Medallion Financial (MFIN) 2026 年第三季財報電話會議：貸款成長、備抵呆帳提列增加與淨息差承壓

重點摘要

• Medallion Financial Corp. (NASDAQ: MFIN) 公布 2026 財年第三季歸屬於股東之淨收益為 240 萬美元，或稀釋後每股盈餘 0.10 美元；相較之下，去年同期為 780 萬美元，或每股 0.32 美元。
• 過去 12 個月來，貸款組合成長 15%，帶動利息收入年增 10%，淨利息收入則年增 5%。
• 淨利息收益率 (NIM) 從 8.21% 降至 7.34%，反映出貸款收益率下降、放款轉向超優質 (super-prime) 房屋修繕貸款，以及現金餘額暫時偏高。
• 信用損失準備從 1,860 萬美元增至 3,080 萬美元。其中包含約 560 萬美元的首日提存 (day-one provisioning)，以及與提高備抵覆蓋率相關的 470 萬美元。
• 房屋修繕貸款承作金額達 1.463 億美元，年增 8,660 萬美元；休閒車輛 (REC) 貸款承作金額則增加 5,650 萬美元，達到 1.982 億美元。
• 董事會核准了一項新的 4,000 萬美元股票回購計畫，且未設到期日。管理層表示，預期將繼續在目前的價格水準進行庫藏股回購，特別是在股價低於每股有形帳面價值時。

關鍵財務數據

業務與營運表現

房屋修繕貸款是成長速度較快的消費者貸款業務。管理層指出，該貸款組合在基期較小的情況下成長了 18%，並預期目前的成長速度將繼續超越 REC（休閒車輛貸款）。第三季房屋修繕貸款承作的平均利率為 9.14%，相比去年同期則超過 10.5%。

較低的定價旨在吸引信用較強的借款人。管理層將房屋修繕貸款組合歸類為超優質 (super-prime)，並在討論其信用品質時提及約 760 分的 FICO 信用分數。雖然這項組合轉變正在壓縮淨利息收益率 (NIM)，但公司預期更強健的信用表現與更龐大的資產規模將支撐長期盈利。

MFIN 在本季度末新增了第六個戰略合作夥伴，這是其首個專屬金融 (captive finance) 合作關係。當該計畫達到全面規模時，管理層希望能每月保留 1,000 萬至 2,000 萬美元的貸款，不過目前尚無法提供具體時間表。

公司還售出了四個資產池中略低於 4,000 萬美元的貸款。其中約 75% 為房屋修繕貸款，25% 為 RV（露營車）貸款。管理層表示，在扣除遞延成本沖銷後，淨利益約為 3%，並希望在買家需求與交易時機允許下，使貸款出售成為常態性業務。

本季資金來源更加多元化。非仲介定期存款從 2026 財年第二季的 2,720 萬美元增加至 1.7317 億美元，高收益儲蓄存款餘額則從 250 萬美元升至 1.01 億美元。管理層表示，相較於類似的仲介資金，這些來源提供了約 10 至 15 個基點的成本優勢。

Medallion Bank 還額外發行了 5,500 萬美元股息率 9% 的 G 系列特別股。該資金符合第一類資本 (Tier 1 capital) 資格，旨在支持消費者貸款持續成長。

管理層指引

管理層維持其長期目標，即在五年內將資產規模從 30 億美元擴大至 50 億美元。預計目前房屋修繕貸款的成長速度仍將高於 REC。

預計第四季貸款承作量將反映正常的季節性因素。10 月的承作量略高於去年同期水準，但低於第二季與第三季上半年的高峰期。管理層指出，2027 年的成長將部分取決於整體經濟狀況。

公司正在第四季調高各貸款組合的利率。管理層預計這將在一定程度上放緩承作量，但隨著時間推移能支撐 NIM。雖然資金成本、利率與現金部署速度仍是變數，但公司預期 NIM 不會再出現像第二季到第三季那樣顯著的季減。

第四季營運費用預期與第三季大致相當，隨後在 2027 年漸進式增加。管理層表示，大多數主要的計畫投資與專案均已實施。

風險與關注焦點

信用成本仍是短期內獲利的主要制約因素。與業務成長及更高備抵覆蓋率相關的首日提存，使單季獲利減少了約 690 萬美元，而去年同期則為 270 萬美元。

REC 貸款的備抵覆蓋率上升 14 個基點至 5.30%，房屋修繕貸款則上升 17 個基點至 2.59%。管理層將此增長歸因於模型輸入變數的變化，包括季節性逾期率、歷史沖銷率、失業率以及利率變動。

