Medallion Financial (MFIN) risk factors, FY2025 10-K

Risks Related to Our Loan Portfolios and Business

1. 01Our business is heavily concentrated in consumer lending, which carries a risk of loss that is different from and typically higher than the risk of loss associated with commercial lending and which could be adversely affected by an economic downturn
2. 02Our financial condition, liquidity and results of operations depend on the credit performance of our loans
3. 03We maintain an allowance for credit losses (a reserve established through a provision for losses that decreases our earnings and that, accordingly, affects our financial condition) that we believe is appropriate to provide for current expected losses in our loan portfolio
4. 04Our business, financial condition and results of operations could be negatively impacted if we are unsuccessful in developing and maintaining relationships with dealers, contractors, and FSPs21% rewritten
5. 05A 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
6. 06Decreases or increases in prevailing interest rates could adversely affect our business, our cost of capital and our net interest income
7. 07Failure to raise additional capital could have a material adverse effect on our results of operations and financial position and impact our growth strategy48% rewritten
8. 08Our subsidiary Medallion Capital’s management team is currently under review by the SBA; until successful completion of the review, which, including the timing thereof, remains uncertain, we cannot obtain financing through the SBANew
9. 09We are subject to certain financial covenants and other restrictions under debt arrangements, which could affect our ability to finance future operations or capital needs or to engage in other business activities
10. 10Medallion Bank’s use of brokered deposits for its deposit-gathering activities may not be available when needed. The inability to accept and renew brokered deposits would have a material adverse effect on our business, financial condition, liquidity, and results of operations
11. 11We depend on cash flow from our subsidiaries to make payments on our indebtedness and fund operations35% rewritten

Legal and Regulatory Risks

1. 12We 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
2. 13The banking industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a significant adverse effect on our operations
3. 14Increases in FDIC insurance premiums may adversely affect our earnings75% rewritten
4. 15Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities
5. 16Our use of third-party vendors and our other ongoing third-party business relationships are subject to regulatory requirements and scrutiny
6. 17Our SBIC subsidiaries are licensed by the SBA and are therefore subject to SBA regulations46% rewritten
7. 18The SBA restricts the ability of SBICs to lend money to any of their officers, directors, and employees, or invest in any affiliates thereof
8. 19Federal and state law may discourage certain acquisitions of our common stock which could have a material adverse effect on our stockholders

Risk Relating to Our Growth and Operations

1. 20Competition with other lenders could adversely affect us
2. 21Since the formation of the Bank in 2002, we have expanded and changed our strategy and pursued new business lines on more than one occasion, including expanding into our recreation lending, home improvement lending and strategic partnership program businesses and our transition away from taxi medallion loan businessNew
3. 22Our ability to achieve our loan and investment objective will depend on our ability to grow, which will depend, in turn, on our management team’s ability to identify, evaluate, and monitor, and our ability to finance and invest in, companies that meet our investment criteria
4. 23Our business depends on our ability to adapt to rapid technological change
5. 24Security breaches and other disruptions could compromise our information and expose us to liability, which may negatively impact our business and reputation27% rewritten
6. 25We are dependent upon our senior management team for our future success32% rewritten
7. 26The development and rapidly expanding use of AI present risks and challenges that may adversely impact our business34% rewritten
8. 27Our strategic investments may not produce anticipated returnsNew
9. 28Acts of violence or war, natural disasters, and terrorist attacks may affect any market for our securities, impact the businesses in which we invest, and harm our operations and profitability
10. 29Our operations could be interrupted if certain external vendors on which we rely experience difficulty, terminate their services or fail to comply with banking laws and regulations
11. 30Misconduct by current or former employees could expose us to significant legal liability and reputational harm
12. 31We borrow money, which magnifies the potential for gain or loss on amounts invested, and increases the risk of investing in us
13. 32As of December 31, 2025, we had $2.4 billion of outstanding indebtedness with a weighted average borrowing cost of 4.16%25% rewritten
14. 33Lending to small businesses involves a high degree of risk and is highly speculative
15. 34Our portfolio is and may continue to be concentrated in a limited number of portfolio companies, industries and sectors, which will subject us to a risk of significant loss if any of these companies default on its obligations to us or by a downturn in the particular industry or sector
16. 35The lack of liquidity in our investments may adversely affect our business
17. 36We depend on the accuracy and completeness of information about customers
18. 37Climate-related physical risk could disrupt our business and the risk of divergent climate-related requirements and stakeholder expectations could increase compliance costs and uncertaintyNew
19. 38Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies
20. 39There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims
21. 40We are subject to a variety of risks in connection with any sales of loans we may conduct32% rewritten
22. 41We may not control many of Medallion Capital’s portfolio companies
23. 42We may not realize gains from our equity investments