Medallion Financial Corp. Announces 2006 Fourth Quarter and Full Year Results

Medallion Financial Corp. (Nasdaq: TAXI), a specialty finance company with a leading position servicing the taxicab industry and other niche markets, announced that earnings, or net increase in net assets resulting from operations increased to $5,844,000 or $0.33 per diluted common share in the 2006 fourth quarter, up from $603,000, or $0.03 per diluted common share in the 2005 fourth quarter. For the 2006 full year, net increase in net assets resulting from operations increased 90% to $13,108,000 or $0.74 per diluted common share from $6,862,000 or $0.39 per diluted common share in 2005. Andrew Murstein, President of Medallion Financial, stated, "We are very pleased with the year’s results, especially the results this quarter. We continued to sell off our Clear Channel position at an optimal time and thus were able to realize substantial gains. We have realized proceeds from the sale of Medallion Taxi Media, our taxi top division, valued at over $35,000,000, representing cash received on the Media sale and from the sale of Clear Channel stock, as well as the carrying value of the shares still held at year end.” The Company also changed its accounting methodology for Medallion Bank at year-end. Historically, the Company consolidated Medallion Bank’s accounts with those of its own, but will now treat the bank as a portfolio investment, similar to the Company’s past treatment of large non-investment company subsidiaries such as Medallion Taxi Media. Although this creates changes in the reported levels of assets, liabilities, revenues, and expenses, our earnings, shareholders’ equity, and the related amounts per share are unchanged. At year end, the Company determined the fair value of its investment in Medallion Bank was approximately $47 million. As a growing significant subsidiary, Medallion Bank’s financial information is also attached to this release. The Company’s on balance sheet taxicab medallion loan portfolio grew by 14% to $428,249,000 at December 31, 2006 from $375,263,000 at December 31, 2005. The commercial loan portfolio decreased 4% to $88,207,000 at December 31, 2006 from $91,485,000 at December 31, 2005. Total managed loans, including taxicab medallion loans and commercial loans sourced and serviced by the Company but owned by Medallion Bank, are shown in the following table. This reflected growth of the Company’s managed taxicab medallion loan portfolio by 16% to $522,193,000 at December 31, 2006, an all-time high, and of the Company’s managed commercial loan portfolio by 2% to $148,444,000 at December 31, 2006. In addition, Medallion Bank’s consumer loan portfolio increased by 30% to $111,799,000 at December 31, 2006, also an all-time high. The following chart shows the components of the Company’s $833,639,000 managed net investment portfolio at December 31, 2006.   On-Balance Sheet Off-Balance Sheet(1) Total Managed Investments Medallion loans $428,249,000  $93,944,000  $522,193,000  Commercial loans 88,207,000  60,237,000  148,444,000  Consumer loans 0  111,799,000  111,799,000  Investment securities 9,961,000  21,683,000  31,644,000  Equity investments 16,068,000  0  16,068,000  Investments in Medallion Bank and other controlled subsidiaries 50,448,000  (46,957,000) 3,491,000  Net investment portfolio $592,933,000  $240,706,000  $833,639,000    (1) Off-balance sheet investments are those owned by our wholly-owned unconsolidated portfolio companies, primarily Medallion Bank. Net investment income after taxes was $965,000 or $0.05 per share in the 2006 fourth quarter, compared to $144,000 or $0.01 per share in the 2006 third quarter and $1,040,000 or $0.06 per share in the 2005 fourth quarter. Including Medallion Bank’s net investment income after taxes with our own, as was the reporting methodology in prior periods, the amounts were $3,522,000 or $0.20 per share in the 2006 fourth quarter, compared to $2,781,000 or $0.16 per share in the 2006 third quarter and $3,763,000 or $0.21 per share in the 2005 fourth quarter. Larry Hall, the CFO of Medallion Financial, stated, "During the year our liquidity sources and financing options improved. In late December 2006, we entered into a new relationship with Citibank which lowered our cost of funds. While that benefit was not meaningful in the fourth quarter, it should start to show results in 2007.” Mr. Hall continued, "In addition to improvements in profitability and asset growth, medallion prices have also continued to grow, with corporate medallion values growing from $425,000 to $525,000 in the last 12 months. This represents the highest values ever in the history of New York City taxi medallions. The average loan-to-value ratio on our loan portfolio is now under 58%, and our