Greetings, welcome to the Medallion Financial fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ken Cooper, Investor Relations. Thank you, Mr. Cooper. You may begin. Thank you and good morning, everyone. Welcome to Medallion Financial Corp's fourth quarter and full year earnings call. Joining me today are Andrew Murstein, President and Chief Operating Officer, and Anthony Cutrone, Chief Financial Officer. Certain statements made during the call today constitute forward-looking statements made pursuant to and within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued yesterday and in our filings with the SEC. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements. In addition to our earnings press release, you can find our fourth quarter supplement presentation on our website by visiting medallion.com and clicking Investor Relations. The presentation is near the top of the page. With that, I'll turn it over to Andrew Murstein, President. Thank you, Ken. Good morning, everyone. Medallion Financial had a great year, highlighted by the continued growth of our consumer lending businesses. Our people have done an exceptional job growing our assets with our long-term success in mind. Also noteworthy is that after more than five years, we were able to reinstate our quarterly dividend in 2022. We were able to purchase over $20 million of our common stock during the year, and we were able to get back to what we had done best for so long, provide a cash return to shareholders. We generated $43.8 million of net income in 2022 as compared to $54.1 million in 2021. I'd like to unpack that for you so you can appreciate how strong both years were for us. In 2022, with the growth of our loan portfolio, we saw an increase of $32.6 million in our net interest income, despite rising interest rates that raised our funding costs. Our loan loss provision trended back towards its normalized level as reflected in our provision for the year of $30.1 million, which was $25.5 million greater than last year's historically low provision of $4.6 million. Last year, we had $16.3 million of gains, which were not repeated this year. This included sales of investments that resulted in the combined gain of $11 million, the gain on extinguishment of debt of $4.6 million, and the sale of a non-core asset for a $700,000 gain. Taking all of these items into consideration, our 2022 performance was excellent across the board. 2022, home improvement continued to be our fastest-growing segment with 43% loan growth to $626 million. We also saw growth in our marine and RV business, which had 23% loan growth to $1.2 billion of loans. Our commercial segment had 21% loan growth to $93 million. Over the past year, we continued to enhance our business. We maintained our rigorous credit standards and expanded our sales teams, as well as the number of dealers, contractors, and financial service providers who helped us originate loans. Finally, during times of increasing interest rates, one of the levers we use to protect our bottom line is to raise our own loan rates. We have done that to a degree in the past year, which has helped us deliver our results. On capital allocation during the quarter, we declared and paid a dividend of $0.08 per share. We used $1.8 million of cash to repurchase over 257,000 shares of our common stock. For the year, we had $0.32 per share of dividends. We repurchased over 2.6 million shares of stock for $20.6 million. We had $20 million remaining under our current share repurchase plan as of December 31st, 2022. Delivering shareholder value remains one of our top priorities. In addition, for 2023, we plan to stay focused on prudently growing our loan portfolio. We will continue to focus on quality assets and not chase volume. It's the same thing we did in our last recessionary environment in 2008 and 2009. We came out of that period stronger. With that, I will now turn the call over to Anthony, who will provide some additional insight about our quarter and year. Thank you, Andrew. Good morning, everyone. As Andrew mentioned, we had a great fourth quarter, which capped off a great year. For the quarter, net interest income grew 22% to $44 million from the prior year quarter and grew 26% to $160 million for the year. The driver of this being growth in our loan portfolio, which now stands at $1.9 billion and reflects a 29% increase from a year ago. Our net interest margin for the quarter was 8.86% and was 9.05% for the year. During the year, we saw a compression in our net interest margin, the result attributable to two factors. The continued growth in our home improvement segment, the prime loans of which carry a lower coupon than our other lending segments, as well as, and to a lesser extent, an increase in our average cost of funds. For the quarter, our average cost of funds was 2.49%, with certificates of deposit, our largest source of borrowing, having an average rate of 1.91% at the end of the year. As we've said for some time now, we expect our cost of funds to increase throughout 2023 as we issue new certificates at current market rates to both fund our continued growth and to replace those maturing. The increase in our cost of borrowings will continue to impact our net interest margin. Despite this, we do expect that the continued growth in our loan portfolio will counteract this compression and allow us to grow our net interest income. Our loan loss provision continued to gravitate back to historical levels in the fourth quarter. The loan loss provision was $9 million for the quarter, up from $3 million in the 2021 fourth quarter. For the year, our provision for loan loss was $30 million, increasing $25 million from a year ago. The increase over last year is a result of higher net charge-offs as we get back to a more normal level of charge-off experience, an increase in our loan loss allowance rates for the consumer loans, an 18 basis point increase for recreation loans, and a 13 basis point increase for home improvement loans, as well as the need for increased allowances specific to new loans as we grow our portfolios. Our operating