 and compares the Company’s common stock with the cumulative total return for the NASDAQ Composite Index and the Russell 2000 Index.
Furthermore, the following graph assumes the investment of $100 on December 31, 2019 in each of the Company’s common stock, the stocks comprising the NASDAQ Composite Index and the Russell 2000 Index and assumes dividends are reinvested.
Furthermore, the following graph assumes the investment of $100 on December 31, 2020 in each of the Company’s common stock, the stocks comprising the NASDAQ Composite Index and the Russell 2000 Index and assumes dividends are reinvested.
The following table presents our purchases for the year ended December 31, 2024.
The following table presents our purchases for the year ended December 31, 2025.
Cumulative Total Return Based on Initial Investment of $100 on December 31, 2019, with dividends reinvested Our common stock is quoted on NASDAQ under the symbol “MFIN.” Our common stock commenced trading on May 23, 1996. As of March 12, 2025, there were approximately 170 holders of record of our common stock.
Cumulative Total Return Based on Initial Investment of $100 on December 31, 2020, with dividends reinvested Our common stock is quoted on NASDAQ under the symbol “MFIN.” Our common stock commenced trading on May 23, 1996. As of March 9, 2026, there were approximately 154 holders of record of our common stock.
On March 12, 2025, the last reported sale price of our common stock was $8.72 per share. We are subject to federal and applicable state corporate income taxes on our taxable ordinary income and capital gains. Beginning in March 2022, the Company's board of directors reinstated our quarterly dividend.
On March 9, 2026, the last reported sale price of our common stock was $9.49 per share. We are subject to federal and applicable state corporate income taxes on our taxable ordinary income and capital gains. Beginning in March 2022, the Company's board of directors reinstated our quarterly dividend at $0.08 per share.
Stockholders may obtain additional information about the dividend reinvestment plan by contacting Equiniti Trust Company, LLC at PO Box 10027, Newark, NJ, 07101. 34 Securities Authorized for Issuance Under Equity Compensation Plans Incorporated by reference from our Definitive Proxy Statement expected to be filed by April 30, 2025 for our 2025 Annual Meeting of Shareholders under the caption “Equity Compensation Plan Information.” PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS On April 29, 2022, our board of directors authorized a new stock repurchase program with no expiration date, pursuant to which we were authorized to repurchase up to $35 million of our shares, which was increased to $40 million on August 10, 2022, also with no expiration date.
Securities Authorized for Issuance Under Equity Compensation Plans Incorporated by reference from our Definitive Proxy Statement expected to be filed by April 30, 2026 for our 2026 Annual Meeting of Shareholders under the caption “Equity Compensation Plan Information.” PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS On April 29, 2022, our board of directors authorized a new stock repurchase program with no expiration date, pursuant to which we were authorized to repurchase up to $35 million of our shares, which was increased to $40 million on August 10, 2022, also with no expiration date.
Such new repurchase program replaced the previous one, which was terminated. During the year ended December 31, 2024 we repurchased 570,404 shares of our common stock at an aggregate cost of $4.6 million. Accordingly, as of December 31, 2024, up to $15,392,299 of shares remain authorized for repurchase under our stock repurchase program.
Such new repurchase program replaced the previous one, which was terminated. During the year ended December 31, 2025, we repurchased 108,351 shares of our common stock at an aggregate cost of $1.0 million. Accordingly, as of December 31, 2025, up to $14,406,534 of shares remain authorized for repurchase under our stock repurchase program.
There can be no assurance that we will continue to pay any cash distributions, as we may retain our earnings to facilitate the growth of our business, to finance our investments, to provide liquidity, or for other corporate purposes.
There can be no assurance that we will continue to pay any cash distributions, as we may retain our earnings to facilitate the growth of our business, to finance our investments, to provide liquidity, or for other corporate purposes. 33 We have adopted a dividend reinvestment plan pursuant to which stockholders may elect to have distributions reinvested in additional shares of common stock.
Total Numbers of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Total Amount Paid Maximum Approximate Dollar Value of Shares that May Yet to Be Purchased under the Plans or Programs January 1 - January 31 — $ — — $ — $ 19,998,012 February 1 - February 29 88,840 7.92 703,587 703,587 19,294,424 March 1 - March 31 175,320 8.11 1,421,942 1,421,942 17,872,483 April 1 - April 30 — — — — 17,872,483 May 1 - May 31 107,000 8.15 872,413 872,413 17,000,070 June 1 - June 30 76,900 8.35 642,241 642,241 16,357,829 July 1 - July 31 — — — — 16,357,829 August 1 - August 31 122,344 7.89 122,344 965,530 15,392,299 September 1 - September 30 — — — — 15,392,299 October 1 - October 31 — — — — 15,392,299 November 1 - November 30 — — — — 15,392,299 December 1 - December 31 — — — — 15,392,299 Total 570,404 $ 8.07 3,762,527 $ 4,605,713 $ 15,392,299 ITEM 6. [ Reserved]
Total Numbers of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Total Amount Paid Maximum Approximate Dollar Value of Shares that May Yet to Be Purchased under the Plans or Programs January 1 - January 31 — $ — — $ — $ 15,392,299 February 1 - February 28 — — — — 15,392,299 March 1 - March 31 60,185 8.83 60,185 531,230 14,861,069 April 1 - April 30 — — — — 14,861,069 May 1 - May 31 400 9.04 400 3,614 14,857,455 June 1 - June 30 47,766 9.44 47,766 450,920 14,406,534 July 1 - July 31 — — — — 14,406,534 August 1 - August 31 — — — — 14,406,534 September 1 - September 30 — — — — 14,406,534 October 1 - October 31 — — — — 14,406,534 November 1 - November 30 — — — — 14,406,534 December 1 - December 31 — — — — 14,406,534 Total 108,351 $ 9.10 108,351 $ 985,764 $ 14,406,534 ITEM 6. [ Reserved]
Removed
We have adopted a dividend reinvestment plan pursuant to which stockholders may elect to have distributions reinvested in additional shares of common stock.
