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A windof change is blowing through the financial industry as more peopledrift toward nonbank institutions for their borrowing needs.
In 1974, banks controlled the lending industry, holding 62% of the total loans. Almost fivedecades later, nonbanks issued 68% of all U.S. mortgages.
A report by the Bankfor International Settlements (BIS) indicated that syndicatedlending to nonfinancial corporations increased substantially, fromless than $300 billion in 1990 to around $4.75 trillion in 2019.Nonbank lending increased from $20 billion to $410 billion per yearover the same period.
Specialty Financing
These nonbanks’ability to meet the need for alternative or specialty financing may bewhat’s driving their increase in lending.
Specialty finance firmsmake it easier for consumers and small to mid-size businesses to getloans they may find difficult to obtain from traditional banks.
They have easily won thehearts of some customers who were yearning to bypass long bureaucraticprocesses in favor of more straightforward procedures like completingloan applications and payments digitally with no initial fees andlow-interest rates.
Thanks to this financing option, people who do not qualify fora traditional bank loan because of bad credit history are now turningto the alternative lending market for their capital needs.
In this context,companies like Oxford Square Capital Corp. (NASDAQ: OXSQ), Mill City Ventures III Ltd. (NASDAQ: MCVT), Manhattan BridgeCapital Inc. (NASDAQ: LOAN), and U.S. Global Investors (NASDAQ: GROW) have flourished over recent years.
MeetingDemand
Asborrowers continue seeking alternative financing sources, Mill City Ventures IIILtd , a short-term nonbank lending and specialty financecompany could be answering this demand with its specialty financingsolutions
Foundedin January 2006, Mill City specialized in providing bespoke short-termlending solutions to public and private companies facing short-termliquidity issues.
Mill City ordinarily provides nonbank lending and specialtyfinance to companies and individuals with both collateral and ashort-term source of liquidity anticipated to be available by the timethe loan matures. The principal specialty finance solutions thecompany provides are high-interest, short-term lendingarrangements.
Theloans the company provides typically have maturities of nine months orless and involve a pledge of collateral or, in the case of loans madeto companies, personal guarantees by the borrower’sprincipals.
Sincecommencing short-term nonbank lending operations in January 2020, boththe average loan size and weighted interest rate have increased yearover year.
Financials
The company’s product offerings could bepositively affecting growth, as shown in Mill City’s recent financialresults for the three- and six-month periods that ended June30, which could be good news for investors.
Q2 2022Highlights
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Investment income from lendingoperations increased 83% to $1.24 million in the three months endedJune 30, up from $675,549 in the prior year.
For the six-month period, investment incomefrom lending operations was $2.24 million, compared to $1.2 million atthe same time a year ago, an 83% increase.
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Pretaxearnings from lending operations increased in the second quarter to$734,250 from $425,393 in the prior year, a 73% increase.
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In the six-month period,pretax earnings from lending operations reached $1.2 million comparedto $438,377 in the prior year period, a 171% increase.
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Shareholder equity increased to $14.4million on June 30, 2022, from $13.4 million on Dec. 31,2021.
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Asof June 30, 2022, the company had $629,572 in cash, compared with$1,936,148 as of Dec. 31, 2021.
Founded in 2007, MillCity is a short-term non-bank lending and specialty finance company.Additional information can be found at www.sec.gov.
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Contact Details
TraDigital IR- JohnMcNamara
+1 917-658-2602
CompanyWebsite
https://www.millcityventures3.com/
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