Medallion Financial is no longer a taxi lender in any economically meaningful sense. The second-quarter print is the first clean look at a consumer-finance franchise that has crossed the three-billion-dollar asset line while still being priced as if the old medallion overhang still defined residual value. Record originations in recreation and home improvement, plus a fifth fintech partner, show the operating engine accelerating. Reported earnings, however, compressed because last year's equity-investment windfall did not repeat and because current expected credit loss accounting forces a day-one reserve on every new loan.
Net interest income set a quarterly record even as attributable earnings compressed. The gap is mechanical rather than a collapse in the core book. A year-ago equity gain near $6 million did not repeat this quarter. Current-period equity marks contributed almost nothing. Day-one provisioning on new originations added roughly $7 million of reserve expense. That accounting tax is the price of growing a recreation book under current expected credit loss rules.
The June meeting also closed the third straight proxy fight with ZimCal, a distressed-debt holder whose nominees took about a fifth of votes cast. Shareholders backed the sitting board by a wide margin after ISS and Glass Lewis issued split recommendations. The equity now trades near $12, a discount to stated book and a single-digit multiple of trailing earnings. Whether recreation charge-offs stay contained while home-improvement scale and partnership fees compound is the question the next several quarters resolve.