- Asset Quality in line with projections; 30+ lease delinquencies improve 86 bps
- Closed on new $75 million funding facility
- Net income of $508,000
- Net income on an adjusted basis of $1.2 million, which excludes the impact of derivatives
- Strong capital position, equity to assets leverage ratio of 23.48%
- Total risk-based capital of 28.43%
- Marlin Business Bank exceeds $100 million in outstanding assets
MOUNT LAUREL, N.J., Nov. 2, 2009 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported third quarter 2009 net income of $508,000, or $0.04 per diluted share, and net income on an adjusted basis of $1.2 million or $0.10 per share.
"We are strongly encouraged by the asset quality results this quarter," says Daniel P. Dyer, Marlin's CEO. "Our focused, proactive approach to credit early into the recession has resulted in improving credit quality during a period when the overall market indicators are negative. Looking to the future, the company is well positioned to capitalize on growth bolstered by our strong, well capitalized balance sheet, access to the credit markets and strengthening fundamentals on the credit side," added Dyer.
Credit trends have improved and reflect management's proactive initiatives to maintain credit quality:
- Leases over 30 days delinquent were 3.55% as of September 30, 2009, an 86 basis point improvement compared to 4.41% at June 30, 2009.
- The provision for credit losses was $6.0 million for the quarter ended September 30, 2009, down from $6.8 million for the second quarter of 2009, due to improvements in the credit migration of the lease portfolio.
- The allowance as a percentage of total finance receivables, which reflects management's estimate of future losses inherent in the portfolio, remained strong at 2.46% at September 30, 2009.
Third quarter lease production was $16.8 million, based on initial equipment cost, compared to $15.8 million for the second quarter of 2009. The average implicit yield on new lease production continues to remain strong and was 15.62% for the third quarter of 2009.
Salaries and benefits were $4.1 million for the third quarter ended September 30, 2009, down from $5.1 million for the second quarter of 2009. Included in second quarter salaries and benefits is a pretax severance adjustment of $700,000. We continue to focus all employees on the goal of containing G&A expenses which has resulted in total G&A of $3.1 million for the third quarter ended September 30, 2009, an improvement of $211,000 compared to $3.3 million for the second quarter of 2009.
At September 30, 2009, the Company has outstanding $97.3 million of leases and loans funded through its banking subsidiary, Marlin Business Bank, and has $80 million in FDIC insured deposits outstanding at an average borrowing rate of 3.45% with a weighted average term to maturity of 2.6 years. Third quarter 2009 average deposit outstandings were $79.4 million at a weighted average interest rate of 3.42%.
On October 9, 2009, the Company closed on a $75,000,000 three-year committed funding facility with the Lender Finance division of Wells Fargo Foothill, part of Wells Fargo & Company. The facility will be used by Marlin to fund its growth, increasing its ability to extend flexible equipment financing options to thousands of small and medium-sized businesses nationwide.
In conjunction with this release, static pool loss statistics and vintage delinquency analysis have been updated as supplemental information on the investor relations section of our website at www.marlincorp.com.
Conference Call and Webcast
We will host a conference call on Tuesday, November 3, 2009 at 9:00 a.m. ET to discuss our third quarter 2009 results. If you wish to participate, please call 888-218-8142 approximately 10 minutes in advance of the call time. The conference ID will be: "Marlin." The call will also be Webcast on the Investor Relations page of the Marlin Business Services Corp. website, www.marlincorp.com. An audio replay will also be available on the Investor Relations section of Marlin's website for approximately 100 days.
About Marlin Business Services Corp.
Marlin Business Services Corp. is a nationwide provider of equipment leasing and working capital solutions primarily to small businesses. The Company's principal operating subsidiary, Marlin Leasing Corporation, finances over 100 equipment categories in a segment of the market generally referred to as "small-ticket" leasing (i.e. leasing transactions less than $250,000). The Company was founded in 1997 and completed its initial public offering of common stock on November 12, 2003. For more information, visit www.marlincorp.com or call toll free at (888) 479-9111.
