Home collateral MEDALLION FINANCIAL CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

MEDALLION FINANCIAL CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

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OBJECTIVE

The information contained in this section should be read in conjunction with the
consolidated financial statements and the accompanying notes thereto for the
years ended December 31, 2021, 2020, and 2019. This section is intended to
provide management's perspective of our financial condition and results of
operations. In addition, this section contains forward-looking statements. These
forward-looking statements are subject to the inherent uncertainties in
predicting future results and conditions. Certain factors that could cause
actual results and conditions to differ materially from those projected in these
forward-looking statements are described in the Risk Factors section on page 17.
Additionally, more information about our business activities can be found in
"Business."

GENERAL

We are a finance company whose focus and growth has been through Medallion Bank
(a wholly-owned subsidiary), which originates consumer loans for the purchase of
recreational vehicles, boats, motorcycles, and home improvements, and provides
loan origination and other services to fintech partners.

Our focus is on growing our consumer finance and commercial lending portfolios.
As of December 31, 2021, our consumer loans represented 94% of our gross loan
portfolio, with commercial loans representing 5% and medallion loans
representing 1%. Total assets under management, which includes assets serviced
for third-party investors, were $1.9 billion as of December 31, 2021 and $1.7
billion as of December 31, 2020.

Our loan-related earnings depend primarily on our level of net interest income.
Net interest income is the difference between the total yield on our loan
portfolio and the average cost of borrowed funds. We fund our operations,
currently and historically, through a wide variety of interest-bearing sources,
such as bank certificates of deposit issued to customers, debentures issued to
and guaranteed by the SBA, privately placed notes, preferred securities, and
bank term debt. Net interest income fluctuates with changes in the yield on our
loan portfolio and changes in the cost of borrowed funds, as well as changes in
the amount of interest-earning assets and interest-bearing liabilities held by
us. Net interest income is also affected by economic, regulatory, and
competitive factors that influence interest rates, loan demand, and the
availability of funding to finance our lending activities. We, like other
financial institutions, are subject to interest rate risk to the degree that our
interest-earning assets reprice, either due to inflation or other factors, on a
different basis than our interest-bearing liabilities.

We also provide debt, mezzanine, and equity investment capital to companies in a
variety of industries, consistent with our investment objectives. These
investments may be venture capital style investments which may not be fully
collateralized. Our investments are typically in the form of secured debt
instruments with fixed interest rates accompanied by an equity stake or warrants
to purchase an equity interest for a nominal exercise price (such warrants are
included in equity investments on the consolidated balance sheets). Interest
income is earned on the debt instruments.

In 2019, the Bank started building a strategic partnership program to provide
lending and other services to financial technology, or fintech, companies. The
Bank entered into an initial partnership in 2020 and began issuing its first
loans, then entered into another strategic partnership in 2021, and continues to
explore opportunities with additional fintech companies.

We have focused on growing our consumer lending segments and maintaining the
profitability of our commercial lending segment. Since the beginning of 2020, we
have taken various steps to pursue this strategy, including:

seeking to grow the Bank organically with a significant focusing on our consumer
lending segments, and to a lesser extent by partnering with fintech companies in
our strategic partnership program;

carrying-out cost-cutting measures, including reducing our employee headcount by
more than 30% at our parent company Medallion Financial Corp. and closing
satellite offices in Long Island City, New York; Chicago, Illinois; and Boston,
Massachusetts; and

exiting non-core investments, including selling the assets of LAX Group, LLC on
December 16, 2020, exiting our investments in RPAC on December 1, 2021, reducing
balance sheet exposure to zero at Medallion Fine Art, Inc. during 2021, and
selling approximately 80% of our investment in Upgrade, Inc. during 2021,
resulting in net cash proceeds of $12.5 million and a gain of $11.3 million.

The Bank is an industrial bank regulated by the FDIC and the Utah Department of
Financial Institutions that originates consumer loans, raises deposits, and
conducts other banking activities. The Bank generally provides us with our
lowest cost of funds which it raises through bank certificates of deposit. To
take advantage of this low cost of funds, historically we referred a portion of
our medallion and commercial loans to the Bank, which originated these loans,
and have since been serviced by Medallion Servicing

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Corp., or MSC. However, other than in connection with dispositions of existing
medallion assets, the Bank has not originated any new medallion loans since 2014
(and Medallion Financial Corp. has not originated any new medallion loans since
2015) and is working with MSC to service its remaining portfolio, as it winds
down. MSC earns referral and servicing fees for these activities.

We are considering various alternatives for the Bank, which may include an
initial public offering of its common stock, the sale of all or part of the
Bank, a spin-off or other potential transaction. We do not have a deadline for
its consideration of these alternatives, and there can be no assurance that this
process will result in any transaction being announced or consummated.

COVID-19[female[feminine

The ongoing coronavirus, or COVID-19, pandemic, its broad impact and preventive
measures taken to contain or mitigate the outbreak have had, and may continue to
have, significant negative effects on the US and global economy, employment
levels, employee productivity, and financial market conditions. This has had,
and may continue to have negative effects on the ability of our borrowers to
repay outstanding loans, the value of collateral securing loans, the demand for
loans and other financial services products and consumer discretionary spending.
As a result of these or other consequences, the outbreak has adversely and
materially affected our business, results of operations and financial condition.
Although we continue to see signs of recovery, it remains uncertain, and the
effects of the outbreak on us could be exacerbated given that our business model
is largely consumer and small business directed, which are more severely
affected by COVID-19 and the preventative measures taken to contain or mitigate
the outbreak, including its significant negative effects on consumer
discretionary spending. The full extent to which the outbreak will continue to
impact our operations will depend on future developments, including the impact
of the Omicron and other potential variants, which are highly uncertain and
cannot be predicted at this time, and include the duration, severity and scope
of the continued outbreak, the actions taken to contain or mitigate the outbreak
and how long, and to what extent the economic recovery from its effects will
take.

We have taken steps to operate through this crisis, including having had our
workforce work remotely on a part-time basis in New York, though our employees
outside of New York largely continue to work remotely. In addition, we
implemented several cost-cutting measures, such as reducing employee headcount
at our parent company, Medallion Financial Corp., and closing satellite offices
in Long Island City, Chicago and Boston.

In March 2020, we adjusted the payment policies and procedures with our consumer
and medallion businesses, and allowed borrowers to defer payments up to 180
days. As of December 31, 2021, minimal consumer loans remained on deferral and
no medallion loans remained on deferral. For our consumer loan portfolios,
although we believe that our deferral programs have been effective to date in
mitigating the effect of COVID-19, the ultimate effects of COVID-19 on these
portfolios remains to be seen. For our medallion portfolio, we determined that
anticipated payment activity on our medallion portfolio was impossible to
quantify upon the end of the deferral moratorium, and therefore all medallion
loans were deemed impaired, placed on nonaccrual status, and written down to
each market's net collateral value in the 2020 third quarter, with additional
write-offs taken during 2021. We will continue to monitor our medallion
portfolio and related assets, which may result in additional write-downs,
charge-offs or impairments, the impact of which could be material to our results
of operations and financial condition.

Substantially all our medallion loans and related assets are concentrated in New
York City. As a result of the COVID-19 pandemic, economic activity and taxi
ridership decreased dramatically in New York City and despite the reopening of
New York City, there has not been a substantial increase in ridership and gross
meter fares. The extent to which the COVID-19 pandemic will continue to
adversely affect taxi medallion owners and, by extension, our medallion loans
and related assets, will depend on future developments, which are highly
uncertain and cannot be predicted, including the scope and duration of the
pandemic, actions taken by governmental authorities, and the direct and indirect
impact of the pandemic on taxi medallion owners and the behaviors of people who
have historically taken taxis.

With regard to our commercial business, many of our mezzanine portfolio
companies accessed the Paycheck Protection Program. This provided needed
liquidity during a period of depressed market demands. Medallion Capital drew on
its remaining unfunded commitments and has a commitment from the SBA for $16.5
million in debenture financing with a ten-year term, upon a capital infusion
from Medallion Financial Corp. For the commercial portfolio, performance is
slowly recovering although lingering impacts of COVID-19 continue to weigh on
performance.

RPAC received $0.7 million under the Paycheck Protection Program in the 2020
second quarter, all of which has been forgiven and accordingly recorded as Other
income during 2021.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We follow financial accounting and reporting policies that are in accordance
with GAAP. Some of these significant accounting policies require management to
make difficult, subjective or complex judgments. The policies noted below,
however, are deemed to be our "critical accounting policies" under the
definition given to this term by the SEC. According to the SEC, "critical
accounting policies" mean those policies that are most important to the
presentation of a company's financial condition and results of operations, and
require management's most difficult, subjective, or complex judgments, often as
a result of the need to make estimates about the effect of matters that are
inherently uncertain.

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The judgments used by management in applying the critical accounting policies
may be affected by deterioration in the economic environment, which may result
in changes to future financial results. Specifically, subsequent evaluations of
the loan portfolio, in light of the factors then prevailing, may result in
significant changes to the allowance for loan losses in future periods, and the
inability to collect on outstanding loans could result in increased loan losses.