Added
Stockholders may obtain additional information about the dividend reinvestment plan by contacting Equiniti Trust Company, LLC at PO Box 10027, Newark, NJ, 07101.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

138 edited+48 added−50 removed56 unchanged
Biggest change(Dollars in thousands) Recreation Home Improvement Commercial Taxi Medallion (1) Total Balance at December 31, 2022 $ 41,966 $ 11,340 $ 1,049 $ 9,490 $ 63,845 Charge-offs (50,512 ) (12,308 ) (1,019 ) (3,829 ) (67,668 ) Recoveries 11,449 2,886 10 22,191 36,536 Provision (benefit) for credit losses 44,592 17,583 1,988 (26,353 ) 37,810 CECL transition amount upon ASU 2016-13 adoption 10,037 1,518 2,120 37 13,712 Balance at December 31, 2023 57,532 21,019 4,148 1,536 84,235 Charge-offs (69,349 ) (18,035 ) (71 ) (124 ) (87,579 ) Recoveries 14,924 4,094 29 5,163 24,210 Provision (benefit) for credit losses 67,995 13,458 1,084 (6,035 ) 76,502 Balance at December 31, 2024 $ 71,102 $ 20,536 $ 5,190 $ 540 $ 97,368 (1) As of December 31, 2024, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $165.3 million, including $98.6 million related to loans secured by New York taxi medallions, some of which may represent collection opportunities for us.
Biggest change(Dollars in thousands) Recreation Home Improvement Commercial Taxi Medallion (1) Total Balance at December 31, 2023 $ 57,532 $ 21,019 $ 4,148 $ 1,536 $ 84,235 Charge-offs (69,349 ) (18,035 ) (71 ) (124 ) (87,579 ) Recoveries 14,924 4,094 29 5,163 24,210 Provision (benefit) for credit losses 67,995 13,458 1,084 (6,035 ) 76,502 Balance at December 31, 2024 71,102 20,536 5,190 540 97,368 Charge-offs (75,486 ) (16,577 ) (5,165 ) (15 ) (97,243 ) Recoveries 16,432 5,423 — 2,987 24,842 Provision (benefit) for credit losses 73,908 10,181 9,027 (3,294 ) 89,822 Balance at December 31, 2025 $ 85,956 $ 19,563 $ 9,052 $ 218 $ 114,789 (1) As of December 31, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $171.1 million, including $106.3 million related to loans secured by New York taxi medallions, some of which may represent collection opportunities for us. 41 The following tables present the gross charge-offs for the years ended December 31, 2025 and 2024, by the year of origination: December 31, 2025 (Dollars in thousands) 2025 2024 2023 2022 2021 Prior Total Recreation $ 3,280 $ 15,870 $ 16,369 $ 17,582 $ 8,310 $ 14,075 $ 75,486 Home improvement 108 3,668 5,141 4,365 1,824 1,471 16,577 Commercial — — — 152 — 5,013 5,165 Taxi medallion — — — — — 15 15 Total $ 3,388 $ 19,538 $ 21,510 $ 22,099 $ 10,134 $ 20,574 $ 97,243 December 31, 2024 (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Total Recreation $ 3,203 $ 18,540 $ 22,883 $ 10,789 $ 4,222 $ 9,712 $ 69,349 Home improvement 841 5,766 6,412 3,131 815 1,070 18,035 Commercial — 71 — — — — 71 Taxi medallion — — — — — 124 124 Total $ 4,044 $ 24,377 $ 29,295 $ 13,920 $ 5,037 $ 10,906 $ 87,579 The following tables present the allowance for credit losses for loans held for investment, by type, as of December 31, 2025 and 2024: December 31, 2025 (Dollars in thousands) Amount Percentage of Allowance (1) Allowance as a Percent of Loan Category (2) Recreation $ 85,956 75 % 5.32 % Home improvement 19,563 17 2.41 Commercial 9,052 8 7.36 Taxi medallion 218 * 18.49 Total (2) $ 114,789 100 % (1) Does not include loans held for sale which are carried at the lower of amortized cost or fair value for which an allowance for credit loss is not established.
(2) Loans 90 days or more past due as a percent of total loans.
(2) Loans 90 days or more past due as a percent of total loans.
For both segments, growth rates consistent with our plan were employed by the third-party expert for a five year period, and a long-term growth rate of 3% was utilized in determining the terminal fair value. 37 Determining the fair value of a lending segment or an indefinite-lived intangible asset involves the use of significant estimates and assumptions.
For both segments, growth rates consistent with our plan were employed by the third-party expert for a five year period, and a long-term growth rate of 3% was utilized in determining the terminal fair value. Determining the fair value of a lending segment or an indefinite-lived intangible asset involves the use of significant estimates and assumptions.
Additionally, we historically and continue to account for goodwill in this non-operating segment. All goodwill relates to the Bank, specifically the recreation and home improvement segments. Commencing with the 2020 second quarter, the Bank began issuing loans related to the new strategic partnership business, which is included within this segment.