貸款組合轉向收益率較低的房屋修繕貸款，可能會造成額外的 NIM 壓縮壓力。資金成本偏高以及資本部署時機亦仍是不確定性的來源。

管理層坦承經濟狀況已與六個月前不同。較為疲軟的經濟可能會限制 2027 年貸款成長的步伐，而來自股權投資退出的手續費收入預計仍將保持不可預測且起伏較大 (lumpy)。

分析師問答亮點

• NIM 壓力：管理層將 NIM 的季減主要歸因於品質較高的房屋修繕貸款利率較低、REC 定價調整，以及第二季發行債券後產生的過剩現金。
• 成長與當前獲利平衡：管理層確認資產負債表的擴展是目前的優先事項。據估算，與成長相關的首日提存在第三季對會計產生的影響約為每股 0.16 美元。
• 資本配置：公司在過去六個月中透過母公司債務與銀行特別股籌集了約 1.3 億美元。管理層認為這提供了能同時支持業務成長、股利發放與股票回購的資金能力。
• 股票回購：MFIN 在第三季以平均每股 11.48 美元的價格回購了近 50 萬股，耗資 560 萬美元。今年以來累計回購金額達 1,440 萬美元，而自 2022 年重啟計畫以來的累計回購金額已達 4,000 萬美元。
• 監管資本：鑑於貸款組合的表現及信用結構改善，管理層計畫要求監管機構重新考慮該銀行 15% 的第一類槓桿比率 (Tier 1 leverage) 要求。然而，任何調整仍非公司所能控制。

法說會完整逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Good morning and welcome to the Medallion Financial Corp Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ken Cooper, Investor Relations. Ken?

Unknown Speaker

Thank you and good morning. Welcome to Medallion Financial Corp's third quarter 2026 earnings call. Joining me today are Andrew Murstein, President and Chief Executive Officer, Anthony Cutrone, Executive Vice President and Chief Financial Officer, and Justin Haley, President and CEO of Medallion Bank. Certain statements made during the call today constitute forward-looking statements. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those risks and uncertainties are described in our earnings press release issued yesterday and in our filings with the SEC. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update these forward-looking statements.

In addition to our earnings press release, you can find our third quarter supplement presentation on our website by visiting medallion.com and clicking investor relations. The presentation is near the top of the page. With that, I'll turn it over to Andrew.

Andrew Murstein

Thank you, Ken, and good morning, everyone. Our third quarter results were driven by our growth strategy, which focuses on growing our market share with strong volumes in our REC and home improvement segments and our strategic partnership program. We are doing this by pricing in-market and leveraging our long-term relationships with some new relationships developed particularly in our home improvement segment. Our approach to credit risk was consistent with prior quarters, with an emphasis on reducing long-term losses in the REC segment and maintaining losses in a stable range for the home improvement segment. During the quarter, our home improvement book grew more quickly than the REC book. Volumes in the home improvement segment were $146.3 million, an increase of $86.6 million over the prior year quarter. Against a smaller base that produces the more rapid 18% growth rate, and we expect the home improvement growth rate to continue to outpace the REC growth rate for now. That is not to say that the REC segment did not grow nicely.

It did. Volumes of $198.2 million were $56.5 million more than the originations a year ago. So, the growth in both segments is partly due to more competitive positioning of our rates, but we are seeing the results of an expansion of our marketing and the new relationships that brings. As I mentioned on our first quarter call, our goal is to grow from $3 billion to $5 billion in assets over the next few years. We feel we have the business, the team, and the market positioning to achieve this goal. The cost of the growth is primarily in our provision of credit losses, which is obvious in this quarter's numbers and which Anthony will discuss in detail. But a secondary effect is the reduction of our net interest margin. Our NIM has historically been and continues to be one of the highest within the banking industry.