The Marlin Business Services Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4087
Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements (including statements regarding future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," "may," "intend," and similar expressions are generally intended to identify forward-looking statements. Economic, business, funding, market, competitive, legal and/or regulatory factors, among others, affecting our business are examples of factors that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these factors is contained in our filings with the SEC, including the sections captioned "Risk Factors" and "Business" in the Company's Form 10-K filed with the Securities and Exchange Commission. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except per-share data)
Dec. 31,
Sept. 30, 2008 (as
2009 restated)(1)
------------ -------------
ASSETS
Cash and due from banks $ 2,562 $ 1,604
Interest-earning deposits with banks 47,879 38,666
------------ -------------
Total cash and cash equivalents 50,441 40,270
Restricted interest-earning deposits
with banks 64,920 66,212
Net investment in leases and loans 499,556 669,109
Property and equipment, net 2,635 2,961
Property tax receivables 885 3,120
Other assets 9,620 12,759
------------ -------------
Total assets $628,057 $794,431
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 87,860 $101,923
Long-term borrowings 275,106 441,385
Deposits 80,060 63,385
Other liabilities:
Fair value of derivatives 9,851 11,528
Sales and property taxes payable 6,779 6,540
Accounts payable and accrued expenses 7,626 7,926
Net deferred income tax liability 13,317 15,119
------------ -------------
Total liabilities 480,599 647,806
============ =============
Commitments and contingencies
Stockholders' equity:
Common Stock, $0.01 par value;
75,000,000 shares authorized;
12,616,826 and 12,246,405 shares
issued and outstanding, respectively 126 122
Preferred Stock, $0.01 par value;
5,000,000 shares authorized; none issued -- --
Additional paid-in capital 84,242 83,671
Stock subscription receivable (3) (5)
Accumulated other
comprehensive income (loss) (152) 167
Retained earnings 63,245 62,670
------------ -------------
Total stockholders' equity 147,458 146,625
------------ -------------
Total liabilities and
stockholders' equity $628,057 $794,431
============ =============
(1) Certain items have been restated from amounts previously
reported, to reflect the impact of correcting an immaterial
error in previously filed Consolidated Financial Statements.
This adjustment is described in Note 15 to the Company's
Consolidated Financial Statements to be filed as part of its
Form 10-Q for the quarterly period ended September 30, 2009.
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per-share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
------------------------- -------------------------
2009 2008 2009 2008
------------ ------------ ------------ ------------
Interest income $ 15,591 $ 21,062 $ 51,944 $ 65,884
Fee income 4,288 5,534 13,702 16,021
------------ ------------ ------------ ------------
Interest and
fee income 19,879 26,596 65,646 81,905
Interest expense 6,448 8,790 21,724 28,396
------------ ------------ ------------ ------------
Net interest
and fee
income 13,431 17,806 43,922 53,509
Provision for
credit losses 5,951 8,602 21,493 22,137