Additionally, we historically and continue to account for goodwill in this non-operating segment. All goodwill relates to the Bank, specifically the recreation and home improvement lending segments. Commencing with the 2020 second quarter, the Bank began issuing loans related to the new strategic partnership business, which is included within this segment.
Additionally, more information about our business activities can be found in “Business.” COMPANY BACKGROUND 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.
Additionally, more information about our business activities can be found in “Business.” 34 COMPANY BACKGROUND 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.
Abrupt increases in market rates of interest may have an adverse impact on our earnings until we are able to originate new loans at the higher prevailing interest rates.
Abrupt increases in market rates of interest may have an adverse impact on our earnings until we are able to originate new consumer loans at the higher prevailing interest rates.
ASSET/LIABILITY MANAGEMENT Interest Rate Sensitivity We, like other financial institutions, are subject to interest rate risk to the extent that our interest-earning assets (consisting of consumer, commercial, and taxi medallion loans, and investment securities) reprice on a different basis over time in comparison to our interest-bearing liabilities (consisting primarily of bank certificates of deposit, SBA debentures and borrowings, historically credit facilities, and borrowings from banks and other lenders).
ASSET/LIABILITY MANAGEMENT Interest Rate Sensitivity We, like other financial institutions, are subject to interest rate risk to the extent that our interest-earning assets (consisting of consumer, commercial, and taxi medallion loans, and investment securities) reprice on a different basis over time in comparison to our interest-bearing liabilities (consisting primarily of bank certificates of deposit, historically credit facilities, and borrowings from banks and other lenders).
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.
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.
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.
We maintain relationships with approximately 3,400 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.
During the year ended December 31, 2024, we continued to utilize a taxi medallion value of $79,500 in the New York City and Newark markets with all other markets being valued at $0 at the end of the year, despite fluctuating transfer prices that have exceeded that value.
During the year ended December 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 year.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OBJECTIVE The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the years ended December 31, 2024, 2023, and 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OBJECTIVE The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the years ended December 31, 2025, 2024, and 2023.
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 years ended December 31, 2024, 2023, and 2022.
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 years ended December 31, 2025, 2024, and 2023.
A relative measure of interest rate sensitivity is provided by the cumulative difference between interest sensitive assets and interest sensitive liabilities for a given time interval expressed as a percentage of total assets. 50 The following table presents our interest rate sensitivity gap at December 31, 2024.
A relative measure of interest rate sensitivity is provided by the cumulative difference between interest sensitive assets and interest sensitive liabilities for a given time interval expressed as a percentage of total assets. 50 The following table presents our interest rate sensitivity gap at December 31, 2025.
These financing options would also provide additional sources of funds for both external expansion and continuation of internal growth. The following table presents sources of available funds for us and each of our subsidiaries and amounts outstanding under trust preferred securities and borrowings and their respective end of period weighted average interest rates at December 31, 2024.
These financing options would also provide additional sources of funds for both external expansion and continuation of internal growth. 53 The following table presents sources of available funds for us and each of our subsidiaries, and amounts outstanding under trust preferred securities and borrowings and their respective end of period weighted average interest rates at December 31, 2025.
MSC earns referral and servicing fees for these activities. In 2019, the Bank launched a strategic partnership program to provide lending and other services to financial technology, or fintech, companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans. The Bank continues to evaluate and launch additional partnership programs with fintech companies.
MSC earns referral and servicing fees for these activities. In 2019, the Bank launched a strategic partnership program to provide lending and other services to fintech companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans. The Bank continues to evaluate and launch additional partnership programs with fintech companies.
We do not have a deadline for its consideration of these alternatives, and there can be no assurance that this process will result in any transaction being announced or consummated. CRITICAL ACCOUNTING ESTIMATES We follow financial accounting and reporting policies that are in accordance with GAAP.
We do not have a deadline for its consideration of these alternatives, and there can be no assurance that this process will result in any transaction being announced or consummated. CRITICAL ACCOUNTING POLICIES AND ESTIMATES We follow financial accounting and reporting policies that are in accordance with Generally Accepted Accounting Principles, or GAAP.
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 on page 19.
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 on page 18.
RATE/VOLUME ANALYSIS The following table presents the change in interest income and expense due to changes in the average balances (volume) and average rates, calculated for the years ended December 31, 2024, 2023, and 2022.
RATE/VOLUME ANALYSIS The following table presents the change in interest income and expense due to changes in the average balances (volume) and average rates, calculated for the years ended December 31, 2025, 2024, and 2023.
Recreation loans are made to borrowers residing nationwide, with the highest concentrations in Texas and Florida, at 16% and 10% of loans outstanding with no other states at or above 10%.
Recreation loans are made to borrowers residing nationwide, with the highest concentrations in Texas and Florida, at 17% and 10% of loans outstanding with no other states at or above 10%.
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.
The percentage of new loan originations by the top ten dealers and/or 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.
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.
The percentage of new loan originations by the top ten contractors and/or 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.
For the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 For a comparison of the Company’s results of operations for the year ended December 31, 2023 to the year ended December 31, 2022, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission on March 9, 2024.
For the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 For a comparison of the Company’s results of operations for the year ended December 31, 2024 to the year ended December 31, 2023, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the Securities and Exchange Commission on March 13, 2025.
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 year ended December 31, 2024, net gains of $6.9 million were recognized with respect to these equity investments.
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 year ended December 31, 2025, net gains of $24.6 million were recognized with respect to these equity investments.
