Did the recent EnerBank and Regions hires contribute to the outsized home improvement growth, and are they gaining traction?

Andrew Murstein confirmed that the new hires, particularly from EnerBank, have done a great job and contributed to the growth. He also mentioned that more talent from EnerBank is expected to join in the coming weeks. “Yes, they have. We really brought over a great person from EnterBank... These people have done a great job for us. We're actually bringing over some more of them in the coming weeks.”

Can you provide color on the sale of recreation loans, including the balance sold, decision drivers, and buyer demand?

Justin Haley stated that $50 million of recreation loans were sold with good economics and strong demand. Periodic sales are anticipated to manage capital effectively given the company's growth pace. Anthony Cutrone added that the sale did not hinder growth and provides a recurring earnings outlet. “About 50 million sold and we're seeing plenty of demand for that. Good economics on it. We would anticipate as we're growing at the pace we're growing in order to manage our capital effectively that we'll have periodic sales.”

How are you feeling about current credit trends and the outlook for credit in the second half of 2026?

Management is positive on home improvement credit, with charge-offs improving significantly. Recreation NCOs are elevated but stable. They expect pricing changes made on recreation loans to lead to a better charge-off ratio and adjusted NIM in coming quarters. “I mean, charge-offs have come in sizably and performed much better than they have maybe a year ago. So, we're optimistic about that. REC is still elevated, but it's not ticking up, and it did come in, you know, as expected from Q1.”

MFIN

Medallion Financial (MFIN) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 30, 2026

Source: earnings call transcript

Executive summary

Medallion Financial Corp. Q2 FY26 — Record Originations and Asset Growth

Medallion Financial reported a quarter of record loan originations in both home improvement and recreation segments, driving significant asset and net interest income growth. The company surpassed $3 billion in assets, reflecting strong lending platform performance and strategic partnerships. While credit quality remained stable, increased day-one provisioning for growth impacted earnings per share, and net interest margin saw some compression. Management remains committed to shareholder returns through dividends and buybacks, alongside continued investment in talent and technology.

Highlights

Home improvement originations increased over twofold to a record $128.6 million.
Recreation originations grew 60% to a record $228.5 million.
Total loans increased 12% year-over-year to $2.79 billion, with 7% sequential growth.
The company surpassed $3 billion in assets for the first time.
Net interest income reached a new quarterly record of $57.2 million.
Dividend per share increased 16.7% from last quarter and 75% since its reinstatement in Q2 2022.
Nearly 780,000 shares were repurchased at a discount to both book and tangible book value.

Concerns

Net interest margin decreased 15 basis points year-over-year and 60 basis points quarter-over-quarter to 7.94%.
Provision for credit loss increased to $22.3 million, including $6.5 million of day-one provisioning for growth, which reduced earnings by $0.18 per share.
Net charge-offs in the recreation portfolio increased slightly to 3.14% from 3.11% in the prior quarter.
Operating costs rose to $25 million from $21.5 million year-over-year, driven by higher employee and servicing expenses, and professional fees.

Guidance & targets

Category	Target	Timeline	Confidence
Strategic partnership program scale	More significant size low materiality	Long term	Medium
Strategic partnership program new partners	Add new partners low materiality	Over time	Medium
Net interest income growth vs. operating costs growth	NII growth to outpace operating costs growth medium materiality	Long term	High
Remaining share buyback authorization	Finish within the next six months high materiality	Next six months · FY26-FY27	High
New share buyback plan	Reload and put a new plan in place high materiality	After current plan completion	High
Full-year loan growth	Mid-teens high materiality	Full year · FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Home Improvement Achieved the highest origination quarter in history for this segment, with stable credit quality. Originations continued at this level through July. Originations: $128.6 millionWeighted average coupon: 9.69%	—	over twofold	—	—
Recreation Recorded a record high for originations in a quarter for this segment, maintaining stable credit quality. Originations continued through July. Net charge-off rate increased slightly from the prior quarter. Originations: $228.5 millionWeighted average coupon: 15.06%Net charge-offs: $13.3 millionNet charge-off rate: 3.14%	—	60%	—	—
Commercial Lending The portfolio grew 5% during the quarter with two new loans originated. Portfolio balance: $126 millionNew loans originated: 2New loan value: $7.1 millionWeighted average coupon: 14.37%	—	—	5%	—

Deals & partnerships

Fifth partner (unnamed) Strategic partnership program for loan originations

Added a fifth partner to the strategic partnership program during the quarter, contributing significantly to loan originations and fee income. The company has a growing pipeline of new partner prospects.

Risks & headwinds

Net interest margin compression Q2 FY26

Down 15 bps YoY and 60 bps QoQ to 7.94%

Mitigation:Growth in loan portfolio generating higher interest income, outpacing interest expense.

Increased provision for credit loss due to growth Q2 FY26

$6.5 million of day-one provisioning, translating to $0.18 per share reduced earnings

Mitigation:Management views this as a necessary 'penalty' for growth that translates into real earnings down the line.

