Medallion Financial Defaults on $73.5 million in SBA Debt — SBA Says It Lacks a Qualified Management Team. ZimCal Says It's No Surprise

On 04/03/26 Medallion filed an 8-K disclosing that it had defaulted on $73.5 million in debt
This follows the Company’s attempt and failure to raise $31.25 million in senior debt in February 2026
MFIN’s commercial lending subsidiary was deemed to not “have a qualified management team” and is in default
ZimCal privately WARNED Medallion about the issues in its commercial book in 2025
Medallion’s leadership is destroying shareholder value and taking its stockholders for granted
This situation is DIRECTLY A RESULT OF poor management and no board oversight
MFIN’s Price/Tangible Book is a terrible 0.85x and its stock is down 50% from its 2013 peak
MFIN is underperforming and is well below other lenders and MFIN-selected peers
MFIN needs better leadership and a tech-first mindset to succeed – the status quo is unacceptable

MINNEAPOLIS, April 10, 2026 (GLOBE NEWSWIRE) --

ZimCal was appalled, but not surprised, to learn that Medallion Financial had defaulted on $73.5 million in debt.

We have warned investors repeatedly that the Company is being mismanaged and in this increasingly uncertain world with technology upending the way financial institutions will be run, poor management will lead to catastrophic results. We have approached Medallion’s board and management team privately on several occasions to offer assistance and address clear risks. These efforts have been repeatedly ignored.

ZimCal Asset Management LLC (“ZimCal”, “We”, “Our”) believes Medallion Financial Corp. (“Medallion”, “MFIN”, the “Company”) is terribly undervalued and should be trading well above Tangible Book Value. MFIN is being held back by poor leadership and worse decision-making. On top of this terrible underperformance, MFIN’s CEO, Andrew Murstein, was sued by the SEC for fraud. He is running the Company like his own private, family business, and paid himself and his father $9.5 million in 2023 and $7.6 million in 2024. Their compensation is multiples higher than executives running far more profitable and larger lending institutions.

We have been invested for 5 years and have analyzed every release, note purchase agreement, SEC filing, employment contract, etc.

ZimCal’s principal has invested in lenders and banks for over 15 years. Prior to our Medallion investment, we have NEVER publicly criticized a firm but felt we had no choice with MFIN. We believe our investment would be worth substantially more if Medallion had the right leadership and business strategy. If the Mursteins refuse to run Medallion to benefit its stakeholders and refuse to adapt and/or insert best-in-class leadership, we believe that value may best be created through a sale of Medallion Bank. We’ve never advocated for a sale but see limited paths forward.

On April 3^rd, 2026, MFIN announced:

“On March 31, 2026, Medallion Capital submitted a management team for review through the SBA’s licensing division and shortly thereafter such submission, the SBA notified Medallion Capital that it has declared an event of default with respect to such debentures [$73.5 million] and directed Medallion Capital, within 120 days, to identify and submit at least one qualified candidate for consideration as a full-time principal and investment committee member of Medallion Capital.”

To step back, Medallion Financial has two major subsidiaries that drive its revenue. Medallion Bank, which is regulated by the FDIC and Utah DFI, and makes up ~92% of revenues and Medallion Capital/Commercial Lending, which is regulated by the SBA, and makes up ~5% of revenues. Medallion Capital is the issue here and is in default. The subsidiary funds itself mostly through SBA debentures (loans provided by the SBA) and held $123 million in commercial loans and had estimated equity of $22 million at FYE25. Medallion Capital’s equity makes up ~10% of Medallion’s total consolidated equity.

If Medallion does not cure the default, which basically says they need competent people managing risk, the SBA can accelerate and call all the debentures due which could force Medallion into a fire sale for their very illiquid loans or the SBA could take the Medallion Capital subsidiary into receivership and wind it down themselves - which would most likely wipe out the equity value. By our estimates, this could reduce Medallion’s tangible book value from ~$240 million to $220 million which is a substantial destruction in value.

As we have said again and again, the Company is being held back by poor decisions and low institutional investor confidence. The Commercial Lending segment has averaged ~20% of its loans as non-paying for the last 4 quarters. This exceeds the levels of non-performing loans for some of the worst loan categories of lenders during the financial crisis. Poor decisions were made by the management team and the board 10 years when Medallion almost failed and resulted in actions by Andrew Murstein that led to an SEC fraud lawsuit – and poor decisions are being made now.

To add to our frustration, during 2025 we approached the Company and its board privately, sharing our concerns, pointing out the issues in its Commercial Lending book and offering assistance - and we were ignored.

MFIN has huge potential. Its subsidiary, Medallion Bank, is a solid platform making solid profits but is being bled dry by tens of millions in executive pay and high corporate costs at its holding company. Many investors are staying away from Medallion because they don’t trust management and are repelled by the stink of the SEC fraud lawsuit against Medallion’s current CEO. If MFIN’s leadership is improved, this can be corrected very easily, and all stakeholders (including us) would be rewarded.

But first, a quick recap for those that don’t know the background.