Allowance for loan losses

The allowance for loan losses is evaluated on a regular basis by management and
is based upon management's periodic review of the collectability of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower's ability to repay, estimated
value of any underlying collateral, prevailing economic conditions, and excess
concentration risks. In analyzing the adequacy of the allowance for loan losses,
the Company uses historical delinquency and actual loss rates with a three-year
look-back period for medallion loans and a one-year look-back period for
recreation and home improvement loans, and uses historical loss experience and
other projections for commercial loans. The allowance is evaluated on a regular
basis by management and is based upon management's periodic review of the
collectability of the loans in light of historical experience, the nature and
size of the loan portfolio, adverse situations that may affect the borrower's
ability to repay, estimated value of any underlying collateral, prevailing
economic conditions, and excess concentration risks. This evaluation is
inherently subjective, as it requires estimates that are susceptible to
significant revision as more information becomes available.

Our methodology to calculate the general reserve portion of the allowance
includes the use of quantitative and qualitative factors. We initially determine
an allowance based on quantitative loss factors for loans evaluated collectively
for impairment. The quantitative loss factors are based primarily on historical
loss rates, after considering loan type, historical loss and delinquency
experience. The quantitative loss factors applied in the methodology are
periodically re-evaluated and adjusted to reflect changes in historical loss
levels or other risks. Qualitative loss factors are used to modify the reserve
determined by the quantitative factors and are designed to account for losses
that may not be included in the quantitative calculation according to
management's best judgment. Our qualitative loss factor rates increased 116
basis points and 21 basis points for recreation and home improvement loans,
respectively, in 2021 compared to 2020 as a result of the adverse COVID-19
economic conditions. If our qualitative loss factor rates were to increase 50
basis points, our recreation and home improvement general reserve would increase
by $4.7 million and $2.2million, respectively. Likewise, if our qualitative loss
factor rates were to decrease 50 basis points, our recreation and home
improvement general reserve would decrease by $4.7 million and $2.2 million,
respectively. Performing loans are recorded at book value and the general
reserve maintained to absorb expected losses consistent with GAAP.

All medallion loans that reach 90 days or more delinquent require a specific
allowance for those loans, which is determined on an individual basis. We deem a
loan impaired when, based on current information and events, it is probable that
we will be unable to collect the amounts due in accordance with the original
contractual terms of the loan agreement, including scheduled principal and
interest payments. All impaired loans also require a specific allowance. We
charge-off loans in the period that such loans are deemed uncollectible or when
they reach 120 days delinquent regardless of whether the loan is a recreation,
home improvement, or medallion loan.

The methodology used in the periodic review of reserve adequacy, which is
performed at least quarterly, is designed to be responsive to changes in
portfolio credit quality and inherent credit losses. The changes are reflected
in both the pooled formula reserve and in specific reserves as the
collectability of larger classified loans is regularly recalculated with new
information as it becomes available. Management is primarily responsible for the
overall adequacy of the allowance.

Medallion Loan Collateral Assessment

The determination of taxi medallion collateral fair value is derived quarterly
for each jurisdiction. For medallion loans, delinquent nonperforming loans are
valued at collateral value for the most recent quarter. Collateral value for the
medallion loans is generally determined utilizing factors deemed relevant under
the circumstances of the market including but not limited to: actual transfers,
pending transfers, median and average sales prices, discounted cash flows,
market direction and sentiment, and general economic trends for the industry and
economy. This evaluation is inherently subjective, as it requires estimates that
are susceptible to significant revision as more information becomes available.

Good will and intangible assets

Goodwill and intangible assets arose as a result of the excess of the fair value
that was determined by an independent third party expert over the book value of
several of our previously unconsolidated portfolio investment companies as of
April 2, 2018. Goodwill is assessed annually for impairment by a third party
expert and is reviewed by management quarterly. The annual goodwill assessment
is focused on the Bank goodwill of $150.8 million and intangible assets of $23.5
million, both of which utilized a step zero qualitative impairment analysis
based on historical and projected financial data. The Bank-related intangible
assets are amortized over their approximate useful life.

Deferred taxes

Deferred taxes reflect the impact of temporary differences between the book value of assets and liabilities and their tax value.

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basis and are stated at tax rates expected to be in effect when taxes are
actually paid or recovered. Deferred tax assets are recognized subject to
management's judgment that it is more like than not that it will be recognized.
In addition, a valuation allowance is recorded when it is deemed that some or
all of the deferred tax assets will not be realized due to the temporary
differences.

Average balances and rates

The following table shows the Company's consolidated average balance sheets,
interest income and expense, and the average interest earning/bearing assets and
liabilities, and which reflect the average yield on assets and average costs on
liabilities as of and for the years ended December 31, 2021, 2020, and 2019.

                                                                                           Year Ended December 31,
                                                      2021                                           2020                                           2019
                                     Average                       Average          Average                       Average          Average                       Average
(Dollars in thousands)               Balance       Interest       Yield/Cost        Balance       Interest       Yield/Cost        Balance       Interest       Yield/Cost
Interest-earning assets
Interest earning cash
equivalents                        $     3,149     $      56             1.78 %   $     1,528     $      37             2.42 %   $         -     $       -                -
Federal funds sold                      45,096            23             0.05          65,783           129             0.20          36,444           574             1.58
Investment securities                   45,195           769             1.70          46,691           997             2.14          45,283         1,285             2.84
Loans
Recreation                             848,956       118,305            13.94         743,118       110,706            14.90         646,425        99,463            15.39
Home improvement                       367,808        34,204             9.30         282,202        27,273             9.66         209,842        19,943             9.50
Commercial                              66,589         7,070            10.62          69,293         7,334            10.58          63,039         7,632            12.11
Medallion                                7,903        (1,483 )         (18.77 )        71,821        (1,518 )          (2.11 )       127,109         3,665             2.88
Strategic partnerships                      70            22            31.43               9             4            44.44               -             -                -
Total loans                          1,291,326       158,118            12.24       1,166,443       143,799            12.33       1,046,415       130,703            12.49
Total interest-earning assets        1,384,766       158,966            11.51       1,280,445       144,962            11.32       1,128,142       132,562            11.75
Non-interest-earning assets
Cash                                    47,050                                         19,312                                         30,494
Equity investments                       9,830                                         10,385                                          9,560
Loan collateral in process of
foreclosure(1)                          47,764                                         50,893                                         51,924
Goodwill and intangible assets         199,160                                        202,618                                        204,063
Income tax receivable                     (621 )                                          702                                            771
Other assets                            44,750                                         47,488                                         44,252
Total non-interest-earning
assets                                 347,933                                        331,398                                        341,064
Total assets                       $ 1,732,699                                    $ 1,611,843                                    $ 1,469,206
Interest-bearing liabilities
Deposits                           $ 1,134,531     $  17,543             1.55 %   $ 1,043,096     $  22,330             2.14 %   $   916,416     $  22,521             2.46 %
Retail and privately placed
notes                                  120,704        10,226             8.47          70,384         6,813             9.68          59,252         5,789             9.77
SBA debentures and borrowings           64,733         2,116             3.27          71,490         2,633             3.68          76,544         2,985             3.90
Preferred securities                    33,000           981             2.97          33,000           966             2.97          33,000         1,522             4.61
Notes payable to banks                  10,960           134             1.22          32,246         1,246             3.86          45,506         2,069             4.55
Other borrowings                         6,782           140             2.06           8,270           163             1.97           8,028           159             1.98
Total interest-bearing
liabilities                          1,370,710        31,140             2.28       1,258,486        34,151             2.71       1,138,746        35,045             3.08
Non-interest-bearing liabilities
Deferred tax liability                   7,444                                          4,959                                          7,602
Other liabilities (2)                   27,634                                         29,174                                         28,331
Total non-interest-bearing
liabilities                             35,078                                         34,133                                         35,933
Total liabilities                    1,405,788                                      1,292,619                                      1,174,679
Non-controlling interest                72,162                                         71,904                                         31,450
Total stockholders' equity             254,749                                        247,320                                        263,077
Total liabilities and
stockholders' equity               $ 1,732,699                                    $ 1,611,843                                    $ 1,469,206
Net interest income                                $ 127,826                                      $ 110,811                                      $  97,517
Net interest margin                                                      9.25 %                                         8.65 %                                         8.64 %


(1)
Includes financed sales of this collateral to third parties reported separately
from the loan portfolio, and that are conducted by the Bank of $7.4 million,
$3.5 million, and $8.2 million as of December 31, 2021, 2020, and 2019.
(2)
Excludes deferred financing costs of $7.1 million and $5.8 million as of
December 31, 2021 and 2020.

For the year ended December 31, 2021, our net loans receivable yielded 12.24%
(compared to 12.33% for the year ended December 31, 2020), mainly driven by
growth in the home improvement portfolio, which has a lower yield than our
recreation portfolio, along with the slight decline in the home improvement and
recreation loan average yield. In addition, in 2021 there was a decline on the
commercial loan yield as a result of an increase in average non-accrual loans
throughout the year. Our debt, mainly certificates of deposit, help fund the
growing consumer loan business and as market rates have decreased, so has the
average cost of borrowing. In addition, we issued new privately placed notes
since December 31, 2020, which were at lower rates compared to the prior
issuances.


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Rate/volume analysis

The following table presents the change in interest income and expense due to
changes in the average balances (volume) and average rates, calculated for the
years ended December 31, 2021, 2020, and 2019.