That gives us an advantage. We have the option to use rate to help us win market share in the short term because we have the flexibility of an outsized NIM. We will not always choose to win with rate, but with increased market share and the step up in asset size, we will deliver increased net interest income, which we expect will enhance our earnings in future periods. Also, as a reminder, by growing our home improvement book faster than our REC book, NIM compression will be a side effect. This is a trade we would take as the credit profile is stronger for home improvement and the opportunity in that market is larger. And of course, if we are successful, this will enhance our earnings long term and result in a more valuable company. To reiterate, we expect our strong origination activity to be coupled with equally strong or improved credit profiles of our borrowers. We are not chasing volume. We are chasing market share with better performing credits to produce larger earnings with still market-leading returns.

To facilitate our growth, we rely on our proven funding model using brokered deposits. The advantage of using brokered deposits is that they have predictable maturities without any run risk. Using broker deposits is more expensive than core deposits, and we regularly evaluate alternatives that might lower our cost of funds. In the third quarter, we originated more non-broker time deposits than we have in the past, the balance of which grew from $27.2 million in Q2 2026 to $173.17 million at Q3 2026. This was available to us at a lower cost than we would have paid for broker deposits, which may not always be the case. We continue to rely on time deposits because we value the asset liability matching that this confers, we have done since the bank's inception. However, we also grew our high yield savings balances from $2.5 million in Q2 2026 to $101 million as of September 30th.

When we have these opportunities, we diversify our deposits and reduce our cost of funds. We will take them. In the quarter, we reinforced our readiness for growth by reopening our Series G preferred stock at Medallion Bank and issuing an additional $55 million. This additional capital qualifies as Tier 1 capital, and when leveraged, will generate recurring earnings, which we expect to exceed the contractual coupon associated with it. This capital will allow us to continue to grow our consumer lending business and with it our earnings. I'd like to note that the 9% coupon on the preferred was the same as it was 15 months before, despite rates rising significantly in the interim. We appreciate that investors view us as a safe investment over time. Our strategic partnership program continues to evolve.

Originations remain strong and we added a sixth partner to the program near the end of the quarter, which was our first captive finance relationship. Our strategic partnership program has the ability to scale significantly bigger than it is today, particularly as our reputation grows and our strategy differentiates us from the competition. Our pipeline of potential partners is strong, but each is a significant investment in time and process. We expect to launch more partners in the coming quarters. My final comments are related to capital allocation priorities. The three priorities continue to be the focal point of delivering for our shareholders. One priority is to continue to grow the business as I just described.

And second is our dividend. We have always been and continue to be committed to an appropriate tangible capital return to our shareholders. Since we reinstated our dividend in 2022, our dividend has grown 75% to its current level. Our third priority is to continue to opportunistically buy back our stock. Since reinstating our stock repurchase plan in 2022, we have repurchased $40 million of stock. To that end, on October 27th, our Board of Directors approved a new $40 million stock repurchase plan with no expiration date. We look at this as a reload and gives us the ability to buy our stock back since we believe it is undervalued. Another example of our capital allocation efforts took place a few weeks ago when we were able to retire $15 million of our trust-preferred securities at a discount.

That gain will be shown in the fourth quarter. Again, I am pleased with our performance on behalf of the entire management team. Thank you to our entire company for expanding our reach and allowing us to serve more borrowers. With that, I'll now turn it over to Anthony, who will provide some additional insight into our quarter.

Anthony Cutrone

Thank you, Andrew. Good morning, everyone. We had another great quarter of growing our top line. Originations have driven the 15% increase in our loan book over the past 12 months. This translated into a 10% increase in interest income and a 5% increase in net interest income over the prior year quarter. Our net interest margin was 7.34% during the quarter, down from 8.21% a year ago. Our average interest yield on loans was 11.87%, decreasing 52 basis points from the prior year quarter. Our average cost of borrowings in the quarter was 4.45%, up from 4.28% a year ago. The change in our average loan yield reflects both the shift in our portfolio mix, with an increasing portfolio of super prime home improvement loans becoming a larger portion of our overall business, as well as the rate changes we instituted at the beginning of the year intended to deliver us stronger credits and borrowers that will perform better in during economic cycles.