In early 2010s, Medallion made really bad taxi medallion loans to weak borrowers
Uber and Lyft began destroying the taxi medallion business
Risks were obvious and alarms came from external (banks, Bloomberg, Vox, and others) and internal (executives) sources – but Andrew Murstein (the current CEO) ignored them
Instead, Murstein paid contractors to publish over 100 bogus “research” pieces and post 900+ comments online on Seeking Alpha etc. to pump up Murstein/Medallion and attack critics
Murstein repeatedly inflated the value of Medallion’s assets to show profits
Murstein allegedly lied to Medallion’s auditors (who have since resigned)
Medallion wrote off almost $300 MILLION in bad loans in 4 years. Tangible book value dropped below $30 million and the stock fell to under $2/share
MFIN stock is now at $8.82/share but at a terrible 0.83x Price/Tangible Book and after 12 years, still far below its peak 2013/2014 tangible book (15% down) and stock price (50% down from $17.74)

Murstein was sued by the SEC for securities fraud (see all the bullet points above) and all legal fees to defend him and $3 million in SEC penalties were paid by stockholders, not Murstein. In the meantime, Murstein’s family and friends on Medallion’s board gave him over $20 million in bonuses, country club membership, a company car and a personal driver. His bonuses can be clawed back by the board and would add almost 10% to Medallion’s market cap, but the board refuses to do anything. This is because 3 of 8 directors are Murstein family members, the average director tenure is 18 years (including Medallion Bank) and 5 of the 8 board members are 80+ years old. There has been no accountability for Murstein – in fact, he was recently promoted to CEO and is being paid much more than peers that have consistently outperformed Medallion.

If Medallion wants to act like a family business and pay huge bonuses for declining performance, they should not be public. The Company has tried to buy stockholder support by raising dividends but that’s forced them to add $42 million in expensive liabilities in the last 2 years to pay for it. Performance in Medallion’s core consumer book (95% of its loans) is poor and declining (low ROAA, ROAE and increasing bad loans in Recreation). Medallion has used one-off shenanigans, timely recoveries from a discontinued business and unpredictable “gains” to pad EPS and hide poor management decisions.

Under the right leadership, this could all be turned around instantly, and value could be unlocked.

See our previous presentation to see how Medallion could improve and reward its stakeholders – ideas we shared with Medallion privately almost 2 ½ years ago and that we have shared privately and publicly several times since. But rather than face the obvious and engage, they ignored and attacked. Just like they did ten years ago. Not unexpectedly, they’ve also taken some of our ideas they dismissed publicly and passed them off as their own...We’ll take it. We want improvements – not credit.

Our singular focus is on making MFIN better and more valuable, which will make our investment more valuable.

About ZimCal Asset Management, LLC
ZimCal Asset Management is an alternative investment firm focused primarily on niche, illiquid and complex credit investment opportunities.

ZimCal Asset Management partners with both healthy and distressed borrowers or issuers and provides customized solutions that meet their unique needs and circumstances. Over the last 15 years, the founder of ZimCal Asset Management has developed a specialization investing in FDIC-insured institutions and has partnered with over 120 bank lenders through investments on both sides of the balance sheet.

ZimCal usually works in collaboration with bank leadership teams and if required, but on very rare occasions, will insert itself more forcefully if it believes that leadership is underwhelming and threatens to undermine stakeholder investments. ZimCal prides itself on performing extensive, rigorous financial analysis and research to fully understand the risks of any investment.

Important Information and Disclaimer
ZimCal Asset Management, LLC, and its affiliates BIMIZCI Fund, LLC, and Warnke Investments LLC (collectively, “ZimCal” or “we”), are, directly or indirectly, owners of securities of Medallion Financial Corp. (the “Company”). ZimCal currently beneficially owns shares of common stock and Trust Preferred securities valued at approximately $16.5 million (par value utilized for our preferred securities). You should assume that ZimCal may from time to time sell all or a portion of their holdings of the Company in open market transactions or otherwise, buy additional shares (in open market or privately negotiated transactions or otherwise), or trade in options, puts, calls, swaps or other derivative instruments relating to such shares. We are not currently engaged in any solicitation of proxies from stockholders of the Company although we may do so in the future. ZimCal intends to monitor the performance and corporate governance of the Company, as well as the actions of the Company’s management and Board. As ZimCal deems necessary, ZimCal will assert its stockholder rights.

Except as otherwise set forth herein, the views expressed reflect ZimCal’s opinions and are based on publicly available information with respect to the Company. We recognize that there may be confidential information in the possession of the Company that could lead it or others to disagree with our conclusions. ZimCal reserves the right to change any of its opinions expressed herein at any time as it deems appropriate and disclaims any obligation to notify the market or any other party of any such change, except as required by law. We disclaim any obligation to update the information or opinions contained herein.

The information herein is being provided merely as information and is not intended to be, nor should it be construed as, an offer to sell or a solicitation of an offer to buy any security.

Some of the information herein may contain forward-looking statements. All statements contained herein that are not clearly historical in nature or that depend on future events are forward-looking. The words “anticipate,” “believe,” “expect,” “potential,” “could,” “opportunity,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. There can be no assurance that any forward-looking statements will prove to be accurate and therefore actual results could differ materially from those set forth in, contemplated by, or underlying these forward-looking statements. In light of the significant uncertainties inherent in forward-looking statements, the inclusion of such information should not be regarded as a representation as to future results or that the objectives and strategic initiatives expressed or implied by such forward-looking statements will be achieved.

Media contact: nicole@nh-consult.com

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