First Quarter Highlights:
- Net Income of $1.2 million for the first quarter of 2010
- Increased sales force by 15 full time equivalents to 53
- 30+ lease delinquencies improved 38 basis points in the first quarter of 2010 and improved 187 basis points from first quarter of 2009.
- Non-performing assets improved 59% from first quarter 2009
- Yield on new lease production of 15.32%
- Strong capital position, equity to assets leverage ratio of 28.2%
- Total risk-based capital of 34.61%
MOUNT LAUREL, N.J., May 6, 2010 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported first quarter 2010 net income of $1.2 million, or $0.10 per diluted share, and net income on an adjusted basis of $1.3 million or $0.10 per share.
"Despite the headwinds of a weak economy, we're encouraged by the favorable performance trends in our business," says Daniel P. Dyer, Marlin's CEO. "In 2010, our priorities will focus on growth and investing in the sales side of the business as we serve the credit needs of small businesses across the U.S. In doing so, we will continue to operate with the same discipline that has allowed us to navigate successfully through the current economic downturn."
First quarter 2010 lease production was $23.6 million, based on initial equipment cost, up 18% from $20.0 million for the fourth quarter of 2009. Approval rates on lease originations improved to 46% for the first quarter of 2010, versus 44% for the fourth quarter of 2009. The average implicit yield on new lease production was 15.32% in the first quarter of 2010. Net interest and fee margin is 11.12% for the first quarter 2010 compared to 10.08% in first quarter 2009. The Company increased its sales force 39% in first quarter 2010 to 53 full time equivalents.
Credit trends continued to steadily improve. Highlights for the first quarter of 2010:
- Leases over 30 days delinquent are 38 basis points lower than fourth quarter 2009 and the lowest since second quarter 2007. On a dollar basis 30+ delinquencies have decreased 20% from the fourth quarter of 2009.
- Leases over 60 days delinquent are 26 basis points lower than fourth quarter 2009 and the lowest since third quarter 2008. On a dollar basis 60+ delinquencies have decreased 24% from the fourth quarter of 2009.
- Non-performing assets of $3.4 million are 25% lower than fourth quarter 2009.
- Net lease charge-offs of $4.8 million were 11% lower than fourth quarter 2009 levels.
- Static pool credit losses and delinquency performance remain in line with expectations for 2008 and 2009 vintages.
- The provision for credit losses was $3.1 million for the quarter ended March 31, 2010, down from $5.7 million for the fourth quarter of 2009 and $8.7 million for the first quarter of 2009, due to improvements in the delinquency migration rates of the lease portfolio and the reduction of lease outstandings.
- The allowance as a percentage of total finance receivables stands at 2.50% as of March 31, 2010 compared to 2.71% as of December 31, 2009.
At March 31, 2010, the Company has outstanding $97.8 million of leases and loans funded through its banking subsidiary, Marlin Business Bank, and has $85.1 million in FDIC-insured deposits outstanding at an average borrowing rate of 3.02% with a weighted average term to maturity of 2.6 years. First quarter 2010 average deposits outstanding were $81.4 million at a weighted average interest rate of 3.09%.