customers have more equity to tap into by borrowing from us to grow their businesses.” Mr. Hall continued, "During the year we made over $470,000,000 of investments, a record for us, which includes $125,000,000 of loans made by Medallion Bank. Loan quality remains the Company’s trademark, as loans 90 days or more past due decreased to 2.1% from 3.5% a year ago. Loans 90 days or more past due in Medallion Bank’s consumer portfolio decreased to 0.5%, down from 0.8% one year ago, and in its total portfolio loans 90 days or more past due decreased to 0.2% down from 0.3% a year ago. The Company also announced that it is increasing its quarterly dividend to $0.19 per share from $0.15 in the 2005 fourth quarter. For the year, the Company declared dividends of $0.70 per share, up from $0.54 per share in 2005, an increase of 30%. Also, 47% of the 2006 dividend will qualify as capital gains and thus be taxed at a lower tax rate to certain investors. The current dividend will be paid on April 13, 2007, to shareholders of record on March 30, 2007. Since the Company’s initial public offering in 1996, the Company has paid in excess of $104,951,000 or $7.01 per share in dividends. Medallion Financial Corp. is a specialty finance company with a leading position in the origination and servicing of loans financing the purchase of taxicab medallions and related assets. The Company also originates and services commercial and consumer loans in targeted niche industries. The Company and its subsidiaries have lent over $3 billion to its taxicab, commercial, and consumer customers. Please note that this press release contains forward-looking statements that involve risks and uncertainties relating to business performance, cash flow, costs, sales, net investment income, earnings, and growth. Medallion’s actual results may differ significantly from the results discussed in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those factors discussed under the heading "Risk Factors,” in Medallion’s 2005 Annual Report on Form 10-K. MEDALLION FINANCIAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS   Three Months endedDecember 31,   Year endedDecember 31,     2006    2005    2006    2005          (As adjusted)       (As adjusted) Interest income on investments $10,275,894  $8,643,205  $38,031,949  $33,649,871  Dividends and interest income on short-term investments 205,420  224,219  1,059,099  696,309  Medallion lease income 171,220    122,750    543,867    464,750  Total investment income 10,652,534    8,990,174    39,634,915    34,810,930  Interest on floating rate borrowings 5,317,820  3,617,648  19,208,815  13,398,536  Interest on fixed rate borrowings 1,256,719    1,242,755    4,981,488    4,598,713  Total interest expense 6,574,539    4,860,403    24,190,303    17,997,249                Net interest income 4,077,995    4,129,771    15,444,612    16,813,681    Gain on sales of loans -  46,874  -  884,608  Other income 595,443    785,441    2,646,574    3,853,094  Total noninterest income 595,443    832,315    2,646,574    4,737,702    Salaries and benefits 1,654,482  2,040,466  8,192,731  9,554,489  Professional fees 476,380  671,803  1,955,521  1,945,153  Other operating expenses 1,577,244    1,239,844    4,777,549    5,484,065  Total operating expenses 3,708,106    3,952,113    14,925,801    16,983,707    Net investment income before income taxes 965,332  1,009,973  3,165,385  4,567,676  Income tax (provision) benefit -    30,034    -    13,924  Net investment income after income taxes 965,332    1,040,007    3,165,385    4,581,600    Net realized gains (losses) on investments 2,538,654    (1,375,007)   3,079,718    3,606,119  Net change in unrealized appreciation (depreciation) on investments 789,219  (492,427) (591,405) (6,338,641) Net change in unrealized appreciation on Medallion Bank and other controlled subsidiaries 1,551,212    1,430,494    7,454,321    5,012,424  Net unrealized gains (losses) on investments 2,340,431    938,067    6,862,916    (1,326,217) Net realized/ unrealized gains on investments 4,879,085    (436,940)   9,942,634    2,279,902  Net increase in net assets resulting from operations   $ 5,844,417    $ 603,067    $13,108,019    $ 6,861,502                      Net investment income after income taxes per common share Basic $0.06  $0.06  $0.18  $0.27  Diluted   0.05    0.06    0.18    0.26  Net increase in net assets resulting from operations per common share Basic $0.34  $0.04  $0.76  $0.40  Diluted   0.33    0.03    0.74    0.39  Dividends declared per share   $0.19    $0.15    $0.70    $0.54  Weighted average common shares outstanding Basic 17,364,241  17,155,302  17,293,665  17,087,034  Diluted   17,770,893    17,582,240    17,761,039    17,552,228  MEDALLION FINANCIAL CORP. CONSOLIDATED BALANCE SHEETS       