                                                                                               Year Ended December 31,
                                                      2021                                               2020                                               2019
                                   Increase         Increase                          Increase         Increase                          Increase         Increase
                                  (Decrease)       (Decrease)                        (Decrease)       (Decrease)                        (Decrease)       (Decrease)
(Dollars in thousands)            In Volume         In Rate         Net 

Change in rate volume Net change in volume

       In Rate         Net Change
Interest-earning assets
Interest earning cash and cash
equivalents                      $        (31 )   $        (55 )   $        

(86 ) $501 $(910) $ (409 ) ($294) $75 $ (219 )
Investment security

                     (24 )           (205 )           (229 )             46             (332 )           (286 )              3              129              132

Loans

Recreation                             14,749           (7,150 )          7,599           15,078           (3,832 )         11,246           10,531           (2,756 )          7,775
Home improvement                        7,961           (1,030 )          6,931            6,933              396            7,329            2,558              487            3,045
Commercial                               (287 )             23             (264 )            803           (1,101 )           (298 )         (1,933 )           (850 )         (2,783 )
Medallion                              11,994          (11,959 )             35           (1,734 )         (3,448 )         (5,182 )         (2,245 )           (972 )         (3,217 )
Strategic partnerships                     19               (1 )             18                -                -                -                -                -                -
Total loans                      $     34,436     $    (20,117 )   $     14,319     $     21,080     $     (7,985 )   $     13,095     $      8,911 

($4,091) $4,820
Total interest-earning assets $34,381 ($20,377) $14,004 $21,627 ($9,227) $12,400 $8,620

     $     (3,887 )   $      4,733
Interest-bearing liabilities
Retail and privately placed
notes                            $      4,263     $       (850 )   $      3,413     $      1,093     $        (69 )   $      1,024     $      2,464     $       (172 )   $      2,292
Deposits                                1,302           (6,089 )         (4,787 )          3,213           (3,402 )           (189 )            409            2,913            3,322
Notes payable to banks                   (261 )           (850 )         (1,111 )           (515 )           (308 )           (823 )           (979 )             32             (947 )
SBA debentures and borrowings            (223 )           (294 )           (517 )           (190 )           (162 )           (352 )           (130 )             32              (98 )
Preferred securities                        -               14               14                -             (557 )           (557 )              -               24               24
DZ loan                                     -                -                -                -                -                -           (2,367 )              -           (2,367 )
Other borrowings                          (31 )              8              (23 )              1                2                3                1               (2 )             (1 )
Total interest-bearing
liabilities                      $      5,050     $     (8,061 )   $     (3,011 )   $      3,602     $     (4,496 )   $       (894 )   $       (602 )   $      2,827     $      2,225
Net                              $     29,331     $    (12,316 )   $     17,015     $     18,025     $     (4,731 )   $     13,294     $      9,222     $     (6,714 )   $      2,508


For the year ended December 31, 2021, interest income increased primarily due to
the increased volume of our recreation and home improvement loan portfolios,
even as the average rate decreased on the recreation and home improvement loan
portfolio. Additionally, we continued to see a decline in our overall medallion
portfolio as all loans had been placed on non-accrual, and they have continued
to age 120 days or more past due and be charged-off to loan collateral in
process of foreclosure. Interest expense decreased for 2021 primarily driven by
the overall decrease in borrowing rates, mainly on the deposits.

Our interest expense is driven by the interest rates payable on our bank
certificates of deposit, fixed-rate, long-term private notes, fixed-rate,
long-term debentures issued to the SBA, and have historically included
short-term credit facilities with banks and other short-term notes payable. The
Bank issues brokered bank certificates of deposit, which are our lowest
borrowing costs. The Bank is able to bid on these deposits at a wide variety of
maturity levels which allows for improved interest rate management strategies.

Our cost of funds is primarily driven by the rates paid on our various debt
instruments and their relative mix, and changes in the levels of average
borrowings outstanding. See Note 5 to the consolidated financial statements for
details on the terms of our outstanding debt. Our debentures issued to the SBA
typically have terms of ten years.

We continue to seek SBA funding through Medallion Capital to the extent it
offers attractive rates. SBA financing subjects its recipients to limits on the
amount of secured bank debt they may incur. We use SBA funding to fund loans
that qualify under the Small Business Investment Act of 1985, as amended, or the
SBIA, and SBA regulations. In July 2020, we obtained a $25.0 million commitment
from the SBA. As of December 31, 2021 and 2020, adjustable rate debt constituted
2% of total debt.


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Loans

The gross loans are reported at the principal amount outstanding, inclusive of
deferred loan acquisition costs, which primarily includes deferred fees paid to
loan originators, and which is amortized to interest income over the life of the
loan. For the years ended December 31, 2021 and 2020, there was continued growth
in the consumer lending segments, which was slightly offset by the continued
shrinkage of the medallion portfolio as loans have continued to age over 120
days and be transferred to loan collateral in the process of foreclosure and
payments received from borrowers. In addition, as a result of the COVID-19
pandemic, there was an increase in charge-offs and loans transferred for the
medallion segment.

Year Ended December 31, 2021                        Home                                             Strategic
(Dollars in thousands)          Recreation       Improvement       Commercial       Medallion       Partnership         Total
Gross loans - December 31,
2020                            $   792,686     $     334,033     $     65,327     $    37,768     $          24     $ 1,229,838
Loan originations                   441,921           258,038           36,415               -            10,997         747,371
Principal payments, sales,
and maturities                     (264,424 )        (155,442 )        (25,873 )        (7,778 )         (10,931 )      (464,448 )
Charge-offs, net                     (2,581 )            (551 )              -          (8,872 )               -         (12,004 )
Transfer to loan collateral
in process of foreclosure,
net                                 (10,431 )               -                -          (5,457 )               -         (15,888 )
Amortization of origination
costs                                (9,678 )           1,671               13              (2 )               -          (7,996 )
Amortization of loan premium           (221 )            (346 )              -          (1,615 )               -          (2,182 )
FASB origination costs, net          14,048              (631 )              -               2                 -          13,419
Paid-in-kind interest                     -                 -              814               -                 -             814
Gross loans - December 31,
2021                            $   961,320     $     436,772     $     76,696     $    14,046     $          90     $ 1,488,924



Year Ended December 31, 2020                        Home                                            Strategic
(Dollars in thousands)          Recreation       Improvement       Commercial      Medallion       Partnership         Total
Gross loans - December 31,
2019                            $   713,332     $     247,324     $     69,767     $  130,432     $           -     $ 1,160,855
Loan originations                   294,885           193,098            7,575              -             1,663         497,221
Principal payments, sales,
and maturities                     (187,989 )        (105,813 )        (13,183 )      (13,207 )          (1,639 )      (321,831 )
Charge-offs, net                    (14,457 )          (1,229 )            (28 )      (42,648 )               -         (58,362 )
Transfer to loan collateral
in process of foreclosure,
net                                 (14,871 )               -                -        (32,383 )               -         (47,254 )
Amortization of origination
costs                                (7,809 )           1,910                8           (131 )               -          (6,022 )
Amortization of loan premium           (191 )            (320 )              -         (2,531 )               -          (3,042 )
FASB origination costs, net           9,786              (937 )              -             36                 -           8,885
Paid-in-kind interest                     -                 -            1,188              -                 -           1,188
Transfer to other foreclosed
property                                  -                 -                -         (1,800 )               -          (1,800 )
Gross loans - December 31,
2020                            $   792,686     $     334,033     $     65,327     $   37,768     $          24     $ 1,229,838

The following table shows the approximate maturities and sensitivity to changes in interest rates of our loans to December 31, 2021.

                                                                     Loan Maturity
                                                      After 1 to       After 5 to
(Dollars in thousands)             Within 1 year        5 years         15 years       After 15 years         Total
Fixed-rate                        $        39,966     $   169,397     $  1,160,589     $        82,515     $ 1,452,467
Recreation                                  2,198          89,844          827,167               6,544         925,753
Home improvement                           25,572          23,756          313,632              75,971         438,931
Commercial                                  9,300          45,840           19,790                   -          74,930
Medallion                                   2,896           9,957                -                   -          12,853
Adjustable-rate                   $         7,104     $     1,961     $          -     $             -     $     9,065
Recreation                                  4,145           1,961                -                   -           6,106
Commercial                                  1,766               -                -                   -           1,766
Medallion                                   1,193               -                -                   -           1,193
Total loans(1)(2)                 $        47,070     $   171,358     $  1,160,589     $        82,515     $ 1,461,532


(1)

Excludes strategic partnership loans.
(2)
As of December 31, 2021, there were no floating-rate loans.

Allowance and provision for loan loss

During the year ended December 31, 2021, the New York City taxi medallion values
remained constant at a net realizable value of $79,500, even as other markets
slightly decreased, whereas for the year ended December 31, 2020 the New York
City taxi medallion values had decreased to a net realizable value of $79,500
from $167,000 at December 31, 2019. In addition, the consumer recreation loan
allowance percentages declined slightly for the year ended December 31, 2021,
whereas, for the year ended December 31, 2020 due to the change in economic
factors due to COVID-19, we increased the reserve percentages for the consumer
loan portfolio between 25 to 100 basis points.