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 Friday May 7, 2010 at 9:00 a.m. ET to discuss our First Quarter 2010 results. If you wish to participate, please call 888-312-5414 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 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 | ||
| March 31, | December 31, | |
| 2010 | 2009 | |
| (Dollars in thousands, except per-share data) | ||
| (Unaudited) | ||
| ASSETS | ||
| Cash and due from banks | $ 1,781 | $ 1,372 |
| Interest-earning deposits with banks | 42,553 | 35,685 |
| Total cash and cash equivalents | 44,334 | 37,057 |
|
Restricted interest-earning deposits with banks (includes $63.1 million and $57.1 million, respectively, related to consolidated variable interest entities ("VIEs")) |
65,521 | 63,400 |
|
Net investment in leases and loans (includes $273.1 million and $238.0 million, respectively, related to consolidated VIEs) |
408,205 | 448,610 |
| Property and equipment, net | 2,305 | 2,431 |
| Property tax receivables | 5,866 | 1,135 |
| Other assets | 8,290 | 13,170 |
| Total assets | $ 534,521 | $ 565,803 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Short-term borrowings | $ — | $ 62,541 |
|
Long-term borrowings (includes $249.1 million and $226.7 million, respectively, related to consolidated VIEs) |
268,434 | 244,445 |
| Deposits | 85,135 | 80,288 |
| Other liabilities: | ||
| Fair value of derivatives | 1,208 | 2,408 |
| Sales and property taxes payable | 7,752 | 4,197 |
| Accounts payable and accrued expenses | 7,268 | 7,649 |
| Net deferred income tax liability | 14,206 | 16,037 |
| Total liabilities | 384,003 | 417,565 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
|
Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,811,578 and 12,778,935 shares issued and outstanding, respectively |
128 | 128 |
|
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued |
— | — |
| Additional paid-in capital | 85,691 | 84,674 |
| Stock subscription receivable | (2) | (3) |
| Accumulated other comprehensive loss | (242) | (267) |
| Retained earnings | 64,943 | 63,706 |
| Total stockholders' equity | 150,518 | 148,238 |
| Total liabilities and stockholders' equity | $ 534,521 | $ 565,803 |
| MARLIN BUSINESS SERVICES CORP. | ||
| AND SUBSIDIARIES | ||
| Condensed Consolidated Statements of Operations | ||
|
(Unaudited) |
||
| Three Months Ended March 31, | ||
| 2010 | 2009 | |
| (Dollars in thousands, except per-share data) | ||
| Interest income | $ 12,829 | $ 19,072 |
| Fee income | 3,816 | 5,034 |
| Interest and fee income | 16,645 | 24,106 |
| Interest expense | 4,658 | 7,832 |
| Net interest and fee income | 11,987 | 16,274 |
| Provision for credit losses | 3,123 | 8,748 |
|
Net interest and fee income after provision for credit losses |
8,864 | 7,526 |
| Other income: | ||
| Insurance income | 1,158 | 1,543 |
| Loss on derivatives | (94) | (1,307) |
| Other income | 288 | 407 |
| Other income | 1,352 | 643 |
| Other expense: | ||
| Salaries and benefits | 5,124 | 5,885 |
| General and administrative | 3,046 | 3,399 |
| Financing related costs | 147 | 255 |
| Other expense | 8,317 | 9,539 |
| Income (loss) before income taxes | 1,899 | (1,370) |
| Income tax expense (benefit) | 662 | (491) |
| Net income (loss) | $ 1,237 | $ (879) |
| Basic earnings (loss) per share | $ 0.10 | $ (0.08) |
| Diluted earnings (loss) per share | $ 0.10 | $ (0.08) |
| Weighted average shares used in computing basic earnings (loss) per share | 12,778,463 | 11,677,264 |
| Weighted average shares used in computing diluted earnings (loss) per share | 12,833,643 | 11,677,264 |
| MARLIN BUSINESS SERVICES CORP. | ||
| AND SUBSIDIARIES | ||
| Net Income on an Adjusted Basis Reconciliation to GAAP Results | ||
| Three Months Ended March 31, | ||
| 2010 | 2009 | |
| (Dollars in thousands) | ||
| (Unaudited) | ||
| Net income (loss) as reported | $ 1,237 | $ (879) |
| Deduct: | ||
| Loss on derivatives | (94) | (1,307) |
| Tax effect | 37 | 516 |
| Loss on derivatives, net of tax | (57) | (791) |
| Net Income on an Adjusted Basis | $ 1,294 | $ (88) |
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.