------------ ------------ ------------ ------------
Net interest
and fee
income after
provision for
credit losses 7,480 9,204 22,429 31,372
------------ ------------ ------------ ------------
Other income:
Insurance
income 1,186 1,609 4,051 4,715
Gain
(loss) on
derivatives (1,164) (3,280) (1,825) (3,280)
Other income 409 424 1,205 1,459
------------ ------------ ------------ ------------
Other income
(loss) 431 (1,247) 3,431 2,894
------------ ------------ ------------ ------------
Other expense:
Salaries and
benefits 4,051 5,620 14,994 17,835
General and
administrative 3,076 3,333 9,761 11,629
Financing
related
costs 51 370 361 967
------------ ------------ ------------ ------------
Other expense 7,178 9,323 25,116 30,431
------------ ------------ ------------ ------------
Income
(loss)
before
income
taxes 733 (1,366) 744 3,835
Income tax
expense
(benefit) 225 (425) 169 1,718
------------ ------------ ------------ ------------
Net income
(loss) $ 508 $ (941) $ 575 $ 2,117
============ ============ ============ ============
Basic earnings
(loss) per share $ 0.04 $ (0.08) $ 0.05 $ 0.17
Diluted earnings
(loss) per share $ 0.04 $ (0.08) $ 0.05 $ 0.17
Weighted
average shares
used in
computing
basic earnings
per share 12,607,147 11,843,300 12,499,578 12,199,081
Weighted
average shares
used in
computing
diluted
earnings
per share 12,649,800 11,843,300 12,522,685 12,258,415
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Net Income on an Adjusted Basis Reconciliation to GAAP Results
(Unaudited)
(Dollars in thousands)
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
----------------- -----------------
2009 2008 2009 2008
-------- -------- -------- --------
Net income (loss) as reported $ 508 $ (941) $ 575 $ 2,117
-------- -------- -------- --------
Deduct:
Loss on derivatives (1,164) (3,280) (1,825) (3,280)
Tax effect 460 1,272 721 1,272
-------- -------- -------- --------
Loss on derivatives,
net of tax (704) (2,008) (1,104) (2,008)
-------- -------- -------- --------
Net Income on an
Adjusted Basis $ 1,212 $ 1,067 $ 1,679 $ 4,125
======== ======== ======== ========
Net Income on an Adjusted Basis is defined as net income excluding the loss on derivatives, net of tax. The Company believes that Net Income on an Adjusted Basis is a useful performance metric for management, investors and lenders, because it excludes the volatility resulting from derivatives activities subsequent to discontinuing hedge accounting in mid-2008.
MARLIN BUSINESS SERVICES CORP.
SUPPLEMENTAL QUARTERLY DATA
(Dollars in thousands, except share amounts)
(Unaudited)
Quarter Ended: 9/30/2008 12/31/2008 3/31/2009
------------ ------------ ------------
New Asset Production:
# of Sales Reps 91 86 58
# of Leases 5,837 5,558 3,811
Leased Equipment
Volume $ 59,005 $ 58,098 $ 36,280
Approval Percentage 49% 47% 41%
Average Monthly
Sources 981 936 692
Implicit Yield
on New Leases 13.87% 13.76% 14.40%
Net Interest and
Fee Margin:
Interest Income Yield 11.92% 11.88% 11.82%
Fee Income Yield 3.14% 3.13% 3.12%
------------ ------------ ------------
Interest and Fee
Income Yield 15.06% 15.01% 14.94%
Cost of Funds 4.98% 4.99% 4.86%
------------ ------------ ------------
Net Interest and
Fee Margin 10.08% 10.02% 10.08%
Average Total Finance
Receivables $ 706,508 $ 680,645 $ 645,570
Average Net
Investment
in Leases $ 690,973 $ 667,232 $ 634,314
End of Period Net
Investment in Leases $ 687,103 $ 657,657 $ 611,774
