Medallion Financial
(NASDAQ: TAXI) reported earnings on April 29, but it waited more than a week to file its quarterly report with the SEC. Now that we have the full financials in hand, here are three numbers investors should be watching closely.

1. Past-due medallion loans nearly doubled
Medallion Financial breaks out loan performance for its medallion loans held in the corporate parent. This data shows that total loans more than 31 days past due nearly doubled from the fourth quarter. In addition, the company reported that some loans are now more than 91 days past due.


Medallion Financial is highly leveraged to loan performance, because it earns only 4.05% annually on its controlled medallion loan portfolio, leaving little margin of error for delinquencies and loan losses. This quarter, roughly 4.1% of its medallion loans were reported to be late by 31 days or more, up from 2.2% in the prior quarter.

The company also restructured 11 medallion loans amounting to roughly $7.5 million in principal. For the sake of comparison, the company did not restructure a single medallion loan in 2014.

2. Medallion Financial harvested its "easy money"
One redeeming factor in Medallion Financial's first-quarter results was its realized gains in its investment portfolio. Realized gains are generally perceived as a lower-quality source of income for business development companies like Medallion Financial, as they are not recurring in nature. However, realized gains do help support the company's distribution when recurring sources of income fall.

Medallion Financial sold its stakes in Generation Outdoor and Medallion Hamptons Holding, realizing net gains of $7.9 million during the quarter, or nearly $0.32 per share. In doing so, the company booked income to support its dividend, but investors should know that these gains represented the bulk of its "easy money" -- gains it has carried for a long time but not yet realized.

The company now reports that its net unrealized appreciation on its investments, excluding illiquid Chicago medallions it owns, stands at just $689,000, or 0.13% of its investment portfolio.

The best measure of its earnings power is its net investment income, which came to just $0.20 during the quarter, well below its recently increased dividend of $0.25 per quarter.

3. Its loan-to-value ratio is rising
Pinpointing a reasonable value for taxi medallions is difficult, given that the market is illiquid. Using recent market prices, the company reports that its medallion loan portfolio had an average loan-to-value ratio of 70%, up from 60% at year-end and 40% in September 2014.

Reasonable investors can have their doubts about what a medallion is actually worth today. After all, in the first four months of 2015, only 11 medallions changed hands in arms-length transactions in New York City. Only seven medallions changed hands in Chicago during the first quarter. Given the illiquid nature of the market for taxi medallions, one would imagine that foreclosure sales would move market prices significantly. 

Considering the trends in delinquent loans, the realization of virtually all of its net unrealized gains, and an ever-rising loan-to-value ratio, this quarter simply wasn't the impressive quarter many thought it to be.

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Jordan Wathen has no position in any stocks mentioned.

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