The following table presents non-prime originations in comparison to total originations for the years ended December 31, 2024, 2023, and 2022.
The following table presents non-prime originations in comparison to total originations for the years ended December 31, 2025, 2024, and 2023.
The following table presents selected financial data and ratios as of and for the years ended December 31, 2024, 2023, and 2022.
The following table presents selected financial data and ratios as of and for the years ended December 31, 2025, 2024, and 2023.
The following table presents selected financial data and ratios as of and for the years ended December 31, 2024, 2023, and 2022.
The following table presents selected financial data and ratios as of and for the years ended December 31, 2025, 2024, and 2023.
The following table presents selected financial data and ratios as of and for the years ended December 31, 2024, 2023, and 2022.
The following table presents selected financial data and ratios as of and for the years ended December 31, 2025, 2024, and 2023.
However, borrowers may prepay for a variety of other reasons, such as to monetize increases in the underlying collateral values. In addition, we manage our exposure to increases in market rates of interest by incurring fixed-rate indebtedness, such as ten year subordinated SBA debentures, and by setting repricing intervals on certificates of deposit, for terms of up to five years.
However, borrowers may prepay for a variety of other reasons, such as to monetize increases in the underlying collateral values. In addition, we manage our exposure to increases in market rates of interest by incurring fixed-rate indebtedness and by setting repricing intervals on certificates of deposit, for terms of up to five years.
We continued to not recognize interest income with all loans being placed on nonaccrual as of the third quarter 2020 (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.
We continued to not recognize interest income with all loans being 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.
(2) Excludes deferred financing costs of $8.2 million, $8.5 million, and $7.0 million as of December 31, 2024, 2023, and 2022. (3) Net charge-offs as a percent of annual average gross loans. (4) Allowance for credit losses as a percentage of loans held for investment.
(2) Excludes deferred financing costs of $8.4 million, $8.2 million, and $8.5 million as of December 31, 2025, 2024, and 2023. (3) Net charge-offs as a percent of annual average gross loans. (4) Allowance for credit losses as a percentage of loans held for investment.
As of December 31, 2024, the allowance for credit loss on loans held for investment was 5.00% and 2.48% for recreation and home improvement loans, compared to 4.31% and 2.76% a year ago. See Note 4 of the accompanying consolidated financial statements for additional information on loans and allowance for credit losses.
As of December 31, 2025, the allowance for credit loss on loans held for investment was 5.32% and 2.41% for recreation and home improvement loans, compared to 5.00% and 2.48% a year ago. See Note 4 of the accompanying consolidated financial statements for additional information on loans and allowance for credit losses.
Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas at 12% and 11% of loans outstanding December 31, 2024, with no other states at or above 10%.
Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas at 14% and 12% of loans outstanding December 31, 2025, with no other states at or above 10%.
The table below presents the components of our debt as of December 31, 2024, exclusive of deferred financing costs of $8.2 million. See Note 5 to the consolidated financial statements for details of the contractual terms of our borrowings.
The table below presents the components of our debt as of December 31, 2025, exclusive of deferred financing costs of $8.4 million. See Note 5 to the consolidated financial statements for details of the contractual terms of our borrowings.
The average cost of the certificates of deposit was 3.54% during the current year, 83 basis points higher than the 2.71% average cost in the prior year, reflecting a higher rate on newly issued deposits when compared to the maturing deposits which were issued at lower rates in previous years.
The average cost of the certificates of deposit was 3.88% during the current year, 34 basis points higher than the 3.54% average cost in the prior year, reflecting a higher rate on newly issued deposits when compared to the maturing deposits which were issued at lower rates in previous years.
We continue to monitor global supply chain disruptions, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation and economic health, as well as other factors which contribute to competition and changes in the demand for our loan products.
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.
The following table presents quarterly originations for the years ended December 31, 2024, 2023, and 2022.
The following table presents quarterly originations for the years ended December 31, 2025, 2024, and 2023.
Liquidity and Capital Resources Our sources of liquidity include brokered certificates of deposit and other borrowings at the Bank, unfunded commitments to sell debentures to the SBA, loan amortization and prepayments, private and public issuances of debt securities, participations or sales of loans to third parties, issuances of preferred securities at our subsidiaries, and the disposition of our other assets.
Liquidity and Capital Resources Our sources of liquidity include brokered certificates of deposit and other borrowings at the Bank, loan amortization and prepayments, private and public issuances of debt securities, participations or sales of loans to third parties, issuances of preferred securities at our subsidiaries, and the disposition of our other assets.
Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of December 31, 2024 by $2.2 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $2.7 million at December 31, 2024.
Assuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of December 31, 2025 by $1.3 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $5.4 million at December 31, 2025.
We also show results for a non-operating segment, corporate and other investments. Recreation Lending 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%, 67%, and 71% of our interest income for the years ended December 31, 2024, 2023, and 2022.
We also present results for a non-operating segment, corporate and other investments. Recreation Lending 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%, 67%, and 67% of our interest income for the years ended December 31, 2025, 2024, and 2023.
The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable. 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 38% of recreation lending’s new loan originations for the year ended December 31, 2024.
The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten relationships were responsible for 39% of recreation lending’s new loan originations for the year ended December 31, 2025.
As of December 31, 2024, 2023, and 2022, the weighted average FICO, measured at origination, scores of all recreation loans outstanding were 685 (683 exclusive of loans held for sale), 683, and 671.
As of December 31, 2025, 2024, and 2023, the weighted average FICO, measured at origination, scores of all recreation loans outstanding were 686, 685 (683 exclusive of loans held for sale), and 683.