| SUPPLEMENTAL QUARTERLY DATA | ||||||||||
| (Dollars in thousands, except share amounts) | ||||||||||
| (Unaudited) | ||||||||||
| Quarter Ended: | 3/31/2009 | 6/30/2009 | 9/30/2009 | 12/31/2009 | 3/31/2010 | |||||
| New Asset Production: | ||||||||||
| # of Sales Reps | 58 | 33 | 34 | 38 | 53 | |||||
| # of Leases | 3,811 | 1,831 | 1,916 | 2,205 | 2,476 | |||||
| Leased Equipment Volume | $36,280 | $15,811 | $16,813 | $20,031 | $23,636 | |||||
| Approval Percentage | 41% | 36% | 38% | 44% | 46% | |||||
| Average Monthly Sources | 692 | 374 | 371 | 421 | 484 | |||||
| Implicit Yield on New Leases | 14.40% | 15.83% | 15.62% | 15.32% | 15.32% | |||||
| Net Interest and Fee Margin: | ||||||||||
| Interest Income Yield | 11.82% | 11.78% | 11.84% | 11.89% | 11.90% | |||||
| Fee Income Yield | 3.12% | 2.99% | 3.25% | 3.12% | 3.54% | |||||
| Interest and Fee Income Yield | 14.94% | 14.77% | 15.09% | 15.01% | 15.44% | |||||
| Cost of Funds | 4.86% | 5.08% | 4.89% | 4.73% | 4.32% | |||||
| Net Interest and Fee Margin | 10.08% | 9.69% | 10.20% | 10.28% | 11.12% | |||||
| Average Total Finance Receivables | $645,570 | $586,608 | $526,829 | $474,326 | $431,176 | |||||
| Average Net Investment in Leases | $634,314 | $577,493 | $519,791 | $469,040 | $427,416 | |||||
| End of Period Net Investment in Leases | $611,774 | $547,892 | $494,102 | $444,583 | $405,424 | |||||
| End of Period Loans | $9,160 | $7,190 | $5,454 | $4,027 | $2,781 | |||||
| Portfolio Asset Quality: | ||||||||||
| Total Finance Receivables | ||||||||||
| 30+ Days Past Due Delinquencies | 4.94% | 4.53% | 3.62% | 3.46% | 3.06% | |||||
| 30+ Days Past Due Delinquencies | $34,910 | $28,493 | $20,215 | $17,297 | $13,829 | |||||
| 60+ Days Past Due Delinquencies | 2.38% | 2.32% | 1.69% | 1.67% | 1.39% | |||||
| 60+ Days Past Due Delinquencies | $16,824 | $14,579 | $9,431 | $8,334 | $6,288 | |||||
| Leasing | ||||||||||
| 30+ Days Past Due Delinquencies | 4.87% | 4.41% | 3.55% | 3.38% | 3.00% | |||||
| 30+ Days Past Due Delinquencies | $33,895 | $27,399 | $19,583 | $16,790 | $13,470 | |||||
| 60+ Days Past Due Delinquencies | 2.34% | 2.26% | 1.65% | 1.63% | 1.37% | |||||
| 60+ Days Past Due Delinquencies | $16,281 | $14,055 | $9,103 | $8,101 | $6,135 | |||||
| Loans | ||||||||||
| 30+ Days Past Due Delinquencies | 10.04% | 13.55% | 10.47% | 11.43% | 11.75% | |||||
| 30+ Days Past Due Delinquencies | $1,015 | $1,094 | $632 | $507 | $359 | |||||
| 60+ Days Past Due Delinquencies | 5.37% | 6.49% | 5.43% | 5.25% | 5.01% | |||||
| 60+ Days Past Due Delinquencies | $543 | $524 | $328 | $233 | $153 | |||||
| Net Charge-offs - Leasing | $7,973 | $7,593 | $7,039 | $5,469 | $4,843 | |||||
| % on Average Net Investment in | ||||||||||
| Leases Annualized | 5.03% | 5.26% | 5.42% | 4.66% | 4.53% | |||||
| Net Charge-offs - Loans | $749 | $531 | $597 | $327 | $220 | |||||
| % on Average Loans Annualized | 26.62% | 23.30% | 33.93% | 25.17% | 23.40% | |||||
| Allowance for Credit Losses | $15,309 | $13,978 | $12,293 | $12,193 | $10,253 | |||||
| % of 60+ Delinquencies | 91.00% | 95.88% | 130.35% | 146.30% | 163.06% | |||||
|
90+ Day Delinquencies (Non-earning total finance receivables) |
$8,263 | $7,650 | $5,209 | $4,557 | $3,399 | |||||
| Balance Sheet: | ||||||||||
| Assets | ||||||||||
| Investment in Leases and Loans | $619,129 | $554,712 | $499,802 | $450,595 | $409,637 | |||||