                                       37
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Activity in the allowance for loan losses for the years ended December 31, 2021
and 2020 follows:

                                                      December 31,
(Dollars in thousands)                             2021          2020
Allowance for loan losses - beginning balance    $  57,548     $  46,093
Charge-offs
Recreation                                         (14,712 )     (23,543 )
Home improvement                                    (2,949 )      (2,909 )
Commercial                                               -           (31 )
Medallion                                          (15,287 )     (49,361 )
Total charge-offs                                  (32,948 )     (75,844 )
Recoveries
Recreation                                          12,131         9,086
Home improvement                                     2,398         1,680
Commercial                                               -             3
Medallion                                            6,415         6,713
Total recoveries                                    20,944        17,482
Net charge-offs (1)                                (12,004 )     (58,362 )
Provision for loan losses                            4,622        69,817

Allowance for loan losses – closing balance (2) $50,166 $57,548

(1)

As of December 31, 2021, cumulative net charge-offs of loans and loan collateral
in process of foreclosure in the medallion portfolio were $258.3 million, some
of which may represent collection opportunities for us.
(2)
As of December 31, 2021, there was no allowance for loan loss and net
charge-offs related to the strategic partnership loans.

Allowance for loan losses by type at December 31, 2021 and 2020 follows:

                                                                       Allowance as        Allowance as a
December 31, 2021                                    Percentage        a Percent of          Percent of
(Dollars in thousands)                Amount        of Allowance       Loan Category         Nonaccrual
Recreation                          $    32,435                64 %              3.37 %              91.18 %
Home improvement                          7,356                15                1.68                20.68
Commercial                                1,141                 2                   1                 3.21
Medallion                                 9,234                19               65.74                25.96
Total                               $    50,166               100 %              3.37 %             141.03 %



                                                                       Allowance as        Allowance as a
December 31, 2020                                    Percentage        a Percent of          Percent of
(Dollars in thousands)                Amount        of Allowance       Loan Category         Nonaccrual
Recreation                          $    27,348                48 %              3.45 %             378.20 %
Home improvement                          5,157                 9                1.54                   NM
Commercial                                    -                 -                   -                    -
Medallion                                25,043                43               66.31                68.01
Total                               $    57,548               100 %              4.68 %              93.17 %


As of December 31, 2021, the overall allowance for loan losses decreased from
December 31, 2020, mainly due to the mix of the loan portfolio, specifically the
decrease in medallion loans, which have a higher allowance as a percentage of
loan balance, and an increase in consumer loans, which have a lower allowance as
a percentage of loan balance. For recreation and home improvement loans, as of
December 31, 2021 the presented allowances exclude $4.2 million and $0.5 million
of loan loss allowances which have been netted within loans as a result of the
consolidation of Medallion Bank.

For the consumer loan portfolio, the process to repossess the collateral is
started at 60 days past due. If the collateral is not located and the account
reaches 120 days delinquent, the account is charged-off to realized losses. If
the collateral is repossessed, a realized loss is recorded to write the
collateral down to its net realizable value, and the collateral is sent to
auction. When the collateral is sold, the net auction proceeds are applied to
the account, and any remaining balance is written off as a realized loss, and
any excess proceeds are recorded as a recovery. Proceeds collected on
charged-off accounts are recorded as recoveries. All collection, repossession,
and recovery efforts are handled on behalf of the Bank by the servicer.

The following table shows the trend in loans 90 days or more past due as of the
dates indicated.

                                                        Year Ended December 31,
                                       2021                       2020                       2019
(Dollars in thousands)         Amount        % (1)        Amount        % (1)        Amount        % (1)
Recreation                    $  3,818           0.3 %   $  5,343           0.5 %   $  5,800           0.5 %
Home improvement                   132             0          170           0.0          184           0.0
Commercial                          74             0           75           0.0          107           0.0
Medallion                            -             -        1,290           0.1        2,572           0.2
Total loans 90 days or more
past due                      $  4,024           0.3 %   $  6,878           0.6 %   $  8,663           0.7 %


(1)

Percentages are calculated relative to the total or managed loan portfolio, as applicable.

We estimate that the weighted average loan-to-value ratio of our medallion loans
was approximately 295%, 327%, and 190%, for the years ended December 31, 2021,
2020, and 2019.

                                       38
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For recreation loans, the process to repossess the collateral is generally
started at 60 days past due. If the collateral is not located and the account
reaches 120 days delinquent, the account is charged off. If the collateral is
repossessed, a loss is recorded by writing the collateral down to its fair value
less selling costs, and the collateral is sent to auction. When the collateral
is sold, the net auction proceeds are applied to the account, and any remaining
balance is written off. Medallion loans that reach 120 days past due are charged
down to collateral value and reclassified to loan collateral in process of
foreclosure. The following table shows the activity of loan collateral in
process of foreclosure for the twelve months ended December 31, 2021 and 2020.

Year Ended December 31, 2021
(Dollars in thousands)                           Recreation       Medallion 

Total

Loan collateral in process of foreclosure -
December 31, 2020                               $      1,432     $    53,128     $   54,560
Transfer from loans, net                              10,431           5,457         15,888
Sales                                                 (6,951 )        (2,928 )       (9,879 )
Cash payments received                                     -         (14,173 )      (14,173 )
Collateral valuation adjustments                      (3,192 )        (5,774 )       (8,966 )
Loan collateral in process of foreclosure -
December 31, 2021                               $      1,720     $    35,710     $   37,430



Year Ended December 31, 2020
(Dollars in thousands)                           Recreation       Medallion 

Total

Loan collateral in process of foreclosure -
December 31, 2019                               $      1,476     $    51,235     $   52,711
Transfer from loans, net                              14,871          32,403         47,274
Sales                                                 (7,512 )          (300 )       (7,812 )
Cash payments received                                     -          (5,687 )       (5,687 )
Collateral valuation adjustments                      (7,403 )       (24,523 )      (31,926 )
Loan collateral in process of foreclosure -
December 31, 2020                               $      1,432     $    53,128     $   54,560


SEGMENT RESULTS

We manage our financial results under four operating segments; recreation
lending, home improvement lending, commercial lending, and medallion lending. We
also show results for two non-operating segments; RPAC and corporate and other
investments. As mentioned earlier, the Company disposed of its investment in
RPAC on December 1, 2021 and, as a result, all presented segment results are
through such date. All results are for the years ended December 31, 2021, 2020,
and 2019.

Recreation Lending

The recreation lending segment is a high-growth prime and non-prime consumer
finance business which is a significant source of income for us, accounting for
74%, 74%, and 75% of our interest income for the years ended December 31, 2021,
2020, and 2019. The loans are secured primarily by RVs, boats, and other
consumer recreational equipment, with RV loans making up 60% of the portfolio,
boat loans making up 19% of the portfolio, and trailer loans 9% as of December
31, 2021, compared to 60%, 19% and 9% as of December 31, 2020. Recreation loans
are made to borrowers residing in all fifty states, with the highest
concentrations in Texas, California, and Florida, at 16%, 10%, and 9% of loans
outstanding, compared to 17%, 10%, and 9% as of December 31, 2020, with no other
states over 5%.

During the year ended December 31, 2021, the recreation portfolio continued to
grow compared to the prior year, with the interest yield in both periods
decreasing as a result of the change in portfolio mix as the portfolio continues
to grow. Additionally, reserve rates decreased slightly as delinquencies and
charge-offs improved, whereas in the prior period there had been an increase due
to the uncertainty regarding the COVID-19 pandemic.


                                       39
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The following table presents selected financial data and ratios at the dates and for the years ended December 31, 20212020 and 2019.

                                                  Year Ended December 31,
(Dollars in thousands)                       2021          2020          2019
Selected Earnings Data
Total interest income                      $ 118,305     $ 110,706     $  99,463
Total interest expense                         9,993        13,013        13,304
Net interest income                          108,312        97,693        86,159
Provision for loan losses                      7,671        23,736        28,638

Net interest income after provision for losses 100,641 73,957 57,521 Total other income (expense), net

            (30,156 )     (27,341 )     (23,490 )
Net income before taxes                       70,485        46,616        34,031
Income tax provision                         (18,699 )     (12,004 )      (8,813 )
Net income after taxes                     $  51,786     $  34,612     $  25,218
Balance Sheet Data
Total loans, gross                         $ 961,320     $ 792,686     $ 713,332
Total loan allowance                          32,435        27,348        18,075
Total loans, net                             928,885       765,338       695,257
Total assets                                 896,223       777,605       707,377
Total borrowings                             710,616       621,735       563,805
Selected Financial Ratios
Return on average assets                        6.00 %        4.59 %        3.84 %
Return on average equity                       30.01         22.93         17.19
Interest yield                                 13.94         14.90         15.39
Net interest margin                            12.76         13.15         13.33
Reserve coverage                                3.37          3.45          2.53
Delinquency status (1)                          0.41          0.70          0.84
Charge-off%                                     0.30          1.95          2.69


(1)

Loans past due 90 days or more.

Home Improvement Loans

The home improvement lending segment works with contractors and financial
service providers to finance home improvements and is concentrated in roofs,
swimming pools, and windows at 30%, 26%, and 13% of total loans outstanding as
of December 31, 2021, as compared to 27%, 24%, and 13% as of December 31, 2020,
with no other collateral types over 8%. Home improvement loans are made to
borrowers residing in all fifty states, with the highest concentrations in
Florida, Texas, and Ohio at 10%, 10%, and 8% of loans outstanding December 31,
2021, compared to 11%, 11%, and 9% as of December 31, 2020, with no other states
over 6%.


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During the year ended December 31, 2021, the home improvement lending segment
continued to grow with the net portfolio increasing 31% from the prior year.
Reserve rates increased 14 basis points from a year ago. The interest yield
decreased slightly from the prior year period, while net interest margins
increased, reflecting lower rates on borrowings and CDs issued in the current
year as compared to the prior year.