As of December 31, 2024, 2023, and 2022, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding were 767, 764, and 753. The weighted average FICO scores at the time of origination for the loans funded in the years ended December 31, 2024, 2023, and 2022 were 781, 771, and 758.
As of December 31, 2025, 2024, and 2023, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding were 767, 767, and 764. The weighted average FICO scores at the time of origination for the loans funded in the years ended December 31, 2025, 2024, and 2023 were 779, 781, and 771.
The Bank is an industrial bank regulated by the FDIC and the Utah Department of Financial Institutions that originates consumer loans, raises deposits, and conducts other banking activities. The Bank generally provides us with our lowest cost of funds which it raises through bank certificates of deposit.
Interest income is earned on the debt instruments. The Bank is an industrial bank regulated by the FDIC and the Utah Department of Financial Institutions that originates consumer loans, raises deposits, and conducts other banking activities. The Bank generally provides us with our lowest cost of funds which it raises through bank certificates of deposit.
Home Improvement Lending The home improvement lending segment works with contractors and financial service providers to finance home improvements and is concentrated in roofs, swimming pools, and windows at 36%, 27%, and 13% of total loans outstanding as of December 31, 2024, as compared to 41%, 20%, and 13% as of December 31, 2023, with no other collateral types at or above 10%.
Home Improvement Lending The home improvement lending segment works with contractors and financial service providers to finance home improvements and is concentrated in swimming pools, roofs, and windows at 32%, 28%, and 11% of total loans outstanding as of December 31, 2025, as compared to 27%, 36%, and 13% as of December 31, 2024, with no other collateral types at or above 10%.
(3) Net charge-offs as a percent of annual average gross loans. 45 Commercial Lending We originate both senior and subordinated loans nationwide to businesses in a variety of industries, with California, Wisconsin, and Texas having 28%, 10%, and 10% of the segment portfolio, and no other states having a concentration at or above 10%.
(3) Net charge-offs as a percent of annual average gross loans. 45 Commercial Lending We originate both senior and subordinated loans nationwide to businesses in a variety of industries, with California, Wisconsin, and New York having 20%, 12%, and 11% of the segment portfolio, and no other states having a concentration at or above 10%.
We expect our borrowing costs to further increase as we take deposits and borrow other funds at the currently higher prevailing rates. 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 expect our borrowing costs to further increase as we take deposits and borrow other funds at current prevailing rates. We have sought 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.
As of December 31, 2024 and 2023, we had intangible assets of $19.1 million and $20.6 million. We recognized $1.4 million of amortization expense on the intangible assets for each of the years ended December 31, 2024, 2023 and 2022. Management engaged an independent third-party expert to perform a quantitative assessment of goodwill for impairment at December 31, 2024.
As of December 31, 2025 and 2024, we had intangible assets of $17.7 million and $19.1 million. We recognized $1.4 million of amortization expense on the intangible assets for each of the years ended December 31, 2025, 2024 and 2023. Management engaged an independent third-party expert to perform a quantitative assessment of goodwill for impairment at October 1, 2025.
Loans held for sale are carried at the lesser of amortized cost or fair value, do not have an allowance for credit losses, and are excluded from this calculation. 48 CONSOLIDATED RESULTS OF OPERATIONS For the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Net income attributable to shareholders was $35.9 million, or $1.52 per share, for the year ended December 31, 2024, compared to $55.1 million, or $2.37 per share, for the year ended December 31, 2023.
Loans held for sale are carried at the lesser of amortized cost or fair value, do not have an allowance for credit losses, and are excluded from this calculation. 48 CONSOLIDATED RESULTS OF OPERATIONS For the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 Net income attributable to shareholders was $43.0 million, or $1.78 per diluted share, for the year ended December 31, 2025, compared to $35.9 million, or $1.52 per diluted share, for the year ended December 31, 2024.
Average debt outstanding was $2.2 billion for the year ended December 31, 2024, up from $2.0 billion for the year ended December 31, 2023, as we issued additional certificates of deposit to fund our loan growth.
Average debt outstanding was $2.330 billion for the year ended December 31, 2025, up from $2.241 billion for the year ended December 31, 2024, as we issued additional certificates of deposit to fund our loan growth.
See page 38 for tables that show average balances and cost of funds for our funding sources. 49 Net interest income was $202.5 million for the year ended December 31, 2024, compared to $188.1 million for the year ended December 31, 2023.
See page 38 for tables that show average balances and cost of funds for our funding sources. 49 Net interest income was $216.9 million for the year ended December 31, 2025, compared to $202.5 million for the year ended December 31, 2024.
We have used the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, which is expected to continue to increase the yield on these portfolios over time, as well as increase the credit quality of our new issuances, particularly in our recreation segment, with the average FICO scores, measured at origination, of our total recreation loans outstanding being 685 and 683 as of December 31, 2024 and 2023.
We have used the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, which has increased the yield on these portfolios over time, as well as increased the credit quality of our new issuances, particularly in our recreation lending segment, with the average FICO scores, measured at origination, of our total recreation loans outstanding being 686 and 685 as of December 31, 2025 and 2024.
For both segments, a discount rate was estimated using the risk-free interest rate adjusted for specific risk and size premiums, resulting in a discount rate of 17.5% for the recreation lending segment and 16.5% for the home improvement lending segment.
For both segments, a discount rate was estimated using the risk-free interest rate adjusted for specific risk and size premiums, resulting in a discount rate of 16.2% for each of the recreation and home improvement lending segments.