End of Period Loans $ 13,607 $ 11,452 $ 9,160
Portfolio Asset
Quality:
Total Finance
Receivables
30+ Days Past Due
Delinquencies 3.58% 3.81% 4.94%
30+ Days Past Due
Delinquencies $ 28,734 $ 29,216 $ 34,910
60+ Days Past Due
Delinquencies 1.41% 1.59% 2.38%
60+ Days Past Due
Delinquencies $ 11,320 $ 12,203 $ 16,824
Leasing
30+ Days Past Due
Delinquencies 3.52% 3.72% 4.87%
30+ Days Past Due
Delinquencies $ 27,739 $ 28,113 $ 33,895
60+ Days Past Due
Delinquencies 1.36% 1.53% 2.34%
60+ Days Past Due
Delinquencies $ 10,735 $ 11,559 $ 16,281
Loans
30+ Days Past Due
Delinquencies 6.87% 8.91% 10.04%
30+ Days Past Due
Delinquencies $ 995 $ 1,103 $ 1,015
60+ Days Past Due
Delinquencies 4.04% 5.20% 5.37%
60+ Days Past Due
Delinquencies $ 585 $ 644 $ 543
Net Charge-offs
- Leasing $ 6,653 $ 7,862 $ 7,973
% on Average Net
Investment in
Leases Annualized 3.85% 4.71% 5.03%
Net Charge-offs
- Other Finance
Receivables $ 483 $ 550 $ 749
% on Average Other
Finance Receivables
Annualized 12.44% 16.40% 26.62%
Allowance for Credit
Losses $ 14,339 $ 15,283 $ 15,309
% of 60+
Delinquencies 126.67% 125.24% 91.00%
90+ Day Delinquencies
(Non-earning total
finance receivables) $ 5,370 $ 6,380 $ 8,263
Balance Sheet:
Assets
Investment in Leases
and Loans $ 693,767 $ 664,902 $ 619,129
Initial Direct Costs
and Fees 21,282 19,490 17,114
Reserve for Credit
Losses (14,339) (15,283) (15,309)
Net Investment
in Leases
and Loans $ 700,710 $ 669,109 $ 620,934
Cash and Cash
Equivalents 25,367 40,270 50,466
Restricted Cash 64,294 66,212 71,382
Other Assets 12,162 18,840 20,857
Total Assets $ 802,533 $ 794,431 $ 763,639
Liabilities
Total Debt $ 565,914 $ 543,308 $ 499,852
Deposits $ 47,172 $ 63,385 $ 74,853
Other Liabilities 37,829 41,113 43,278
Total Liabilities $ 650,915 $ 647,806 $ 617,983
Stockholders' Equity
Common Stock $ 122 $ 122 $ 126
Paid-in Capital, net 83,661 83,666 83,561
Other Comprehensive
Income (2,182) 167 178
Retained Earnings 70,017 62,670 61,791
Total Stockholders'
Equity $ 151,618 $ 146,625 $ 145,656
Total Liabilities and
Stockholders' Equity $ 802,533 $ 794,431 $ 763,639
Capital and Leverage:
Tangible Equity $ 151,618 $ 146,625 $ 145,656
Debt to Tangible
Equity 4.04 4.14 3.95
Equity to Assets 18.89% 18.46% 19.07%
Regulatory Capital
Ratios:
Tier 1 Leverage
Capital -- -- 19.19%
Tier 1 Risk-based
Capital -- -- 21.48%
Total Risk-based
Capital -- -- 22.74%
Expense Ratios:
Salaries and Benefits
Expense $ 5,620 $ 5,082 $ 5,885
Salaries and Benefits
Expense
Annualized %
of Avg
Fin. Recbl 3.18% 2.99% 3.65%
Total personnel end
of quarter 286 284 230
General and
Administrative
Expense $ 3,333 $ 3,611 $ 3,399
General and
Administrative
Expense
Annualized
% of Avg
Fin. Recbl 1.89% 2.12% 2.11%
Efficiency Ratio 45.13% 45.67% 50.94%
Net Income:
Net Income (Loss) $ (941) $ (7,348) $ (879)
Annualized
Performance
Measures:
Return on Average
Assets -0.46% -3.71% -0.45%
Return on Average
Stockholders' Equity -2.47% -19.64% -2.39%
Per Share Data:
Number of Shares
- Basic 11,843,300 11,799,939 11,677,264
Basic Earnings (Loss)
per Share $ (0.08) $ (0.62) $ (0.08)
Number of Shares
- Diluted 11,843,300 11,799,939 11,677,264
Diluted Earnings
(Loss) per Share $ (0.08) $ (0.62) $ (0.08)
Quarter Ended: 6/30/2009 9/30/2009
------------- -------------
New Asset Production:
# of Sales Reps 33 34
# of Leases 1,831 1,916
Leased Equipment Volume $ 15,811 $ 16,813