The following table presents selected financial data and ratios at the dates and for the years ended December 31, 20212020 and 2019.

                                                  Year Ended December 31,
(Dollars in thousands)                       2021          2020          2019
Selected Earnings Data
Total interest income                      $  34,204     $  27,273     $  19,943
Total interest expense                         4,153         5,699         4,757
Net interest income                           30,051        21,574        15,186
Provision for loan losses                      2,750         3,778         1,598
Net interest income after loss provision      27,301        17,796        13,588
Other income (expense), net                  (11,640 )      (9,611 )      (7,520 )
Net income before taxes                       15,661         8,185         6,068
Income tax provision                          (4,155 )      (2,108 )      (1,572 )
Net income after taxes                     $  11,506     $   6,077     $   4,496
Balance Sheet Data
Total loans, gross                         $ 436,772     $ 334,033     $ 247,324
Total loan allowance                           7,356         5,157         2,608
Total loans, net                             429,416       328,876       244,716
Total assets                                 371,781       340,494       252,704
Total borrowings                             294,786       272,284       201,605
Selected Financial Ratios
Return on average assets                        3.01 %        2.07 %        2.20 %
Return on average equity                       15.04         10.35         10.22
Interest yield                                  9.30          9.66          9.50
Net interest margin                             8.17          7.62          7.24
Reserve coverage                                1.68          1.54          1.05
Delinquency status (1)                          0.03          0.05          0.07
Charge-off%                                     0.15          0.44          0.37


(1)

Loans past due 90 days or more.

Commercial loans

We originate both senior and subordinated loans nationwide to businesses in a
variety of industries, more than 53% of which are located in the Midwest region,
with the rest scattered across the country. These mezzanine loans are primarily
secured by a second position on all assets of the businesses and generally range
in amount from $2.0 million to $5.0 million at origination, and typically
include an equity component as part of the financing. The commercial lending
business has concentrations in manufacturing and administrative, wholesale trade
and support services, making up 40% and 14%, and 13% of the loans outstanding as
of December 31, 2021, compared to 63%, 0%, and 13% as of December 31, 2020.

During the year ended December 31, 2021, the commercial portfolio continued to
grow. Additionally, reserve rates increased, reflecting specific reserves on
aged investments.


                                       41
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The following table presents selected financial data and ratios as of and for
the years ended December 31, 2021, 2020, and 2019. The commercial segment
encompasses the mezzanine lending business, and the other legacy commercial
loans (immaterial to total) have been allocated to corporate and other
investments.
                                                 Year Ended December 31,
(Dollars in thousands)                       2021          2020         2019
Selected Earnings Data
Total interest income                      $   6,592     $  6,926     $  7,183
Total interest expense                         2,720        2,538        2,833
Net interest income                            3,872        4,388        4,350
Provision for loan losses                          -            -          364
Net interest income after loss provision       3,872        4,388        3,986
Other income (expense), net                    3,101       (3,196 )     (1,149 )
Net income before taxes                        6,973        1,192        2,837
Income tax provision                          (1,850 )       (299 )       (684 )
Net income after taxes                     $   5,123     $    893     $  2,153
Balance Sheet Data
Total loans, gross                         $  74,854     $ 62,037     $ 66,405
Total loan allowance                           1,141            -            -
Total loans, net                              73,713       62,037       66,405
Total assets                                 103,631       80,622       84,924
Total borrowings                              82,169       65,924       68,666
Selected Financial Ratios
Return on average assets                        5.85 %       1.07 %       2.44 %
Return on average equity                       29.23         5.17        12.21
Interest yield                                 10.41        10.51        11.39
Net interest margin                             6.12         6.66         6.90
Reserve coverage(1)                             1.49         0.00         0.00
Delinquency status (1) (2)                      0.10         0.11         0.15
Charge-off% (3)                                    -         0.04         1.30


(1)
Ratio is based off of total commercial balances, and relates solely to the
legacy commercial loans balances.
(2)
Loans 90 days or more past due.
(3)
Ratio is based on total commercial lending business, and relates to the total
loan business.

                                               As of December 31,
                                       2021                           2020
                             Total Gross        % of        Total Gross        % of
Geographic Concentrations       Loans          Market          Loans          Market
Illinois                    $      11,667           16 %   $       9,473           15 %
California                         10,034           13             5,000            8
Minnesota                           9,916           13             5,679            9
North Carolina                      7,264           10             6,836           11
Michigan                            6,269            8            10,461           17
Texas                               5,570            7             5,559            9
New Hampshire                       5,503            7                 -            -
New Jersey                          4,164            6             4,072            7
Kansas                              4,107            5             4,107            7
Florida                                 -            -             3,978            6
North Dakota                        2,805            4             3,259            5
Other (1)                           7,555           11             3,613            6
Total                       $      74,854          100 %   $      62,037          100 %


(1)

Includes seven other states, all of which were below 5% at December 31, 2021and nine other states, all of which were below 7% at December 31, 2020.

Loan of medallions

The medallion lending segment operates mainly in the New York City, Newark, and
Chicago markets. We have a long history of owning, managing, and financing taxi
fleets, taxi medallions, and corporate car services. During the year ended
December 31, 2021, taxi medallion values remained consistent in the New York
City market even as other markets saw declines. We continue to not recognize
interest income with all loans being placed on nonaccrual as of the third
quarter 2020, and transferring underperforming loans from the portfolio to loan
collateral in process of foreclosure with charge-offs to collateral value once
loans become more than 120 days past due. All the loans are secured by taxi
medallions and enhanced by personal guarantees of the shareholders and owners.


                                       42
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The following table presents selected financial data and ratios at the dates and for the years ended December 31, 20212020 and 2019.

                                                         Year Ended December 31,
(Dollars in thousands)                              2021          2020           2019
Selected Earnings Data
Total interest income (loss)                      $ (1,483 )    $  (1,518 )    $   3,665
Total interest expense                               5,914          3,610          7,962
Net interest loss                                   (7,397 )       (5,128 )       (4,297 )
(Benefit) provision for loan losses                 (7,752 )       42,276   

16,331

Net interest income (loss) after provision for losses 355 (47,404 )

     (20,628 )
Other income (expense), net                         (1,991 )      (30,366 )      (10,493 )
Net loss before taxes                               (1,636 )      (77,770 )      (31,121 )
Income tax benefit                                     433         19,520          7,596
Net loss after taxes                              $ (1,203 )    $ (58,250 )    $ (23,525 )
Balance Sheet Data
Total loans, gross                                $ 14,046      $  37,768      $ 123,097
Total loan allowance                                 9,234         25,043         18,075
Total loans, net                                     4,812         12,725        105,022
Total assets                                        42,011        124,554        217,483
Total borrowings                                    69,221         98,636        176,825
Selected Financial Ratios
Return on average assets                             (1.15 )%      (33.21 )%       (9.73 )%
Return on average equity                             (5.75 )      (165.21 )       (48.49 )
Interest yield                                      (18.77 )        (2.11 )         2.88
Net interest margin                                 (93.60 )        (7.14 )        (3.38 )
Reserve coverage                                     65.74          66.31          19.48
Delinquency status (1)                                   -           3.57           2.04
Charge-off%                                          95.40          59.38          14.68


(1)

Loans past due 90 days or more.

                                               As of December 31,
                                     2021                             2020
                            Total Gross       % of          Total Gross        % of
Geographic Concentration       Loans         Market            Loans          Market
New York City              $      12,514          89 %     $      33,657           89 %
Newark                             1,486          11               3,811           10
All Other                             46           0   (1)           300            1
Total                      $      14,046           0 %     $      37,768          100 %


(1)
Less than 1%.

                                                                  As of December 31,
                                                      2021                                   2020
                                           Total Loan                             Total Loan
                                         Collateral in                          Collateral in
                                           Process of            % of             Process of            % of
Geographic Concentration                  Foreclosure           Market           Foreclosure           Market
New York City                          $           29,303              82 %   $           38,738              73 %
Newark                                              4,247              12                  7,994              15
Chicago                                             1,952               5                  6,057              11
All Other                                             208               1                    339               1
Total                                  $           35,710               0 %   $           53,128             100 %


RPAC

Until December 1, 2021, we were the majority owner and managing member of RPAC
Racing, LLC, a performance and marketing company for NASCAR. Revenues were
mainly earned through sponsorships and race winning activity over the ten month
race season (February through November) during the year. As a result of
COVID-19, the prior year race season was suspended from March 15, 2020 through
May 17, 2020.


                                       43
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The following table presents selected financial data and ratios at the dates and for the years ended December 31, 20212020 and 2019.

                                                     Year Ended December 31,
(Dollars in thousands)                         2021 (1)        2020         2019
Selected Earnings Data
Sponsorship, race winnings, and other income   $  12,567     $ 20,042     $ 18,742
Race and other expenses                           14,667       16,339       15,938
Interest expense                                     546          163          159
Total expenses                                    15,213       16,502       16,097
Net income (loss) before taxes                    (2,646 )      3,540       

2,645

Income tax (provision) benefit                    (1,498 )       (889 )       (329 )
Net income (loss) after taxes                  $  (4,144 )   $  2,651     $  2,316

Balance Sheet Data
Total assets                                   $       -     $ 33,711     $ 31,538
Total borrowings                                       -        8,689        7,794
Selected Financial Ratios
Return on average assets                              NM         7.98 %       7.28 %
Return on average equity                              NM           NM       (96.37 )


(1)

The Company sold its interest in PRPP in December 2021. Selected revenue data is applicable until the date of sale.