As of December 31, 2024, current loans (those less than 30 days past due) were 94% and 99% of the recreation and home improvement loan portfolios, compared to 95% and 99% as of December 31, 2023.
As of December 31, 2025, current loans (those less than 30 days past due) were 94% and 99% of the recreation and home improvement loan portfolios, similar to December 31, 2024.
In April 2023, the Bank began to originate retail savings deposits through a third-party service provider and, as of December 31, 2024, the Bank had $6.0 million in retail savings deposit balances. 51 In March 2023, the Bank established a discount window line of credit at the Federal Reserve.
In April 2023, the Bank began to originate retail savings deposits through a third-party service provider and, as of December 31, 2025, the Bank had $3.7 million in retail savings deposit balances. In March 2023, the Bank established a discount window line of credit at the Federal Reserve.
The Bank has borrowing arrangements with several commercial banks. These agreements are accommodations that can be terminated at any time, for any reason and allow the Bank to borrow up to $75.0 million. As of December 31, 2024, there were no outstanding amounts with respect to these arrangements.
These agreements are accommodations that can be terminated at any time, for any reason and allow the Bank to borrow up to $75.0 million. As of December 31, 2025, there were no outstanding amounts with respect to these arrangements.
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 20%, and collector cars making up 11% of the portfolio as of December 31, 2024, compared to 54%, 19%, and 10% as of December 31, 2023.
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 cars making up 13% of the portfolio as of December 31, 2025, compared to 55%, 20%, and 11% as of December 31, 2024.
The tables below present the activity of the total loan portfolio, inclusive of loans held for sale and loans held for investment.
The following tables present the activity of the loan portfolio, inclusive of loans held for sale and loans held for investment.
The home improvement loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $20,000 as of December 31, 2024. The loans are fixed rate with an average term at origination of 15 years.
The home improvement loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $22,000 as of December 31, 2025, with an average loan size originated in 2025 of $31,000. The loans are fixed rate with an average term at origination of approximately 15 years.
The commercial lending business has concentrations in manufacturing, construction, and wholesale trade that make up 57%, 12%, and 12% of total loans outstanding as of December 31, 2024, as compared to 53%, 13%, and 11% as of December 31, 2023.
The commercial lending business has concentrations in manufacturing, wholesale trade, and construction, that make up 63%, 11%, and 10% of total loans outstanding as of December 31, 2025, as compared to 57%, 12%, and 12% as of December 31, 2024.
Our cost of funds is primarily driven by the rates paid on our various borrowings and changes in the levels of average borrowings outstanding. See Note 5 to the consolidated financial statements for details on the terms of our outstanding debt. Our debentures issued to the SBA typically have terms of ten years.
Our cost of funds is primarily driven by the rates paid on our various borrowings and changes in the levels of average borrowings outstanding. See Note 5 to the consolidated financial statements for details on the terms of our outstanding debt.
In June 2024, we amended the notes previously issued in a private placement to certain institutional investors in December 2023, increasing the 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.
We used the net proceeds from the offering for general corporate purposes. 51 In June 2024, we amended the notes previously issued in a private placement to certain institutional investors in December 2023, increasing the 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.
During the year ended December 31, 2024, we collected $12.1 million related to taxi medallion assets, which resulted in net recoveries and gains of $6.9 million and collected $45.2 million related to taxi medallion assets in the prior year, which resulted in net recoveries and gains of $29.6 million.
During the year ended December 31, 2025, we collected $13.6 million related to taxi medallion assets, which resulted in net recoveries and gains of $7.9 million, and collected $12.1 million related to taxi medallion assets in the prior year, which resulted in net recoveries and gains of $6.9 million.
As of December 31, 2024, our consumer loans represented 95% of our gross loan portfolio, inclusive of loans held for sale, and commercial loans represented 4%. Total assets were $2.9 billion as of December 31, 2024 and $2.6 billion as of December 31, 2023. 35 Our loan-related earnings depend primarily on our level of net interest income.
As of December 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 $2.96 billion as of December 31, 2025 and $2.87 billion as of December 31, 2024. Our loan-related earnings depend primarily on our level of net interest income.
Year Ended December 31, 2024 2023 2022 (Dollars in thousands) Amount % (1) Amount % (1) Amount % (1) Recreation $ 10,018 0.4 % $ 9,095 0.4 % $ 7,365 0.4 % Home improvement 1,386 * 1,502 0.1 579 * Commercial 16,337 0.7 6,240 0.3 74 * Taxi medallion — — — — 885 * Total loans 90 days or more past due $ 27,741 1.1 % $ 16,837 0.8 % $ 8,903 0.5 % (1) Percentages are calculated against the total loan portfolio.
Year Ended December 31, 2025 2024 2023 (Dollars in thousands) Amount % (1) Amount % (1) Amount % (1) Recreation $ 12,856 0.5 % $ 10,018 0.4 % $ 9,095 0.4 % Home improvement 1,300 * 1,386 * 1,502 0.1 Commercial 10,274 0.4 16,337 0.7 6,240 0.3 Taxi medallion 41 * — — — — Total loans 90 days or more past due $ 24,471 1.0 % $ 27,741 1.1 % $ 16,837 0.8 % (1) Percentages are calculated against the total loan portfolio.
During the year ended December 31, 2024, we originated $14.3 million of loans, compared to $34.9 million in originations in 2023. As of December 31, 2024, commercial loans totaled $111.3 million. The following table presents selected financial data and ratios as of and for the years ended December 31, 2024, 2023, and 2022.