costs decreased to $16 million from the prior quarter, primarily due to lower salary and benefit costs and lower professional fees. Do expect volatility in our professional fees to continue over the near term. Net income attributable to Medallion Financial shareholders was $13.1 million for the quarter and $43.8 million for the year. Our diluted earnings per share was $0.57 for the quarter and was $1.83 for the year. That covers our fourth quarter and full year financial overview. With that, Andrew and I are now happy to take your questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please hold while we gather your queue requests. Our first question comes from Matthew Howlett with B. Riley Securities. Hey, guys. Good morning. Thanks for taking my question. Good morning, Matt. Excellent. Good morning. An excellent performance here. I wanna touch on a few things. First on, you know, on the ability to pass through these higher funding costs. I recognize the mix shift here in the quarter with the lower home improvement, the higher prime home improvement growth. What's the sort of outlook and ability to just continue to raise pricing for some mixed things from some of the, you know, banks in the auto space? Love to hear what you guys are seeing in your segment. Sure. On both home improvements. Yeah. We could go into that. We have throughout 2022, we have been able to raise rates on both both consumer products, the rec and the home improvement. You know, at the end of the year, we're probably about 300 basis points higher on new loans than we were at the end of 2021 for rec loans. On home improvements, about 150 basis points higher. It hasn't quite translated and shown up in the income statement yet in our yield just because, you know, these are the new loans going on and the ones coming off were probably written three years ago, more or less, so the rates are somewhat comparable. We do expect over time to that'll show up. To $301.50. That. Did I hear you correctly? Yes. Year-over-year. I mean, just incredible. Okay. Well, it sounds like you can really continue to, you know, originate in that and raise pricing. I guess my next question is on, you know, the consumer. I mean, obviously, you know, everyone talks about it. We know a pullback's coming at some point or a slowdown. Obviously, the credit's holding up here. It's been resilient. You know, in your segments, I mean, it's much higher quality than we've seen in the past, especially with the prime home improvement. What can you just tell us about, you know, the pullback in demand and/or, you know, some normalization in losses? I mean, can you give us a cadence this year? Do you not really seen it yet so far? Just anything on that. I mean, it's the topic du jour, obviously. The home improvement demand continues to be strong. We haven't seen any significant pullback. We think, you know, in terms of, you know, going into 2023, we think, you know, originations will be strong. We don't know that we'll be able to grow. We don't think we'll be able to grow originations at the, at the levels we have over the past two years. We do think overall that portfolio will continue to grow throughout the year. Similarly in rec, we do expect to grow that portfolio in 2023, although, somewhat nice to see. In 2022, we saw a return to a normalized activity in terms of volume. The seasonality associated with the rec portfolio, which we didn't experience in 2021. We did see that started in Q3, we did see that in Q4 in the rec. We think demand drops on the rec side. Even with the drop, you know, I think we get back to more normalized levels of demand. With our increased rates, the drop, we still think we're able to grow that book. Got you. In the rec, just remind me again, the second and third quarter are the strongest seasonality-wise volume? Right. Yeah, it's, you know, it follows the seasons, right? Q4 is slow. Q1, you know, it's slow, and then it starts to pick up. Weather gets nice. People wanna be outdoors. Got you. Okay, just the last question. Look, like we get excited when we see these expense management. I know the, like you said, professional fee lines, it's gonna be lumpy, obviously. I mean, can you just tell us anything on that operating expense line? You take a lot of cost out. You know, I'd love to see the professional fee line, you know, steady from here. Any sort of what's the volatility we can expect on the operating expense line in 23? Yeah, you know, professional fees, you know, like stated earlier, we expect that to, you know, fluctuate some in the near term. As far as other operating, you know, costs, you know, we'll see those as we're trying to grow this business. We're trying to grow our balance sheet. We're trying to grow our bank. As that happens, we're gonna have to increase costs. Obviously, you know, those increased costs should correlate at a lower rate than the increase on the assets and the increase on our top line. Great. I'll get back in the queue. Thanks. Thanks, Matt. Thank you. Our next question comes from Mike Grondahl with Northland Securities. Hey, guys. Thank you. Hey, my first question is, Anthony, would you say that the 300 basis point increase on the rec pricing and the 150 basis points on the home improvement, do you think that's gonna offset the higher CD pricing? Like, how do those two balance out? Yeah. It doesn't offset it. It's not dollar for dollar. When you know, we're dealing with, you know, higher priced loans than, you know, a traditional bank. You know, for every 100 basis points of cost of funds, we can't push through that 100 basis points. You know, that's just part of it when you've got a high-yield portfolio. You can't always push through every cost. You know, we've probably seen, you know. I mean, we know it, interest rates have gone up over the past year. Being able to push through 300 on our, you know, rec portfolio, we like those numbers. On the prime lending and the home improvement, being able to push through 150, we still think that's good. You know. Yeah. No, it is. It's a lot. is. It's a lot. It's just unfortunate. It's not gonna be