Corporate and other investments

This non-operating segment relates to our equity and investment securities as
well as our legacy commercial business, and other assets, liabilities, revenues,
and expenses not allocated to the operating segments. Commencing with the 2020
second quarter, the Bank began issuing loans related to the new strategic
partnership business, which is currently included within this segment. Strategic
partnerships represent $0.1 million in net loans as of December 31, 2021,
compared to less than $0.1 million as of December 31, 2020. This segment also
reflects the elimination of all intercompany activity among the consolidated
entities, as well as the gains (losses) on the dispositions of certain non-core
assets.

The following table presents selected financial data and ratios at the dates and for the years ended December 31, 20212020 and 2019.

(Dollars in thousands)                Year Ended December 31,
                                2021           2020           2019
Selected Earnings Data
Total interest income         $   1,348      $   1,575      $   2,308
Total interest expense            7,814          9,128          6,030
Net interest loss                (6,466 )       (7,553 )       (3,722 )
Total interest expense            1,953             27            455
Net interest loss                (8,419 )       (7,580 )       (4,177 )
Other income (expense), net       1,455        (11,164 )       (7,946 )
Net loss before taxes            (6,964 )      (18,744 )      (12,123 )
Income tax benefit                1,552          5,854          3,461
Net loss after taxes          $  (5,412 )    $ (12,890 )    $  (8,662 )
Balance Sheet Data
Total loans, gross            $   1,933      $   3,314      $   3,362
Total loan allowance                  -              -              -
Total loans, net              $   1,933          3,314          3,362
Total assets                    459,411        285,425        247,641
Total borrowings                328,358        244,987        150,898
Selected Financial Ratios
Return on average assets          (1.89 )%       (5.06 )%       (3.71 )%
Return on average equity         (13.62 )       (23.29 )       (14.26 )




                                       44
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Summary of consolidated financial ratios

The following table presents selected financial data and ratios at the dates and for the years ended December 31, 20212020 and 2019.

                                                       Year Ended December 

31,

(Dollars in thousands, Except per share
data)                                           2021            2020        

2019

Return on average assets (ROA)                      3.12 %         (2.16 )%         (0.12 )%
Return on average equity (ROE)                     21.24          (10.90 )          (0.59 )
Net interest margin                                 9.25            8.65             8.64
Other income ratio (1)                              2.28           (0.46 )           1.81
Total expense ratio (2)                             9.26            7.51             9.18
Equity to assets (3)                               19.00           18.54            21.70
Debt to equity (4)                                  4.2x            4.3x             3.5x
Loans receivable to assets                            77 %            71 %             72 %
Net charge-offs                                   12,004          58,362           37,688
Net charge-offs (recoveries) as a % of
average loans receivable                            0.93 %          5.00 %           3.60 %
Allowance coverage ratio                            3.37            4.68             3.97


(1)
Other income ratio represents other income divided by average interest earning
assets.
(2)
Total expense ratio represents total expenses (interest expense, operating
expenses, and income taxes) divided by average interest earning assets.
(3)
Includes $68.8 million, $73.2 million, and $71.3 million related to
non-controlling interests in consolidated subsidiaries as of December 31, 2021,
2020, and 2019.
(4)
Excludes deferred financing costs of $7.1 million, $5.8 million, and $5.1
million as of December 31, 2021, 2020, and 2019.

Consolidated operating results

For the year ended December 31, 2021 Compared to the year ended December 31, 2020

Net income attributable to shareholders was $54.1 million, or $2.17 per share
for the year ended December 31, 2021, compared to net loss attributable to
shareholders of $34.8 million, or $1.42 per share, for the year ended December
31, 2020.

Total interest income was $159.0 million for the year ended December 31, 2021,
compared to $145.0 million for the year ended December 31, 2020. The increase in
interest income is reflective of the continued growth in the consumer lending
segments, offset by contraction in the medallion lending segment, all loans of
which are on nonaccrual status beginning in third quarter 2020, and a reduction
in interest rates. The yield on interest earning assets was 11.51% for the year
ended December 31, 2021, compared to 11.32% for the year ended December 31,
2020. Average interest earning assets were $1,384.8 million for the year ended
December 31, 2021, an increase from $1,280.4 million for the year ended December
31, 2020.

Loans before allowance for loan losses were $1,488.9 million as of December 31,
2021, comprised of recreation ($961.3 million), home improvement ($436.8
million), commercial ($76.7 million), medallion ($14.0 million), and strategic
partnership (less than $0.1 million) loans. We had an allowance for loan losses
as of December 31, 2021 of $50.2 million, which was attributable to the
recreation (64%), home improvement (15%), medallion (19%), and commercial (2%)
loan portfolios. As of December 31, 2020, loans before allowance for loan losses
were $1,229.8 million, comprised of recreation ($792.7 million), home
improvement ($334.0 million), commercial ($65.3 million), medallion ($37.8
million), and strategic partnership ($24.0 million) loans. We had an allowance
for loan losses as of December 31, 2020 of $57.5 million, which was attributable
to recreation (48%), medallion (43%), and home improvement (9%) loans.

Loans increased $259.1 million, or 21%, from $1,229.8 million as of December 31,
2020 to $1,488.9 million as of December 31, 2021 as a result of $747.4 million
of loan originations, offset by principal payments, and to a lesser extent
transfers to loan collateral in process of foreclosure and net charge-offs. The
provision for loan losses was $4.6 million for the year ended December 31, 2021,
compared to a $69.8 million for the year ended December 31, 2020. The
improvement over the prior year is attributable to the entire medallion loan
portfolio being placed on non-accrual status and reserved down to collateral
value in 2020, along with increases in reserve rates between 50 and 100 basis
points on the recreation subprime loan business, as well as lower net
charge-offs in the consumer, primarily recreation, loan portfolio in the current
year. The charge-off ratios on the loan portfolios was 0.93% for the year ended
December 31, 2021 compared to 5.00% for the year ended December 31, 2020,
primarily reflective of higher recoveries and lower charge-offs in the current
year within the consumer loan portfolio. See Note 4 of the accompanying
consolidated financial statements for additional information on loans and
allowance for loan losses.

Interest expense was $31.1 million for the year ended December 31, 2021,
compared to $34.2 million for the year ended December 31, 2020. The decrease is
from the prior year is attributable to lower costs associated with new deposits
issued during the year, despite the overall increase in outstanding deposits,
due to lower interest rates, offset slightly by higher priced longer-term
private notes replacing lower cost short term bank borrowings. The average cost
of borrowed funds was 2.28% for the year ended December 31, 2021, compared to
2.71% for the year ended December 31, 2020, the decrease mainly driven by the
decline in market rates for deposits, the repayment of retail notes, offset to a
lesser extent with the replacement of notes payable to banks with higher fixed
rate private notes. Average debt outstanding was $1,370.7 million for the year
ended December 31, 2021, up from $1,258.5 million for the year ended December
31, 2020, as we issued additional certificates of deposits to increase our
liquidity, along with the new issuance of privately placed notes, offset by the
repayment of publicly traded retail notes and other bank borrowings. We expect

                                       45
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interest expense to increase as certificates of deposit mature and get replaced
with certificates of deposit with higher rates. See page 35 for tables that show
average balances and cost of funds for our funding sources.

Net interest income was $127.8 million for the year ended December 31, 2021,
compared to $110.8 million for the year ended December 31, 2020. Net interest
margin was 9.25% for the year ended December 31, 2021, compared to 8.65%, for
the year ended December 31, 2020, reflecting the continued growth and
performance of the higher yielding consumer loans, as well as the trends in
interest rates.

Net other income (loss), which is comprised of sponsorship and race winnings,
prepayment fees, servicing fee income, late charges, write-downs of loan
collateral, impairment of equity investments, and other miscellaneous income was
$31.6 million for the year ended December 31, 2021, compared to a loss of $5.9
million for the year ended December 31, 2020. The increase was mainly due to
gains recorded on the extinguishment of debt, gains on the disposal of equity
investments in the current year, $11.3 million resulting from the sale of shares
in Upgrade, as well as lower write-downs of the loan collateral in process of
foreclosure as compared to the prior year. We will not earn additional
sponsorship and race winnings as a result of the sale of RPAC in December 2021.

Operating expenses were $72.9 million for year ended December 31, 2021, compared
to $72.0 million for year ended December 31, 2020. Salaries and benefits were
$31.6 million for the year ended December 31, 2021, up from $28.2 million for
the year ended December 31, 2020, with the increase mainly attributable to both
the growth in our loan portfolio as well as increased compensation in connection
with current year performance. Professional fees were $5.3 million for the year
ended December 31, 2021, compared to $8.0 million for the year ended December
31, 2020, primarily reflective of lower legal costs for a variety of corporate
matters. Race team costs were $9.6 million for the year ended December 31, 2021,
compared to $8.4 million for the year ended December 31, 2020, reflective of a
full race team in 2021 as compared to the shortened 2020 season due to the
COVID-19 pandemic. Due to the sale of RPAC in December 2021, we do not expect to
continue to incur race team costs. Loan servicing costs were $7.0 million for
the year ended December 31, 2021, down slightly from the year ended December 31,
2020. Occupancy and other operating expenses were $19.4 million for the year
ended December 31, 2021 compared to $20.7 million for the year ended December
31, 2020.