Additionally, during the quarter, we held more cash than is typical, much of this due to the notes offering of the second quarter. As we continued to deploy that capital, we would expect our average cash balance to decrease and thus the negative impact of holding large amounts of lower yielding cash has on our NIM to be somewhat muted. The increase in our cost of borrowings is due to a growing total borrowings required to support our consumer loan business and rising interest rates on new bank deposits as older issuances mature. The provision for credit loss was $30.8 million for the quarter as compared to $18.6 million in the 2025 quarter. As expected, the vast majority of our provision, $29.8 million, is from our consumer loans. If we deconstruct the provision, the components are actual loan losses, day 1 provisioning, and changes in allowance coverage on our loans due to a variety of economic and portfolio inputs. The day 1 provision during the quarter, which again is the additional allowance for credit loss needed on a growing loan portfolio, recorded at the time the loans are originated, was approximately $5.6 million.

Additionally, during the quarter, our allowance coverage increased 14 basis points to 5.3% for REC loans and 17 basis points to 2.59% for home improvement loans, which represents $4.7 million of the provision for credit loss in the quarter. These two components had the most significant impact on our provision for credit loss and our earnings during the quarter, particularly when compared to the prior year. Net charge-offs in the consumer portfolio during the quarter were $19.6 million, or 2.84%, compared to $15 million, or 2.55% in the 2025 quarter. Operating costs totaled $24 million in the third quarter, which were down from $25 million in the prior quarter and up from $20.7 million in the prior year quarter. The increase in non-interest expense is overwhelmingly tied to operating costs associated with both scaling our origination platform and growing our loan portfolio. As we continue to expand our platforms and focus on growth, we anticipate operating costs to continue to grow. For the quarter, net income attributable to our shareholders was $2.4 million or $0.10 per diluted share compared to $7.8 million or $0.32 per share in the prior year quarter.

Increase in day 1 provision and increasing our allowance for credit loss during the quarter reduced earnings by an approximate $6.9 million during the quarter as compared to a reduction of $2.7 million in the prior year quarter. Our net book value per share as of September 30th was $17.73, from $17.07 a year ago and our tangible book value per share, which excludes the value of goodwill, intangible assets, and the correlated deferred tax liability associated with both was $12.17 at the end of the quarter, up from $11.64 a year ago. In addition to paying our quarterly dividend of $0.14 per share, we repurchased just under 500,000 shares of our company stock during the quarter at an average price of $11.48 for a total repurchase during the quarter of $5.6 million. As of today, we have repurchased $14.4 million of stock this year. That covers our third quarter results. We are now happy to answer your questions.

Operator

We will now begin the question and answer session. [Operator Instructions] The first question comes from Ken Kohut with Raymond James. Please go ahead.

分析師問答

Kenneth Kohut

Hey, good morning, guys. I hope you're doing well. Yes. Maybe starting with the NIM, Anthony, I really appreciate the commentary you provided, but maybe going into a little bit more detail there. The sequential drop in quarter was pretty large. From my perspective, it looked like big driver was maybe the home improvement portfolio. Like average balances were up $80 million and the portfolio yield was down 76 basis points. I'm just wondering, was there any one-time items impacting results in the quarter that might reverse going forward? And what was the yield on new originations during the quarter?

Anthony Cutrone

Sure. Yes. No, you hit it on the head. It was, you know, and this is consistent what we've been saying for a while now, you know, as the portfolio, the mix changes and we shift towards more of these super prime loans with a better credit, you know, the yield is going to be impacted. You know, originations during the quarter. Home improvement was 9.14% was the coupon. You know, a year ago we were originating around north of 10.5%. So it's, um, it's a pretty big drop. But again, you know, we think that, you know, long term this is going to benefit us. These are better credits. Not that we were writing bad credits a year ago, but these are better credits that perform better from all the data that we have and what we see.

So it's that shift. And again, you know, beginning of the year, we lowered rates in REC, you know, again, hoping to get a better borrower, a better performing credit. So that's got some impact on it, too. And then the notes offering we did, you know, it takes us a while to deploy this capital. We can't, you know, just put it to work day 1. So we held significantly larger balances of cash. That does have an impact on our NIM, particularly in the quarter. So as we continue to deploy that, you know, that should lower the impact.

Kenneth Kohut

That it has on them. Great, thanks for the color there. And then maybe switching gears to the new partnership that you added during the quarter, our finance relationship, you know, can you just quantify maybe the size of the opportunity there and their origination volumes expected? And how much do you anticipate retaining on the balance sheet?

