MFIN Medallion Financial Corp.

Risks

• Our financial condition, liquidity and results of operations depend on the credit performance of our loans.
• Changes in the taxi and for-hire vehicle industries have resulted in significantly increased competition and have had a material adverse effect on our business, financial condition, and operations and have resulted in losses in our medallion loan portfolio.
• Decreases in the value of our medallion loan collateral, including the impact on loans in process of foreclosure, and our Chicago taxi medallions purchased out of foreclosure have had, and may continue to have, a material adverse effect on our business.
• Uncertainty relating to the reporting of collateral values for our loans may adversely affect the value of our portfolio.
• Our allowance for loan losses may prove to be insufficient to cover losses on our loans.
• Our business, financial condition and results of operations could be negatively impacted if we are unsuccessful in developing and maintaining our relationships with dealerships, contractors, and FSPs.
• A 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.
• A decrease in prevailing interest rates may lead to more loan prepayments, which could adversely affect our business.
• Changes in prevailing interest rates could adversely affect our business.
• We are subject to certain financial covenants and other restrictions under our loan and credit arrangements, which could affect our ability to finance future operations or capital needs or to engage in other business activities.
• Failure to obtain an extension of our existing credit facilities, failure to obtain additional revolving credit facilities or raise additional capital in the future could have a material adverse effect on our results of operations and financial position.
• Medallion 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.
• Changes in interest rates may affect our cost of capital and net interest income.
• We depend on cash flow from our subsidiaries to make payments on our indebtedness and fund operations.
• We 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.
• The 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.
• Changes in taxi industry regulations that result in the issuance of additional taxi medallions or increases in the expenses involved in operating a taxi medallion would decrease the value of our medallion loan collateral and our Chicago taxi medallions purchased out of foreclosure.
• Changes in laws, regulations, or policies may adversely affect our business.
• Non-compliance with the USA PATRIOT Act, the Bank Secrecy Act or other laws and regulations could result in fines or sanctions against us.
• Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.
• Our SBIC subsidiaries are licensed by the SBA, and are therefore subject to SBA regulations.
• Our ability to enter into transactions with our affiliates is restricted.
• We must maintain an exception from registration under the 1940 Act which could limit our ability to take advantage of attractive investment opportunities, and the failure to maintain that exception could have material adverse consequences on our business.
• Federal and state law may discourage certain acquisitions of our common stock which could have a material adverse effect on our stockholders.
• We operate in a highly competitive market for investment opportunities.
• Our financial condition and results of operations will depend on our ability to manage growth effectively.
• Our business depends on our ability to adapt to rapid technological change.
• Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
• Terrorist attacks, other acts of violence or war, and natural disasters may affect any market for our securities, impact the businesses in which we invest, and harm our operations and profitability.
• We are dependent upon our key investment personnel for our future success.
• Our 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.
• Current or former employee misconduct could expose us to significant legal liability and reputational harm.
• Lending to small businesses involves a high degree of risk and is highly speculative.
• The lack of liquidity in our investments may adversely affect our business.
• Our business may be further adversely affected if New York City experiences a sustained economic downturn.
• Sales of loans could have an adverse effect on the credit or other characteristics of the loans and portfolios we retain.
• We depend on the accuracy and completeness of information about customers.
• Laws and regulations implemented in response to climate change could result in increased operating costs for our portfolio companies.
• Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
• There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.
• We may not control many of Medallion Capital’s portfolio companies.
• The issuance of debt securities or preferred stock and our borrowing money from banks or other financial institutions may affect holders of our common stock.
• We borrow money, which magnifies the potential for gain or loss on amounts invested, and increases the risk of investing in us.