July 25, 2011: Medallion Financial (ticker: TAXI) announced that Medallion Bank, the company’s unconsolidated wholly-owned portfolio company received an investment of approximately $26.3M in Medallion Bank’s preferred stock from the United States Treasury under the Small Business Lending Fund. The fund is a voluntary program intended to encourage small business lending by providing capital to qualified smaller banks at favorable rates. In connection with the investment, the Bank exited the TARP Capital Purchase Program by redeeming all $22.3M of the preferred stock outstanding under that program. In addition, Medallion Bank received additional funds of approximately $3.95M. These new funds will be leveraged into new loan growth.
BDC Reporter Two Cents: TAXI is the only BDC which owns a bank. Given that the bulk of its earnings are derived from the bank and the FDIC could bar any dividends to the parent at any time, this is a positive step forward.