Unknown Speaker

Hi, Ken. This is Justin. It's a difficult thing to quantify. Our finance team currently offers a marketplace, the operator marketplace, where this new product is competing with it. So they're in a ramp phase right now where they're attempting to win that volume. With rate changes and the like, it's difficult to quantify. I will say that we have intentions of retaining some of this paper we'd like to when they're at full steam be at a point where we're retaining $10 million to $20 million a month. We don't know that that's going to be happening for the next few months. So unfortunately, unable to quantify, but we are enthusiastic about it.

Operator

Great. Thanks, Justin. We'll be back. All right. Thank you. Thank you. The next question comes from Manuel Navas with Piper Sandler. Please go ahead.

Manuel Navas

Good morning. How should we think about loan pipelines and growth from here? I'm expecting some seasonality here in the fourth quarter, but this is the last two quarters have been really strong, and it should drive that momentum. Should that continue to next year? Any early thoughts on growth next year as well?

Anthony Cutrone

So just just thinking about the fourth quarter right now, you're absolutely right. Seasonality. That's just a part of our business. What we are seeing is that origination volumes in October this year are slightly ahead of where they were a year ago, which, which is positive. But, you know, they're down from from the peak seasons that we experience in Q2 and in the first half of Q3. Justin, do you want to talk about '27?

Unknown Speaker

It's a function of the economy. So if the economy is a little bit shaky and we're not necessarily projecting that, but it's certainly different now than it was six months ago, won't see the same level of growth. If the economy is strong then we would anticipate the kinds of growth that we've experienced this year.

Andrew Murstein

And I'll just add, long-term, the vision hasn't changed. As we said on the last call, the goal is to go from $3 billion to $5 billion over a five-year period, and we think we're on target for that. And with that, as we stated, the NIM, just to use an example, if it was 700 basis points and $5 billion. You're talking about $350 million versus 800 basis points on $4 billion, $320 million. So it's $30 million more obviously, um, by us to reach that $5 billion threshold. So that's our goal.

Anthony Cutrone

And I'd also add to both of those, is that in Q4, we're actually raising rates across the board on our loans, particularly just given what the Fed decision was and what we anticipated to be going forward. That'll slow the volume a little bit, we think. But again, you know, we dropped rates at the beginning of the year for a better credit. You know, the rate environment is what it is. You know, we don't control that. So we will be raising rates there, and that will help over time our NIM.

Manuel Navas

Another piece that you hinted on, on the NIM, is that you have a couple of money market and CDs available from non-brokered sources. Can you just talk a little bit about how you're sourcing that? What's the... I don't think you gave the rate unless I missed it and I'm sorry, but can you kind of say the difference between your your broker deposit costs today versus in sourcing or sourcing your own money market and CDs.

Unknown Speaker

This is Justin again. Yes, we're opportunistic on this. So if we can find a way to lower our cost of funds, we want to take advantage of that. And in this case, if you're comparing to similar brokered CDs to the CDs we're able to get non-brokered or you're comparing the high-yield savings account, maybe we get the same amount of money. 10 to 15 basis points against that cost of funds. And it's at the scale that's advantageous. So $100 million here, $100 million there, it starts to add up. If those opportunities aren't available, then we'll continue to use broker because we like that stability. But I would think of it in those terms.

Manuel Navas

Is it digital? Like, what do you, how are you sourcing it? And where can that grow? Why and how would it grow?

Unknown Speaker

We have a relationship with a third party that helps us to source it. That way it's not brokered, but it is a third party that runs a marketplace that we can tap into. It is unlimited, so it's capped by the extent to which we can get a better cost of funds by doing it that way. Sometimes we can't. The prices there are just higher than they will. We can get brokered and sometimes we can. And this was one of those quarters where we had a real opportunity and we're hoping to do so again in Q4, but that will be, that will be seen.

Manuel Navas

Okay. Um I appreciate some of the description on the growth math on the provision. But there was still an increase in the loan loss reserve, kind of the high teens basis points in each portfolio. And I think that seemed to be definitely a driver. Can you just talk about those changes? Was that kind of inputs from a model? Like what kind of drove some of those changes there?

Anthony Cutrone

Yes, that's exactly what it is. We've got a fairly sophisticated quantitative model that, you know, generates our, you know, allowance coverage in the various portfolios and the sub-portfolios. And, you2 the extent, you know, delinquencies tick up like they always do this time of year, that causes us to, you know, have to take more allowances. Historic charge-offs, you know, if we see an uptick like we do in Q2 compared to Q3, that also.