December 31, 2006   December 31, 2005         (As adjusted) Assets Medallion loans, at fair value $ 428,248,589  $ 375,263,403  Commercial loans, at fair value 88,206,661  91,485,479  Investment in Medallion Bank and other controlled subsidiaries, at fair value 50,448,032  40,335,393  Equity investments, at fair value 16,068,243  23,137,661  Investment securities, at fair value   9,961,111      -  Net investments ($405,817,000 at December 31, 2006 and $380,267,000 at December 31, 2005 pledged as collateral under borrowing arrangements) 592,932,636  530,221,936    Cash ($865,000 at December 31, 2006 and $574,000 December 31, 2005 restricted as to use by lender) 15,398,740  22,808,388  Accrued interest receivable 2,177,694  2,383,083  Fixed assets, net 525,472  454,659  Goodwill, net 5,007,583  5,007,583  Other assets, net     15,562,763      12,479,159  Total assets   $ 631,604,888    $ 573,354,808    Liabilities Accounts payable and accrued expenses $ 5,057,205  $ 4,326,282  Accrued interest payable 1,783,258  1,759,737  Floating rate borrowings 377,886,424  323,664,950  Fixed rate borrowings   77,250,000      77,250,000  Total liabilities     461,976,887      407,000,969    Commitments and contingent liabilities -  -    Shareholders’ equity Preferred Stock (1,000,000 shares of $0.01 par value stock authorized - none outstanding) -  -  Common stock (50,000,000 shares of $0.01 par value stock authorized – 18,799,766 shares at December 31, 2006 and 18,546,648 shares at December 31, 2005 issued) 187,998  185,271  Treasury stock at cost (1,373,351 shares at December 31, 2006 and December 31, 2005) (12,611,113) (12,611,113) Capital in excess of par value 176,849,296  175,259,730  Accumulated undistributed net investment income (loss) (7,765,327) (5,838,235) Accumulated undistributed net realized gains on investments -  -  Net unrealized appreciation (depreciation) on investments     12,967,148      9,358,186  Total shareholders' equity     169,628,002      166,353,839  Total liabilities and shareholders' equity   $ 631,604,888    $ 573,354,808    Number of common shares outstanding 17,426,415  17,173,297  Net asset value per share   $ 9.73    $ 9.69    Total managed loans $ 795,980,453  $ 690,280,561  Total managed assets     907,132,484      802,106,190  Medallion Bank Financial Information The following table presents MB’s statement of operations and other valuation adjustments on other controlled subsidiaries for the years ended December 31, 2006, 2005, and 2004. Year ended December 31,   2006    2005    2004  Statement of operations Investment income $ 29,956,940  $ 22,376,878  $ 14,301,397  Interest expense   10,453,732    6,413,605    3,244,540  Net interest income 19,503,208  15,963,273  11,056,857  Non interest income 508,601  434,146  160,697  Operating expenses   6,289,009    5,543,633    3,869,221  Net investment income before income taxes 13,722,800  10,853,786  7,348,333  Income tax provision   4,387,959    1,973,019    1,911,737  Net investment income after income taxes 9,334,841  8,880,767  5,436,596  Net realized/unrealized (losses) of Medallion Bank and other controlled subsidiaries (1)   (1,880,520)   (3,868,343)   (5,093,235) Net increase in net assets resulting from operations of Medallion Bank and other controlled subsidiaries $ 7,454,321  $ 5,012,424  $ 343,361    (1) Includes $1,450,068, ($230,649), and ($2,826,598) of net realized/unrealized gains (losses) of controlled subsidiaries other than Medallion Bank for the years ended December 31, 2006, 2005, and 2004. The following table presents MB’s balance sheets and the net investment in other controlled subsidiaries as of December 31, 2006 and 2005.     2006    2005  Medallion loans, at fair value $ 93,944,562  $ 73,893,149  Commercial loans, at fair value 60,237,698  54,322,488  Consumer loans, at fair value 111,798,871  85,678,412  Investment securities, at fair value   21,682,923    18,092,838  Net investments ($0 pledged as collateral under borrowing arrangements at December 31, 2006 and 2005) 287,664,054  231,986,887  Cash ($0 at December 31, 2006 and $0 December 31, 2005 restricted as to use by lender) 14,698,918  20,227,118  Accrued interest receivable 2,435,766  1,702,018  Fixed assets, net 184,091  160,199  Other assets, net   3,958,506    5,002,719  Total assets $ 308,941,335  $ 259,078,941  Accounts payable and accrued expenses $ 499,983  $ 511,181  Payable to parent 267,246  324,234  Fixed rate borrowings   261,483,540    219,107,214  Total liabilities 262,250,769  219,942,629  Medallion Bank equity   46,690,566    39,136,312  Total liabilities and equity $ 308,941,335  $ 259,078,941  Investment in other controlled subsidiaries $ 3,530,220  $ 874,847  Total investment in Medallion Bank and other controlled subsidiaries $ 50,488,032  $ 40,335,393