First Quarter 2011 Highlights:
- New equipment lease originations doubled year-over-year
- Increased sales force to 94 full time equivalents
- Eight consecutive quarters of credit quality improvement
- Strong capital position, consolidated equity to assets ratio of 34.02%
- An additional $25 million of capital contributed to Marlin Business Bank; equity to assets ratio of 30.09%.
MOUNT LAUREL, N.J., May 5, 2011 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported first quarter 2011 net income of $754,000, or $0.06 per diluted share.
"We continue to move in a favorable direction, growing our business and providing access to credit to the small business customers we serve," says Daniel P. Dyer, Marlin's CEO. "All of our key sales metrics are accelerating with origination volume doubling compared to the first quarter of 2010. Supporting profitable growth, our 60+ day portfolio delinquencies and charge-offs this quarter are at a four year low while borrowing rates continue to improve, due to the greater use of lower cost deposit funding at Marlin Business Bank," says Dyer.
First quarter 2011 lease production was $47.0 million, based on initial equipment cost, up 10% from $42.9 million for the fourth quarter of 2010 and 99% higher than the first quarter of 2010. Average monthly originating sources reached 740 for the first quarter of 2011, up 2% from the fourth quarter of 2010 and a 53% increase over the first quarter of 2010. The sales force grew to 94 full-time equivalents from 87 in the fourth quarter of 2010 and 53 in the first quarter of 2010, a 77% increase over the prior year.
Net interest and fee margin grew to 12.30% for the first quarter of 2011, compared to 12.10% in the fourth quarter of 2010 and 11.12% a year ago. The margin gain was driven by an improvement in portfolio yield, as well as lower average cost of funds which was favorably impacted by the shift in the Company's funding mix from term funding to lower cost insured deposits at the Company's subsidiary, Marlin Business Bank.
Credit trends have returned to historic levels. Highlights for the first quarter of 2011 include:
- Leases over 30 days delinquent were 1.67% of Marlin's lease portfolio, which is 30 basis points lower than the fourth quarter of 2010 and 133 basis points lower than the first quarter of 2010
- Leases over 60 days delinquent were 0.75% of Marlin's lease portfolio, which is 14 basis points lower than the fourth quarter of 2010 and 62 basis points lower than the first quarter of 2010
- Net leasing charge-offs were 2.30% of average net investment, which is 31 basis points lower than the fourth quarter of 2010 and 223 basis points lower than the first quarter of 2010.
The allowance for credit losses as a percentage of total finance receivables was 1.98% as of March 31, 2011 and 236% of total 60+ day delinquencies, compared to an allowance for credit losses of 2.19% as of December 31, 2010 and 220% of total 60+ day delinquencies.
The Company maintains strong capital ratios with a consolidated equity to assets ratio of 34.02% and ample liquidity to support growth through our insured depository, Marlin Business Bank. The Company also had $54 million in unused commitments through its revolver facilities.
In connection with the Company's discussions with the Federal Reserve Bank relating to the Company's allowance for credit losses (the "Allowance"), the Company received a letter dated April 28, 2011 from the Federal Reserve Bank of Philadelphia stating that the Company should continue to operate under its current methodology for determining the Allowance, and that the appropriateness and reasonableness of the overall level of the Allowance, as well as the adequacy of the documentation and controls maintained by the Company's management to support the appropriateness of the Allowance, will be reviewed again by the Federal Reserve Bank of San Francisco and the Utah Department of Financial Institutions during their next regularly scheduled commercial bank examination of Marlin Business Bank.
In conjunction with this release, the Company's static pool loss statistics and vintage delinquency analysis have been updated as supplemental information on the Investor Relations section of the Company's website at www.marlincorp.com.
Conference Call and Webcast
We will host a conference call on Friday, May 6, 2011 at 9:00 a.m. ET to discuss the Company's first quarter results. If you wish to participate, please call 877-312-5414 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 Company's website, www.marlincorp.com, and an audio replay will also be available on the Investor Relations section of Marlin's website for approximately 45 days.
About Marlin Business Services Corp.