| Initial Direct Costs and Fees | 17,114 | 14,348 | 12,047 | 10,208 | 8,821 | |||||
| Reserve for Credit Losses | (15,309) | (13,978) | (12,293) | (12,193) | (10,253) | |||||
| Net Investment in Leases and Loans | $620,934 | $555,082 | $499,556 | $448,610 | $408,205 | |||||
| Cash and Cash Equivalents | 50,466 | 53,529 | 50,441 | 37,057 | 44,334 | |||||
| Restricted Cash | 71,382 | 67,751 | 64,920 | 63,400 | 65,521 | |||||
| Other Assets | 20,857 | 14,284 | 13,140 | 16,736 | 16,461 | |||||
| Total Assets | $763,639 | $690,646 | $628,057 | $565,803 | $534,521 | |||||
| Liabilities | ||||||||||
| Total Debt | $499,852 | $426,203 | $362,966 | $306,986 | $268,434 | |||||
| Deposits | 74,853 | 77,305 | 80,060 | 80,288 | 85,135 | |||||
| Other Liabilities | 43,278 | 40,477 | 37,573 | 30,291 | 30,434 | |||||
| Total Liabilities | $617,983 | $543,985 | $480,599 | $417,565 | $384,003 | |||||
| Stockholders' Equity | ||||||||||
| Common Stock | $126 | $126 | $126 | $128 | $128 | |||||
| Paid-in Capital, net | 83,561 | 83,838 | 84,239 | 84,671 | 85,689 | |||||
| Other Comprehensive Income | 178 | (40) | (152) | (267) | (242) | |||||
| Retained Earnings | 61,791 | 62,737 | 63,245 | 63,706 | 64,943 | |||||
| Total Stockholders' Equity | $145,656 | $146,661 | $147,458 | $148,238 | $150,518 | |||||
| Total Liabilities and | ||||||||||
| Stockholders' Equity | $763,639 | $690,646 | $628,057 | $565,803 | $534,521 | |||||
| Capital and Leverage: | ||||||||||
| Tangible Equity | $145,656 | $146,661 | $147,458 | $148,238 | $150,518 | |||||
| Debt to Tangible Equity | 3.95 | 3.43 | 3.00 | 2.61 | 2.35 | |||||
| Equity to Assets | 19.07% | 21.24% | 23.48% | 26.20% | 28.16% | |||||
| Regulatory Capital Ratios: | ||||||||||
| Tier 1 Leverage Capital | 19.19% | 20.12% | 22.31% | 24.89% | 27.69% | |||||
| Tier 1 Risk-based Capital | 21.48% | 24.36% | 27.16% | 30.19% | 33.35% | |||||
| Total Risk-based Capital | 22.74% | 25.63% | 28.43% | 31.45% | 34.61% | |||||
| Expense Ratios: | ||||||||||
| Salaries and Benefits Expense | $5,885 | $5,057 | $4,051 | $4,078 | $5,124 | |||||
| Salaries and Benefits Expense | ||||||||||
| Annualized % of Avg. Fin. Recbl. | 3.65% | 3.45% | 3.08% | 3.44% | 4.75% | |||||
| Total personnel end of quarter | 230 | 169 | 175 | 181 | 196 | |||||
| General and Administrative Expense | $3,399 | $3,287 | $3,076 | $3,092 | $3,046 | |||||
| General and Administrative Expense | ||||||||||
| Annualized % of Avg. Fin. Recbl. | 2.11% | 2.24% | 2.34% | 2.61% | 2.83% | |||||
| Efficiency Ratio | 50.94% | 52.39% | 47.43% | 52.01% | 60.82% | |||||
| Net Income: | ||||||||||
| Net Income (Loss) | ($879) | $946 | $508 | $461 | $1,237 | |||||
| Annualized Performance Measures: | ||||||||||
| Return on Average Assets | -0.45% | 0.52% | 0.31% | 0.31% | 0.90% | |||||
| Return on Average Stockholders' Equity | -2.39% | 2.58% | 1.38% | 1.25% | 3.31% | |||||
| Per Share Data: | ||||||||||
| Number of Shares - Basic | 11,677,264 | 12,593,514 | 12,607,147 | 12,681,773 | 12,778,463 | |||||
| Basic Earnings (Loss) per Share | ($0.08) | $0.08 | $0.04 | $0.04 | $0.10 | |||||
| Number of Shares - Diluted | 11,677,264 | 12,603,305 | 12,649,800 | 12,724,998 | 12,833,643 | |||||
| Diluted Earnings (Loss) per Share | ($0.08) | $0.08 | $0.04 | $0.04 | $0.10 | |||||
|
Net investment in total finance receivables includes net investment in direct financing leases and loans. |
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