During the year ended December 31, 2025, we originated $40.6 million of loans, compared to $14.3 million in originations in 2024. As of December 31, 2025, commercial loans totaled $123.1 million. The following table presents selected financial data and ratios as of and for the years ended December 31, 2025, 2024, and 2023.
Salaries and benefits were $38.3 million for the year ended December 31, 2024, up from $37.6 million for the year ended December 31, 2023, with the increase attributable to a higher head count, annual cost of living increases, and higher long-term performance based equity compensation.
Salaries and benefits were $41.7 million for the year ended December 31, 2025, up from $38.3 million for the year ended December 31, 2024, with the increase attributable to a higher head count, annual cost of living increases, higher long-term performance based equity compensation, and higher incentive compensation at our subsidiaries.
Additionally, during the year ended December 31, 2024, the allowance for credit losses increased 24% from December 31, 2023, with the increase reflecting the 15% growth in the portfolio we experienced as well as rising loss rates and various economic factors.
Additionally, during the year ended December 31, 2025, the allowance for credit losses increased 21% from December 31, 2024, with the increase reflecting the 5% growth in the portfolio we experienced as well as rising loss rates and various economic factors resulting in a higher allowance.
The following table presents non-prime originations in comparison to total originations for the years ended December 31, 2024, 2023, and 2022. (Dollars in thousands) Total Originations Non-prime Originations Non-prime Originations (%) 2024 $ 298,642 $ 586 * 2023 $ 357,394 $ 3,094 1 % 2022 $ 392,543 $ 5,068 1 % (*) Less than 1%.
The following table presents non-prime originations in comparison to total originations for the years ended December 31, 2025, 2024, and 2023. (Dollars in thousands) Total Originations Non-prime Originations Non-prime Originations (%) 2025 $ 224,478 $ 65 * 2024 $ 298,642 $ 586 * 2023 $ 357,394 $ 3,094 1 % (*) Less than 1%.
The 32 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.
The 25 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.
The weighted average FICO scores at the time of origination for the loans funded in the years ended December 31, 2024, 2023, and 2022 were 685, 686, and 676.
The weighted average FICO scores at the time of origination for the loans funded in the years ended December 31, 2025, 2024, and 2023 were 688, 685 (686 exclusive of loans held for sale), and 686.
(Dollars in thousands) Total Originations Non-prime Originations Non-prime Originations (%) 2024 $ 526,634 $ 185,334 35 % 2023 $ 447,039 $ 152,045 34 % 2022 $ 513,062 $ 180,697 35 % 43 The following table presents selected financial data and ratios as of and for the years ended December 31, 2024, 2023, and 2022.
(Dollars in thousands) Total Originations Non-prime Originations Non-prime Originations (%) 2025 $ 468,467 $ 169,498 36 % 2024 $ 526,634 $ 185,334 35 % 2023 $ 447,039 $ 152,045 34 % 43 The following table presents selected financial data and ratios as of and for the years ended December 31, 2025, 2024, and 2023.
Year Ended December 31, (Dollars in thousands) 2024 2023 2022 Return on average assets 1.54 % 2.51 % 2.40 % Return on average stockholder's equity 10.12 17.33 14.92 Return on average equity 9.89 15.79 13.74 Net interest margin, gross 8.05 8.38 8.73 Equity to assets (1) 15.30 15.91 16.40 Debt to equity (2) 5.4x 5.1x 4.9x Net loans to assets 83 % 82 % 82 % Net charge-offs 63,369 31,132 16,380 Net charge-offs as a % of average loans receivable (3) 2.69 % 1.48 % 0.99 % Reserve coverage (4) 4.12 3.80 3.33 (1) Includes $68.8 million, related to non-controlling interests in consolidated subsidiaries as of December 31, 2024, 2023, and 2022.
Year Ended December 31, (Dollars in thousands) 2025 2024 2023 Return on average assets 1.93 % 1.54 % 2.51 % Return on average stockholder's equity 11.06 10.12 17.33 Return on average equity 11.43 9.89 15.79 Net interest margin, gross 8.06 8.05 8.38 Equity to assets (1) 17.19 15.30 15.91 Debt to equity (2) 4.7x 5.4x 5.1x Net loans to assets 83 % 83 % 82 % Net charge-offs 72,401 63,369 31,132 Net charge-offs as a % of average loans receivable (3) 2.88 % 2.69 % 1.48 % Reserve coverage (4) 4.50 4.12 3.80 (1) Includes $99.4 million, related to non-controlling interests in consolidated subsidiaries as of December 31, 2025, and $68.8 million as of December 31, 2024 and 2023.
Year Ended December 31, (Dollars in thousands) 2024 2023 2022 First Quarter $ 51,576 $ 94,981 $ 89,820 Second Quarter 67,990 117,035 105,172 Third Quarter 96,545 79,333 100,451 Fourth Quarter 82,531 66,045 97,100 Year Ended $ 298,642 $ 357,394 $ 392,543 As of December 31, 2024, 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.
Year Ended December 31, (Dollars in thousands) 2025 2024 2023 First Quarter $ 48,796 $ 51,576 $ 94,981 Second Quarter 54,253 67,990 117,035 Third Quarter 59,711 96,545 79,333 Fourth Quarter 61,718 82,531 66,045 Year Ended $ 224,478 $ 298,642 $ 357,394 As of December 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.