Elevated recreation net charge-offs Q2 FY26

3.14% in Q2 FY26 compared to 3.11% in Q1 FY26

Mitigation:Pricing changes on recreation loans implemented last quarter are expected to produce a better charge-off ratio over time.

Higher operating costs Q2 FY26

$25 million in Q2 FY26 vs $21.5 million in Q2 FY25, due to employee costs, servicing expenses, and professional fees

Mitigation:Expect net interest income growth to outpace operating cost growth long-term; New York office relocation expected to reduce annual occupancy costs by $500,000.

Choppy net income and EPS Q2 FY26

Net income $7.4 million ($0.31 diluted EPS) vs $11.1 million ($0.46 diluted EPS) YoY

Mitigation:Attributed to timing related to several unique drivers of the business, but all add shareholder value long-term.

What to watch in Q3 FY26

Loan Origination Volume (Home Improvement & Recreation)

Next quarter (Q3 FY26)

Current Home Improvement: $128.6M (record); Recreation: $228.5M (record)

Target Continued high levels, especially in Q3 (seasonally strong)

Why it matters

Sustained high origination volumes are key for continued loan and asset growth, driving future profitability.

Yes, no, we were quite happy with the loan origination volumes this quarter, and we do think that they're sustainable. We would expect there to be continued seasonality like we've seen it. Q2 and Q3 are going to be our stronger origination months.

Find out whether MFIN delivers this. Inve re-checks your case every morning.

Q&A highlights

Given the impressive Q2 loan growth, how sustainable is this level going forward?

Management confirmed the sustainability of loan origination volumes, noting that Q2 and Q3 are seasonally strong months and that the home improvement market offers a large ecosystem where Medallion is still a small player.

“Yes, no, we were quite happy with the loan origination volumes this quarter, and we do think that they're sustainable. We would expect there to be continued seasonality like we've seen it. Q2 and Q3 are going to be our stronger origination months.”

asked by Ken Cote, Raymond James · answered by Anthony Cutrone

3 min read 7 chapters

Detailed narrative

Record Origination Activity

Medallion Financial achieved record origination volumes in both its home improvement and recreation lending segments during Q2 FY26. Home improvement originations surged over twofold to $128.6 million, marking the highest quarter in the segment's history. Recreation originations increased 60% year-over-year to $228.5 million, also a record.

This strong activity, which continued through July, was attributed to new talent acquisition, competitive pricing adjustments in the recreation business, and enhanced engagement with existing contractor relationships.

Asset Growth and Milestones

The robust origination activity fueled significant loan and asset growth. Total loans reached $2.79 billion, representing a 12% increase year-over-year and 7% sequential growth from the prior quarter. The company also surpassed a significant milestone, exceeding $3 billion in total assets for the first time. Management views this achievement as a testament to the organization's strength and potential for future expansion.

Strategic Partnership Program Expansion

The strategic partnership program continued to gain traction, adding a fifth partner during the quarter. This program contributed $247.1 million in loan originations and over $1.1 million in fee income. Management emphasized a methodical approach to growth within this program, aiming to scale it to a more significant size long-term while ensuring satisfaction for all stakeholders, including borrowers, partners, and regulators.

Credit Trends and Outlook

Credit quality remained stable across both lending segments. Home improvement charge-offs improved significantly compared to a year ago, contributing to an optimistic outlook. While recreation net charge-offs remained elevated at 3.14%, they were stable quarter-over-quarter. Management expects pricing changes implemented for recreation loans to lead to an improved charge-off ratio and a better charge-off-adjusted net interest margin in coming quarters.

Investments in Talent and Technology

Medallion Financial is actively investing in its business, primarily focusing on talent acquisition in 2026. This includes bringing in new talent for marketing, technology, data analytics, credit analytics, and collections to leverage the existing platform more effectively. A major technology investment planned for Q1 2027 is the replacement of the loan origination system, which is expected to enable the rollout of new credit scoring models and the integration of alternative data for more sophisticated underwriting.

Capital Allocation and Shareholder Returns

The company demonstrated its commitment to shareholder returns through both dividends and share buybacks. The Board approved a Q2 dividend of $0.14 per share, marking a 16.7% increase from the prior quarter and a 75% increase since the dividend's reinstatement in Q2 2022.

Additionally, nearly 780,000 shares were repurchased at a discount to book and tangible book value. Management expects to complete the remaining $6 million of its $40 million buyback authorization within six months and plans to initiate a new program thereafter, balancing growth, dividends, and buybacks.

Cost Management and Efficiency

The company completed its relocation to a new New York office, which is expected to reduce annual occupancy costs by approximately $500,000, totaling $5 million in savings over the life of the new lease. While overall operating costs are anticipated to increase with loan portfolio growth and talent investments, management expects net interest income growth to outpace these rising expenses in the long term, maintaining operational efficiency.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.