Approval Percentage 36% 38%
Average Monthly Sources 374 371
Implicit Yield on New Leases 15.83% 15.62%
Net Interest and Fee Margin:
Interest Income Yield 11.78% 11.84%
Fee Income Yield 2.99% 3.25%
------------- -------------
Interest and Fee Income Yield 14.77% 15.09%
Cost of Funds 5.08% 4.89%
------------- -------------
Net Interest and Fee Margin 9.69% 10.20%
Average Total Finance Receivables $ 586,608 $ 526,829
Average Net Investment in Leases $ 577,493 $ 519,791
End of Period Net Investment in Leases $ 547,892 $ 494,102
End of Period Loans $ 7,190 $ 5,454
Portfolio Asset Quality:
Total Finance Receivables
30+ Days Past Due Delinquencies 4.53% 3.62%
30+ Days Past Due Delinquencies $ 28,493 $ 20,215
60+ Days Past Due Delinquencies 2.32% 1.69%
60+ Days Past Due Delinquencies $ 14,579 $ 9,431
Leasing
30+ Days Past Due Delinquencies 4.41% 3.55%
30+ Days Past Due Delinquencies $ 27,399 $ 19,583
60+ Days Past Due Delinquencies 2.26% 1.65%
60+ Days Past Due Delinquencies $ 14,055 $ 9,103
Loans
30+ Days Past Due Delinquencies 13.55% 10.47%
30+ Days Past Due Delinquencies $ 1,094 $ 632
60+ Days Past Due Delinquencies 6.49% 5.43%
60+ Days Past Due Delinquencies $ 524 $ 328
Net Charge-offs - Leasing $ 7,593 $ 7,039
% on Average Net Investment in
Leases Annualized 5.26% 5.42%
Net Charge-offs - Other Finance
Receivables $ 531 $ 597
% on Average Other Finance Receivables
Annualized 23.30% 33.93%
Allowance for Credit Losses $ 13,978 $ 12,293
% of 60+ Delinquencies 95.88% 130.35%
90+ Day Delinquencies (Non-earning
total finance receivables) $ 7,650 $ 5,209
Balance Sheet:
Assets
Investment in Leases and Loans $ 554,712 $ 499,802
Initial Direct Costs and Fees 14,348 12,047
Reserve for Credit Losses (13,978) (12,293)
Net Investment in Leases and Loans $ 555,082 $ 499,556
Cash and Cash Equivalents 53,529 50,441
Restricted Cash 67,751 64,920
Other Assets 14,284 13,140
Total Assets $ 690,646 $ 628,057
Liabilities
Total Debt $ 426,203 $ 362,966
Deposits $ 77,305 $ 80,060
Other Liabilities 40,477 37,573
Total Liabilities $ 543,985 $ 480,599
Stockholders' Equity
Common Stock $ 126 $ 126
Paid-in Capital, net 83,838 84,239
Other Comprehensive Income (40) (152)
Retained Earnings 62,737 63,245
Total Stockholders' Equity $ 146,661 $ 147,458
Total Liabilities and
Stockholders' Equity $ 690,646 $ 628,057
Capital and Leverage:
Tangible Equity $ 146,661 $ 147,458
Debt to Tangible Equity 3.43 3.00
Equity to Assets 21.24% 23.48%
Regulatory Capital Ratios:
Tier 1 Leverage Capital 20.12% 22.31%
Tier 1 Risk-based Capital 24.36% 27.16%
Total Risk-based Capital 25.63% 28.43%
Expense Ratios:
Salaries and Benefits Expense $ 5,057 $ 4,051
Salaries and Benefits Expense
Annualized % of Avg. Fin. Recbl 3.45% 3.08%
Total personnel end of quarter 169 175
General and Administrative Expense $ 3,287 $ 3,076
General and Administrative Expense
Annualized % of Avg. Fin. Recbl 2.24% 2.34%
Efficiency Ratio 52.39% 47.43%
Net Income:
Net Income (Loss) $ 946 $ 508
Annualized Performance Measures:
Return on Average Assets 0.52% 0.31%
Return on Average Stockholders' Equity 2.58% 1.38%
Per Share Data:
Number of Shares - Basic 12,593,514 12,607,147
Basic Earnings (Loss) per Share $ 0.08 $ 0.04
Number of Shares - Diluted 12,603,305 12,649,800
Diluted Earnings (Loss) per Share $ 0.08 $ 0.04
Net investment in total finance receivables includes net investment in direct financing leases and loans.