During the year ended December 31, 2024, we issued deposits for three-month certificates at rates as high as 4.89% for both 36 month and 60 month certificates, with the most recent 36 month and 60 month issuances in 2024 at rates of 4.19%. and 4.13%.
During the year ended December 31, 2025, we issued deposits for three-month certificates at rates as high as 4.15% and 4.35% for both 36 month and 60 month certificates, with the most recent 36 month and 60 month issuances in 2025 both at rates of 3.70%.
Provision and Allowance for Credit Losses The allowance for credit losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions, and excess concentration risks.
Specifically, subsequent evaluations of the loan portfolio, in light of the factors then prevailing, may result in significant changes to the allowance for credit losses in future periods, and the inability to collect on outstanding loans could result in increased credit losses. 35 Provision and Allowance for Credit Losses The consumer loan allowance for credit losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions, and excess concentration risks.
Strategic partnership loans were $7.4 million and $0.6 million in net loans as of December 31, 2024 and December 31, 2023, with originations of $203.6 million and $118.3 million during the years ended December 31, 2024 and December 31, 2023.
Strategic partnership loans were $15.1 million and $7.4 million in net loans as of December 31, 2025 and December 31, 2024, with originations of $771.6 million and $203.6 million during the years ended December 31, 2025 and December 31, 2024.
(2) Excludes deferred costs. ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of December 31, 2024 and 2023, the allowance totaled $97.4 million and $84.2 million, which represented 4.12% and 3.80% of total loans held for investment, respectively.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of December 31, 2025 and 2024, the allowance totaled $114.8 million and $97.4 million, which represented 4.50% and 4.12% of total loans held for investment, respectively.
(Dollars in thousands) Year Ended December 31, 2024 2023 2022 Selected Earnings Data Total interest income $ 7,869 $ 6,257 $ 2,793 Total interest expense 11,371 9,704 7,008 Net interest expense (3,502 ) (3,447 ) (4,215 ) Provision (benefit) for credit losses (9 ) (35 ) 152 Net interest income after credit loss provision (benefit) (3,493 ) (3,412 ) (4,367 ) Other income 1,793 1,609 1,865 Operating expenses: Salaries (11,158 ) (9,674 ) (7,567 ) Loan servicing fees and collection costs (1,126 ) (799 ) (554 ) Other costs (3,864 ) (4,939 ) (4,525 ) Net loss before taxes (17,848 ) (17,215 ) (15,148 ) Income tax benefit 4,731 4,985 4,011 Net loss after taxes $ (13,117 ) $ (12,230 ) $ (11,137 ) Balance Sheet Data Total loans, net 7,386 553 572 Total assets 449,888 421,956 359,333 Total segment borrowings 373,168 345,462 291,526 Summary Consolidated Financial Ratios The following table presents selected financial data and ratios as of and for the years ended December 31, 2024, 2023, and 2022.
(Dollars in thousands) Year Ended December 31, 2025 2024 2023 Selected Earnings Data Total interest income $ 9,039 $ 7,869 $ 6,257 Total interest expense 12,633 11,371 9,704 Net interest expense (3,594 ) (3,502 ) (3,447 ) Benefit for credit losses — (9 ) (35 ) Net interest expense after credit loss benefit (3,594 ) (3,493 ) (3,412 ) Other income 6,124 1,793 1,609 Operating expenses: Salaries (11,612 ) (11,158 ) (9,674 ) Loan servicing fees and collection costs (50 ) (1,126 ) (799 ) Other costs (3,856 ) (3,864 ) (4,939 ) Net loss before taxes (12,988 ) (17,848 ) (17,215 ) Income tax benefit 4,006 4,731 4,985 Net loss after taxes $ (8,982 ) $ (13,117 ) $ (12,230 ) Balance Sheet Data Total loans, net 15,144 7,386 553 Total assets 487,023 449,888 421,956 Total segment borrowings 396,135 373,168 345,462 Summary Consolidated Financial Ratios The following table presents selected financial data and ratios as of and for the years ended December 31, 2025, 2024, and 2023.
Net interest margin, excluding the impact of allowance for credit loss, was 8.05% for the year ended December 31, 2024, compared to 8.38%, for the year ended December 31, 2023, reflecting the above, particularly the rising cost of borrowings experienced over the prior year, offset to an extent by higher yields on loans compared to the prior year.
Net interest margin, excluding the impact of allowance for credit loss, was 8.06% for the year ended December 31, 2025, compared to 8.05%, for the year ended December 31, 2024, reflecting the above, particularly our higher yield over the prior year, largely offset by the rising cost of borrowings experienced.
In August 2024, we completed a private placement to certain institutional investors of $5.0 million aggregate principal amount of 8.625% unsecured senior notes due August 2039, with interest payable semiannually. We intend to use the net proceeds from the offering for general corporate purposes.
In August 2024, we completed a private placement to certain institutional investors of $5.0 million aggregate principal amount of 8.625% unsecured senior notes due August 2039, with interest payable semiannually.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAssuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of December 31, 2024 by $2.2 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $2.7 million at December 31, 2024.
Biggest changeAssuming that the balance sheet were to remain constant and no actions were taken to alter the existing interest rate sensitivity a hypothetical immediate 1% increase in interest rates would result in an increase to net income as of December 31, 2025 by $1.3 million on an annualized basis, and the impact of such an immediate increase of 1% over a one year period would have been a reduction in net income by $5.4 million at December 31, 2025.
Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates.
Accordingly, no assurances can be given that actual results would not differ materially from the potential outcome simulated by these estimates. 55

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