Unknown Speaker

Causes a shift up. There are also macroeconomic factors that are built into the model. So it's looking forward and it's taking in. In our case, we're looking at unemployment rates, we're looking at interest rate changes and the like. And as those look rougher, then you'll see the model start to build more reserve in anticipation of future losses. As those improve, then the model will bring down that reserve.

Manuel Navas

I appreciate that. There was some, I appreciate that. There was some loan sold in the quarter. Can you just kind of talk through that transaction? I don't think I saw the balance that was sold. Just thoughts there.

Anthony Cutrone

Yes, it was just around just below $40 million across 4 different pools of loans about 75% of them are home improvement. 25% of them are RV. And, you know, we net around a 3 when you factor in the cost of the deferred cost that we have to write off.

Manuel Navas

Is that a 3% gain? That's what I was looking for. Thank you. Have you sold home improvement often in the past? It seemed like there were more REC loans. Is that any shift there?

Unknown Speaker

It is a shift. We sold home improvement loans in the 2016 to 2018 timeline, but this was the first time we sold home improvement with this shift.

Manuel Navas

And the hope is this will be a recurring process. You've talked about that in the past, but is this mix shift also a, part of that recurring process.

Unknown Speaker

Yes, we're interested in selling both from both pools because we're growing in both places and it's based on the appetite of the buyers that we encounter. And we do want this to be a recurring thing though. Sometimes the timing is going to be a little bit difficult to project. We have multiple buyers now in our stable of buyers that want to be repeat, and it depends on when they next want to buy that we'll have the next transaction.

Anthony Cutrone

But we're always looking for more. Yeah, we're talking with several right now. You know, we don't. You know, we don't have any documents signed, nothing, you know, scheduled to close in Q4. But that could change if it falls to Q1 or later. I mean, that's always possible. But there's always ongoing conversations with this.

Manuel Navas

I appreciate the commentary. I'll step back into queue.

Operator

Thank you. The next question comes from Christopher Nolan with Ladenburg Thalmann. Please go ahead.

Unknown Speaker

Is it correct to say that you're prioritizing balance sheet growth over the...

Anthony Cutrone

Earnings to cover the dividend? Yes, I think that's fair, particularly just given, you know, the type of assets we originate and that, you know, the GAAP impact to originating those with a day 1 provision immediately. You know, and we've spoken about this, you know, in the past, you know, in these years where we're growing significantly, the bottom line is not going to paint a picture of how successful or not we're being. So, again, you know, you quantify that growth penalty. Last quarter it was $0.18. This quarter it's around $0.16. But, yes, you know, growth is a priority for us.

Unknown Speaker

And as a follow-up question, is growth strategy a wise choice? Decision at this point in the cycle, because I highlight that you are experiencing a lower net interest margin, higher net charge-off ratio, and you're dealing with a consumer base, which is dealing with higher fuel costs, as well as higher interest rates. And on top of that, you have a balance sheet mismatch, which does does not work in your favor in rising interest rates. I mean, what am I missing?

Andrew Murstein

I think it's measured growth, but it's growth, to your point, in a questionable economy that's in our favor, meaning better quality growth. So as the investment grade rating that we received recently further indicates, I think the portfolio is strengthening. The more home improvement levels are, the better lending that we could do at 760 FICO scores, the better, and the overall health of the portfolio improves. And uh, we're very well matched. We're able to, through brokerage CDs, kind of match fund everything that we put out. So there's very few long-term liabilities that are aren't properly matched for us. Anthony, I don't know if you want to add anything to that.

Anthony Cutrone

Yeah, no, I think that, you know, as we said, the portfolio, the mix shift that we're experiencing now, you know, we're cognizant of what's going on in the economy and where these loans are, you know, where they're performing. You know, it's something we talk about daily, multiple times a day. That's part of the reasons why we lowered rates in our REC portfolio at the beginning of the year, because we, you know, we do like this paper, we've operated here for a long time, but we do want a better performing, you know, uh, asset. Um, so we we think of things like that, and you know, shifting more to and focusing more on growing our home improvement portfolio with the NIM impact, you know, long-term, that's good for our company.

Unknown Speaker

Okay, final question. Um, given all the changes that you mentioned in terms of going for a higher quality client and everything else, um, have how have you got any feedback from regulators? Are they willing to lower?