Total income tax expense was $24.2 million for the year ended December 31, 2021,
compared to a benefit of $10.1 million for the year ended December 31, 2020. The
2021 year included $1.8 million of tax expense related to a valuation allowance
with respect to certain tax assets which we believe will not be realized.

Loan collateral in process of foreclosure was $37.4 million at December 31,
2021, a decline from $54.6 million at December 31, 2020. The decrease was
primarily reflective of cash payments received, sales, and to a lesser extent,
the decline in collateral values offset by the additional loans having reached
120 days past due being charged-down to their collateral value and reclassified
to loan collateral in process of foreclosure.

For the year ended December 31, 2020 Compared to the year ended December 31, 2019

For a comparison of the Company's results of operations for the year ended
December 31, 2020 to the year ended December 31, 2019, see Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's Annual Report on Form 10-K for the year ended December 31, 2020, which
was filed with the Securities and Exchange Commission on March 16, 2021.

ASSET/LIABILITY MANAGEMENT

Sensitivity to interest rates

We, like other financial institutions, are subject to interest rate risk to the
extent that our interest-earning assets (consisting of consumer, commercial, and
medallion loans, and investment securities) reprice on a different basis over
time in comparison to our interest-bearing liabilities (consisting primarily of
bank certificates of deposit, privately placed notes, and SBA debentures and
borrowings).

Having interest-bearing liabilities that mature or reprice more frequently on
average than assets may be beneficial in times of declining interest rates,
although such an asset/liability structure may result in declining net earnings
during periods of rising interest rates. Abrupt increases in market rates of
interest may have an adverse impact on our earnings until we are able to
originate new loans at the higher prevailing interest rates. Conversely, having
interest-earning assets that mature or reprice more frequently on average than
liabilities may be beneficial in times of rising interest rates, although this
asset/liability structure may result in declining net earnings during periods of
falling interest rates. This mismatch between maturities and interest rate
sensitivities of our interest-earning assets and interest-bearing liabilities
results in interest rate risk.

The effect of changes in interest rates is mitigated by regular turnover of the
portfolios. We believe that the average life of our loan portfolios varies to
some extent as a function of changes in interest rates. Borrowers are more
likely to exercise prepayment rights in a decreasing interest rate environment
because the interest rate payable on the borrower's loan is high relative to
prevailing interest rates. Conversely, borrowers are less likely to prepay in a
rising interest rate environment. However, borrowers may prepay for a variety of
other reasons, such as to monetize increases in the underlying collateral
values. In addition, we manage our exposure to

                                       46
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increases in market rates of interest by incurring fixed-rate indebtedness, such
as ten year subordinated SBA debentures, and by setting repricing intervals on
certificates of deposit, for terms of up to five years.

A relative measure of interest rate risk can be derived from our interest rate
sensitivity gap. The interest rate sensitivity gap represents the difference
between interest-earning assets and interest-bearing liabilities, which mature
and/or reprice within specified intervals of time. The gap is considered to be
positive when repriceable assets exceed repriceable liabilities, and negative
when repriceable liabilities exceed repriceable assets. A relative measure of
interest rate sensitivity is provided by the cumulative difference between
interest sensitive assets and interest sensitive liabilities for a given time
interval expressed as a percentage of total assets.

The following table presents our interest rate sensitivity gap at December 31,
2021. The principal amounts of interest earning assets are assigned to the time
frames in which such principal amounts are contractually obligated to be
repriced. We have not reflected an assumed annual prepayment rate for such
assets in this table.

                                                          December 31, 2021 Cumulative Rate Gap (1)
                                                      More            More           More            More            More
                                                      Than           Than 2         Than 3          Than 4           Than
                                       Less        1 and Less       and Less       and Less        and Less       5 and Less
                                       Than          Than 2          Than 3         Than 4          Than 5          Than 6
(Dollars in thousands)                1 Year          Years          Years          Years           Years            Years        Thereafter        
Total
Earning assets
Fixed-rate                          $   39,966     $    19,984     $   19,572     $   54,025     $     75,816     $    65,613     $ 1,177,492     $ 1,452,468
Adjustable rate                          7,104             688          1,250              -               23               -               -           9,065
Investment securities                    4,406           2,087          4,394          4,023            1,869           1,847          26,147          44,773
Cash                                   123,234               -              -            500              750               -               -         124,484
Total earning assets                $  174,710     $    22,759     $   25,216     $   58,548     $     78,458     $    67,460     $ 1,203,639     $ 1,630,790
Interest bearing liabilities
Deposits                            $  405,311     $   242,965     $  

289,685 $165,798 $149,529 $-$- $1,253,288
Retail and privately placed tickets

            -               -         36,000              -           31,250               -          53,750      

121,000

SBA debentures and borrowings                -           5,000         13,963         14,000           14,000               -          23,000          69,963
Preferred securities                         -               -              -              -                -               -          33,000          33,000
Total liabilities                   $  405,311     $   247,965     $  339,648     $  179,798     $    194,779     $         -     $   109,750     $ 1,477,251
Interest rate gap                   $ (230,601 )   $  (225,206 )   $ (314,432 )   $ (121,250 )   $   (116,321 )   $    67,460     $ 1,093,889     $   153,539
Cumulative interest rate gap        $ (230,601 )   $  (455,807 )   $ (770,239 )   $ (891,489 )   $ (1,007,810 )   $  (940,350 )   $   153,539     $         -
December 31, 2020 (2)               $ (366,801 )   $  (570,449 )   $ (719,385 )   $ (827,236 )   $   (907,295 )   $  (860,941 )   $    52,347     $         -
December 31, 2019 (2)               $ (260,024 )   $  (500,953 )   $ (651,546 )   $ (689,819 )   $   (748,187 )   $  (706,935 )   $    83,402     $         -


(1)
The ratio of the cumulative one year gap to total interest rate sensitive assets
was (14%), (27%), and (21%) as of December 31, 2021, 2020, and 2019.
(2)
Excludes federal funds sold and investment securities.

Our interest rate sensitive assets were $1,630.8 million and interest rate
sensitive liabilities were $1,477.3 million at December 31, 2021. The one-year
cumulative interest rate gap was a negative $230.6 million or (14%) of interest
rate sensitive assets. We seek to manage interest rate risk by originating
adjustable-rate loans, by incurring fixed-rate indebtedness, by evaluating
appropriate derivatives, pursuing securitization opportunities, and by other
options consistent with managing interest rate risk.

With the cessation of LIBOR in 2023, we are currently reviewing the impact on
our loans and borrowings. We do not have lendings tied to LIBOR and do not
expect a significant impact on our loans. We have trust preferred securities
that bear a variable rate of interest of 90 day LIBOR (0.21% at December 31,
2021) plus 2.13%. We expect to rely on our lenders to adjust and communicate
rate adjustments; however, we do not expect a material impact on our borrowings.

Cash and capital resources

Our sources of liquidity include unfunded commitments to sell debentures to the
SBA, loan amortization and prepayments, private issuances of debt securities,
participations or sales of loans to third parties, the disposition of our other
assets, and dividends from Medallion Capital and the Bank, and are subject to
compliance with regulatory ratios. As of December 31, 2021, we had unfunded
commitments from the SBA of $9.5 million, all of which required the infusion of
$4.8 million of capital from either the capitalization of retained earnings or a
capital infusion from the Company.

Additionally, the Bank has access to independent sources of funds for our
business originated there, primarily through brokered certificates of deposit.
The Bank has up to $45.0 million available under Fed Funds lines with several
commercial banks.

In February 2021, we completed a private placement to certain institutional
investors of $25.0 million aggregate principal amount of 7.25% unsecured senior
notes due February 2026, with interest payable semiannually. Follow-on offerings
of these notes in March and April 2021 raised an additional $3.3 million and
$3.0 million.

In December 2020, we completed a private placement to certain institutional
investors of $33.6 million aggregate principal amount of 7.50% unsecured senior
notes due December 2027, with interest payable semiannually. Follow-on offerings
of these notes in February and March 2021 raised an additional $8.5 million. In
April 2021, we raised an additional $11.7 million in a follow-on offering, and
repaid substantially all of our remaining bank borrowings.

                                       47
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The net proceeds from the December 2020, February 2021, March 2021 and April
2021 private placements have been used for general corporate purposes, including
repayment of outstanding debts, including repayment of our 9.00% retail notes at
maturity in April 2021 and to pay down other borrowings, including some
borrowings at a discount.

In December 2019, the Bank closed an initial public offering of $46.0 million
aggregate liquidation amount, yielding net proceeds of $42.5 million, of its
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series F.
Dividends are payable quarterly from the date of issuance to, but excluding
April 1, 2025, at a rate of 8% per annum, and from and including April 1, 2025,
at a floating rate equal to a benchmark rate (which is expected to be
three-month Secured Overnight Financing Rate, or SOFR) plus a spread of 6.46%
per annum.

In March 2019we completed a private placement with certain institutional investors of $30.0 million 8.25% aggregate principal amount of unsecured notes due 2024, with interest payable semi-annually. A follow-up offering of these notes in the third quarter of 2019 raised an additional amount $6.0 million.