dollar for dollar. Got it. The, the $5.2 million of Medallion Collections, which was nice to see again, how did that flow through the P&L? Sure. About $2 million flew through the P&L in terms of recoveries in Q4, both on, you know, loans and on the Medallion assets. $3 million or so was the reduction in our Medallion exposure from the end of Q3. Got it. Got it. With CECL, you know, the press, the press release talks about, I think it was $13.8 million more added to reserves for adopting that. What is pro forma Tier 1 capital? Usually, you guys have, you know, disclosed that in the past, but where is Tier 1 capital pro forma for CECL? Yeah. The $11 million doesn't have a significant impact. Where we think it's gonna. We've got the ability on that $11 million. It's $13.8 million in consolidation. $11 million is specifically a Medallion Bank related to consumer products. That $11 million is not gonna have a huge impact on our Tier 1, and we've got the ability over three years to phase that impact in the Tier 1 calculation. We don't see that being, you know, a big burden for us. Where we will see it is on the origination side. As we continue to grow, our provisioning is gonna be higher than what it was up until the adoption of CECL. That's gonna run through our income statement. It's gonna reduce our income some, and that's gonna be where, you know, we've got some constraints in terms of capital. Got it. can you tell us how to how to think about or, you know, at a high level, how we should model that? You know, obviously, I think you're saying your provisions are gonna be a little bit higher because you need to recognize those at the time of origination. I don't know, what is a normal origination environment in 1Q 2023, what does provision look like? On new loans in the home improvement segment, you know, our initial reserve is about 181 basis points. With CECL, we're gonna be around 205. We got about a 24%, 25% basis point increase in the initial reserve. When we move to rec, we're at 355 up until the end of 2022. That goes to 447, you know, with day one transition. When you do the math, that's how the $11 million on the consumer, the initial reserve impact, that's how it comes about, comes to play. You know, with CECL, we're going to looking at, you know, future expected losses from a 12 month, you know, as opposed to looking at a 12-month period. You know, to the extent that, you know, losses increase, charge-offs increase, you know, we're gonna see some volatility in our reserving, our allowance. You know, our initial allowances are gonna have to go up. There could be some swings, but that's just, that's just part of GAAP that we have to live with now going forward. Got it. There's nothing constraining on your growth from a capital standpoint, like Tier 1. I remember at the bank, you needed 15%. Because of CECL, you don't have any governor on growth or anything like that. You have ample capital to keep growing. I think that's fair. At, you know, at the end of the year, the bank's Tier 1 was 16.2%. You know, the CECL impact, the day one CECL impact doesn't really affect that number because we are able to pull it in and adjust it over three years. Like I said before, it's, you know, to the extent that the provisioning is higher because of CECL with our growth, you know, that's gonna trickle down to the bottom line, and that increase in equity isn't gonna allow for excessive growth at the levels that we've seen, you know, the past couple of years. We're also expecting growth to come in. We don't necessarily think it's gonna hurt us all that much. Got it. Hey, just lastly, you know, credit quality is normalizing from a very low level. CECL kinda catches that up even a little bit more. How are you guys feeling about charge-offs over the course of 2023? We think home improvement is actually back to, you know, the historical levels of what we've seen. Yeah, rec is still low. We think we get, you know, a normalized, you know, charge-offs are in the high 2%. We haven't gotten there yet, so we do expect that to, you know, tick up a little bit. You know, we've been surprised for the past two years about, you know, how low charge-offs have been. We'll see what happens. Ken, I'll add on that point. There's a good slide on our website that we just put up showing loan losses in rec and home improvement for many years, over 15 or so years. You know, it shows how we did through a recession and how we managed. I'd recommend people look at that. We feel comfortable in that the last big recession or so in 2008, 2009, the losses went up, but never really to a level that alarmed us, and then they went significantly down after that. Our portfolio is in a lot better shape today than it was back in 2008 and 2009. We've raised our FICO scores in the rec through the years. Home improvement, we don't even have back then. We only started that in 2012, and that's 760 FICO scores, A quality paper. We're even in better shape today than we were in the last recession. Yeah, no, I saw the chart. It's helpful and, you know, just speaks to the long track record. Absolutely. Good credit quality. Hey, thanks, guys. I appreciate that. Thank you. There are no further questions at this time. I would like to turn the floor back over to Andrew Murstein for closing comments. Thank you again for joining us to hear our business update. One item to note, we just added several slides, as I just mentioned, to our earnings supplement presentation, which can be found on our homepage. I encourage you to review this deck. It gives a nice snapshot as to our strategy and performance. We appreciate your interest in our company. Our entire team is working hard to deliver shareholder value. We have accomplished a lot over the years and believe we have a very bright future. As always, if you have any questions, please reach out. The contact information for our investor relations team is on the last page of our earnings supplement, as well as within the IR section of our website, medallion.com. Thank you and have a great rest of your day. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.