Andrew Murstein

For the 15% leverage ratio at the bank level? Um, we plan on asking them to do that, but of course, that's out of our control. But that's part of our argument when we go in and talk to them next, or our discussion, I should say, is look how well the portfolio is performing. Look at the credit quality of the fastest growing part of it, look where the 15% Tier 1 requirement is compared to new banks with zero track records that are getting approved at 10% to 12%. You know, you have a bank here that has been knocking the cover off the ball for 23 straight years. In 23 years this bank has never had a loss in and a full year since it started. So all those things are in our benefit, but of course, um, it's not only up to us and we have to be able to convince others. So we'll try once more probably.

Operator

Thank you. And we have a follow-up from Manuel Navas with Piper Sandler. Please go ahead.

Manuel Navas

I'm back. The NIM declined this quarter. Is the cash deployment and continued growth a problem? Enough to have it stabilize from here, or is the continued trend down?

Anthony Cutrone

You know, I think it's a wait and see. If we wouldn't expect a large step down from here, but again, you know, where interest rates go, particularly on our cost of borrowing, that could impact it, how quickly we can deploy it. And we're not looking at just write loans just for the sake of putting money out that we're not comfortable with. But I wouldn't expect to see a significant drop like you did Q2 to Q3 in Q4.

Andrew Murstein

Yes, I mean, it's, it's practical that it could go down a little bit as Anthony saying, because you're just, you're adding better quality loans. So when you're adding 9% to 10% home improvement loans faster than you're adding 15% loans, it usually means a compression. It also usually means an increase in profits, and that's what we're more focused on.

Manuel Navas

Yes, the NII trajectory is pretty solid. The buyback pace in light of the new authorization, I know it doesn't expire, and it's pretty large the authorization. Where do you kind of stand on its use versus the last couple quarters? The pace has been very accelerated. Just kind of, um, any updated thoughts on the buyback pace?

Andrew Murstein

We were fortunate that in the last six months, I think we raised about $130 million between the parent company debt and the bank preferred. So, we're in a good financial position and that we could accomplish all 3 of our goals, which are growth, dividend increases and buybacks. So you're right. It did accelerate this year. And for the most part, we've been buying anytime it's been below tangible book, which is $12 and change or. So at these price levels, I think we continue buying.

Manuel Navas

I appreciate the price sensitivity there. This quarter, OpEx stepped down. I know that it should rise with your pretty strong revenue growth. Is that as soon as next quarter? Just kind of, there was a little bit of a savings this quarter, just to kind of think of how, uh, what's the right run rate. If there's anything interesting that happened this quarter that lowered it. Um, I know you changed, uh, you're saving on your headquarters. There's some other ways that you're saving, but it should have an upward trajectory from here, but just kind of speak to OpEx in general, please.

Anthony Cutrone

Yes, I would expect Q4 to look fairly similar to Q1. Q3 and then, you know, incremental creases in 2027. Nothing. I think a lot of the big expenditures and initiatives we we intended on putting into place were done. So there's always going to be some increase in operating costs, but I wouldn't I wouldn't expect a sizable step.

Manuel Navas

Up. David P. I appreciate that. The fee line, there's still the lumpy gain on equity investments. It comes and goes. Is there any sightline to booking some of those near-term um.

Anthony Cutrone

I know that can be difficult to predict. Yes, last year we had a whole lot of exits that generated a whole lot of gains. This year it's been, you know, essentially flat, you know, a few things here and there. You know, we don't have anything, you know, that we're anticipating in Q4. There was one portfolio company that was being talked about. That's been tabled for, I think the sponsor sponsor couldn't get the price they wanted, so it's being tabled for now. If it's sold next year, it wouldn't surprise me, but if it dragged out another two years, that wouldn't surprise me either. So it's going to continue to be lumpy.

We'll have really big years and then years with nothing.

Manuel Navas

Okay. I just wanted to check. I appreciate it. Thank you, guys, for the commentary.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Andrew Murstein for any closing remarks.

Andrew Murstein

Thank you again for joining us this morning. We remain pleased with our business momentum and our confidence that we have the business, the team, and the market positioning to maintain our strong volumes, which will result in long-term shareholder value. For those who can make it, we look forward to seeing you at the Piper Sandler Financial Conference in Miami in mid-November. If not, we, of course, are always available any other time to speak or meet. Thank you for your continued support, and I hope you have a great rest of your day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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