The table below presents the components of our debt were as of December 31,
2021, exclusive of deferred financing costs of $7.1 million. See Note 4 to the
consolidated financial statements for details of the contractual terms of our
borrowings.

(Dollars in thousands)                Balance        Percentage       Rate (1)
Deposits (2)                        $ 1,254,038               85 %         1.20 %
Retail and privately placed notes       121,000                8           7.66
SBA debentures and borrowings            69,963                5           2.72
Preferred securities                     33,000                2           2.31
Total outstanding debt              $ 1,478,001              100 %         1.82 %


(1)

Weighted average contractual rate at December 31, 2021. (2) The balance includes $0.8 million reserve deposits of strategic partners in the
December 31, 2021.

Our contractual obligations expire on or mature at various dates through
September 2037. The following table shows all contractual obligations at
December 31, 2021.

                                                        Payments due by period
                           Less than        1 - 2         2 - 3         3 - 4         4 - 5       More than
(Dollars in thousands)       1 year         years         years         years         years        5 years        Total (1)
Borrowings
Deposits (2)               $  405,311     $ 242,965     $ 289,685     $ 165,798     $ 149,529     $        -     $ 1,253,288
Retail and privately
placed notes                        -             -        36,000             -        31,250         53,750         121,000
SBA debentures and
borrowings                          -         5,000        13,963        14,000        14,000         23,000          69,963
Preferred securities                -             -             -             -             -         33,000          33,000
Total outstanding
borrowings                    405,311       247,965       339,648       179,798       194,779        109,750       1,477,251
Operating lease
obligations                     2,439         2,356         2,373         2,390         2,408          1,164          13,130
Total contractual
obligations                $  407,750     $ 250,321     $ 342,021     $ 182,188     $ 197,187     $  110,914     $ 1,490,381


(1)

Total debt excludes deferred financing costs of $7.1 million. (2) The balance excludes $0.8 million reserve deposits of strategic partners in the
December 31, 2021.

Approximately $653.3 million of our borrowings have maturity dates within the next two years, a large majority of which are traded CDs.

In addition, the illiquidity of portions of our loan portfolio and investments
may adversely affect our ability to dispose of them at times when it may be
advantageous for us to liquidate such portfolio or investments. In addition, if
we were required to liquidate some or all of our portfolio, the proceeds of such
liquidation may be significantly less than the current value of such
investments. Because we borrow money to make loans and investments, our net
operating income is dependent upon the difference between the rate at which we
borrow funds and the rate at which we invest these funds. As a result, there can
be no assurance that a significant change in market interest rates will not have
a material adverse effect on our interest income. In periods of sharply rising
interest rates, our cost of funds would increase, which would reduce our net
interest income.

We use a combination of long-term and short-term borrowings and equity capital
to finance our lending and investing activities. Our long-term fixed-rate
investments are financed primarily with fixed-rate debt. We may use interest
rate risk management techniques in an effort to limit our exposure to interest
rate fluctuations. We have analyzed the potential impact of changes in interest
rates on net interest income. Assuming that the balance sheet were to remain
constant and no actions were taken to alter the existing interest rate
sensitivity a hypothetical immediate 1% increase in interest rates would result
in an increase to net income as of December 31, 2021 by $1.3 million on an
annualized basis, and the impact of such an immediate increase of 1% over an one
year period would have been a reduction in net income by $0.8 million at
December 31, 2021. Although management believes that this measure is indicative
of our sensitivity to interest rate changes, it does not adjust for potential
changes in credit quality, size, and composition of the assets on the balance
sheet, and other business developments that could affect net income from
operations in a particular quarter or for the year taken as a whole.
Accordingly, no assurances can be given that actual results would not differ
materially from the potential outcome simulated by these estimates.

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From time to time, we work with investment banking firms and other financial
intermediaries to investigate the viability of several other financing options
which include, among others, the sale or spinoff of certain assets or divisions,
the development of a securitization conduit program, and other independent
financing for certain subsidiaries or asset classes. These financing options
would also provide additional sources of funds for both external expansion and
continuation of internal growth.

The following table illustrates sources of available funds for us and each of
our subsidiaries, and amounts outstanding under credit facilities and their
respective end of period weighted average interest rates at December 31, 2021.
See Note 5 to the consolidated financial statements for additional information
about each credit facility.

                          Medallion
                          Financial                                                                                              December 31,       December 31,
(Dollars in thousands)      Corp.             MFC            MCI               FSVC               MB             All Other         2021(1)            2020(1)
Cash, cash equivalents                  (1)                              (2)              (2)
and federal funds sold   $    40,540        $    258     $     22,124        $     226        $    61,302        $       34     $      124,484     $      112,040
Bank Loans                                                                                                                                   -             31,261
Average interest rate                                                                                                                       NA               3.67 %
Maturity                                                                                                                                    NA         2/21-12/23
Preferred Securities          33,000                                                                                                    33,000             33,000
Average interest rate           2.31 %                                                                                                    2.31 %             2.35 %
Maturity                        9/37                                                                                                      9/37               9/37
Retailed notes and
privately placed
borrowings                   121,000                                                                                                   121,000            103,225
Average interest rate           7.66 %                                                                                                    7.66 %             8.25 %
Maturity                  3/24-12/27                                                                                                3/24-12/27         4/21-12/27
SBA debentures &
borrowings                                                     70,500            8,963                                                  79,463             93,008
Amounts available                                               9,500                                                                    9,500             25,000
Amounts outstanding                                            61,000            8,963                                                  69,963             68,008
Average interest rate                                            2.64 %           3.25 %                                                  2.72 %             3.36 %
Maturity                                                   3/23- 3/32           45,412                                              3/23- 3/32          3/21-9/30
Brokered CD's & other                                                                                        (3)
funds borrowed                                                                                  1,254,038                            1,254,038          1,068,072
Average interest rate                                                                                1.20 %                               1.20 %             1.71 %
Maturity                                                                                       1/22-12/26                           1/22-12/26         1/21-12/25
Other borrowings                                                                                                                             -              8,689
Average interest rate                                                                                                                       NA               1.91 %
Maturity                                                                                                                                    NA         12/21-6/25
Total Cash               $    40,540        $    258     $     22,124        $     226        $    61,302        $       34     $      124,484     $    

112,040

Total outstanding debt $154,000 $- $61,000

 $   8,963        $ 1,254,038        $        -     $    1,478,001     $    1,312,255


(1)
Excludes deferred financing costs of $7.1 million and $5.8 million as of
December 31, 2021 and 2020.
(2)
Cash resides in the applicable SBIC and is generally not available for corporate
use.
(3)
Balance includes $0.8 million of strategic partner reserve deposits and $8.7
million related to listing services.

Loan amortization, prepayments, and sales also provide a source of funding for
us. Prepayments on loans are influenced significantly by general interest rates,
medallion loan market values, economic conditions, and competition.

We also generate liquidity through deposits generated at the Bank, through the
issuance of SBA debentures, the issuance of privately placed notes and
historically through borrowing arrangements with other banks, as well as from
cash flow from operations. In addition, we may choose to participate a greater
portion of our loan portfolio to third parties. We actively seek additional
sources of liquidity; however, given market conditions, there can be no
assurance that we will be able to secure additional liquidity on terms favorable
to us or at all. If that occurs, we may decline to underwrite lower yielding
loans in order to conserve capital until credit conditions in the market become
more favorable; or we may be required to dispose of assets when we would not
otherwise do so, and at prices which may be below the net book value of such
assets in order for us to repay indebtedness on a timely basis.

Recently issued accounting standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit
Losses, or Topic 326: Measurement of Credit Losses on Financial Instruments, or
ASU 2016-13. The main objective of this new standard is to provide financial
statement users with more decision-useful information about the expected credit
losses on financial assets and other commitments to extend credit held by a
reporting entity at each reporting date. Under the FASB's new standard, the
concepts used by entities to account for credit losses on financial instruments
will fundamentally change. The existing "probable" and "incurred" loss
recognition threshold is removed. Loss estimates are based upon lifetime
"expected" credit losses. The use of past and current events must now be
supplemented with "reasonable and supportable" expectations about the future to
determine the amount of credit loss. The collective changes to the recognition
and measurement accounting standards for financial instruments and their
anticipated impact on the allowance for credit losses modeling have been
universally referred to as the CECL (current expected credit loss) model. ASU
2016-13 applies to all entities and is effective for fiscal years beginning
after December 15, 2019 for public entities, with early adoption permitted. In
November 2019, the FASB issued ASU 2019-10 to defer implementation of the
standard for smaller reporting companies, such us, to fiscal years beginning
after December 15, 2022. We are assessing the impact the update will have on our
financial statements, and expect the update to have a material impact on our
accounting for estimated credit losses on our loans.

                                       49

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In August 2021, the FASB issued ASU 2021-06, Presentation of Financial
Statements, or Topic 205: Depository and Lending, or Topic 942: and Financial
Services - Investment Companies, or Topic 946: Measurement of Credit Losses on
Financial Instruments, or ASU 2016-13. This new standard amends certain SEC
paragraphs from the Codification in response to the issuance of SEC Final Rule
No. 33-10786, Amendments to Financial Disclosures About Acquired and Disposed
Businesses and SEC Rule No. 33-10835, Update of Statistical Disclosures for Bank
and Savings and Loan Registrants. We have assessed the impact of the update and
determined it does not have a material impact on the accompanying financial
statements.

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