Marlin Business Services Corp. is a nationwide provider of equipment leasing solutions primarily to small and mid-sized businesses. The Company's 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 Securities and Exchange Commission, 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, | |
| 2011 | 2010 | |
| (Dollars in thousands, except per-share data) | ||
| (Unaudited) | ||
| ASSETS | ||
| Cash and due from banks | $ 982 | $ 2,557 |
| Interest-earning deposits with banks | 39,082 | 34,469 |
| Total cash and cash equivalents | 40,064 | 37,026 |
| Restricted interest-earning deposits with banks (includes $46.3 million and $44.7 million | ||
| at March 31, 2011 and December 31, 2010, respectively, related to consolidated variable | ||
| interest entities ("VIEs")) | 51,212 | 47,107 |
| Securities available for sale (amortized cost of $1.7 million and $1.5 million at | ||
| March 31, 2011 and December 31, 2010, respectively) | 1,682 | 1,534 |
| Net investment in leases and loans (includes $130.9 million and $154.1 million at March 31, 2011 | ||
| and December 31, 2010, respectively, related to consolidated VIEs) | 348,019 | 351,569 |
| Property and equipment, net | 2,261 | 2,180 |
| Property tax receivables | 4,074 | 197 |
| Other assets | 26,955 | 28,449 |
| Total assets | $ 474,267 | $ 468,062 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Long-term borrowings (includes $106.9 million and $128.2 million at March 31, 2011 | ||
| and December 31, 2010, respectively, related to consolidated VIEs) | 178,323 | 178,650 |
| Deposits | 95,731 | 92,919 |
| Other liabilities: | ||
| Sales and property taxes payable | 5,268 | 1,978 |
| Accounts payable and accrued expenses | 8,128 | 8,019 |
| Net deferred income tax liability | 25,449 | 26,493 |
| Total liabilities | 312,899 | 308,059 |
| Stockholders' equity: | ||
| Common Stock, $0.01 par value; 75,000,000 shares authorized; | ||
| 13,021,761 and 12,864,665 shares issued and outstanding at March 31, 2011 | ||
| and December 31, 2010, respectively | 130 | 129 |
| Additional paid-in capital | 87,565 | 86,987 |
| Stock subscription receivable | (2) | (2) |
| Accumulated other comprehensive loss | (100) | (132) |
| Retained earnings | 73,775 | 73,021 |
| Total stockholders' equity | 161,368 | 160,003 |
| Total liabilities and stockholders' equity | $ 474,267 | $ 468,062 |
| MARLIN BUSINESS SERVICES CORP. | |||
| AND SUBSIDIARIES | |||
| Condensed Consolidated Statements of Operations | |||
| (Unaudited) | |||
| Three Months Ended March 31, | |||
| 2011 | 2010 | ||
| (Dollars in thousands, except per-share data) | |||
| Interest income | $10,900 | $ 12,829 | |
| Fee income | 3,132 | 3,816 | |
| Interest and fee income | 14,032 | 16,645 | |
| Interest expense | 3,292 | 4,658 | |
| Net interest and fee income | 10,740 | 11,987 | |
| Provision for credit losses | 1,179 | 3,123 | |
| Net interest and fee income after provision for credit losses | 9,561 | 8,864 | |
| Other income: | |||
| Insurance income | 977 | 1,158 | |
| Loss on derivatives | (5) | (94) | |
| Other income | 282 | 288 | |
| Other income | 1,254 | 1,352 | |
| Other expense: | |||
| Salaries and benefits | 5,937 | 5,124 | |
| General and administrative | 3,471 | 3,046 | |
| Financing related costs | 189 | 147 | |
| Other expense | 9,597 | 8,317 | |
| Income before income taxes | 1,218 | 1,899 | |
| Income tax expense | 464 | 662 | |
| Net income | $ 754 | $ 1,237 | |
| Basic earnings per share | $ 0.06 | $ 0.10 | |
| Diluted earnings per share | $ 0.06 | $ 0.10 | |
| Weighted average shares used in computing basic earnings per share | 12,927,477 | 12,778,463 | |
| Weighted average shares used in computing diluted earnings per share | 13,005,882 | 12,833,643 | |
| SUPPLEMENTAL QUARTERLY DATA | |||||
| (Dollars in thousands, except share amounts) | |||||
| (Unaudited) | |||||
| Quarter Ended: | 3/31/2010 | 6/30/2010 | 9/30/2010 | 12/31/2010 | 3/31/2011 |
| New Asset Production: | |||||
| # of Sales Reps | 53 | 69 | 84 | 87 | 94 |
| # of Leases | 2,476 | 3,009 | 3,253 | 3,669 | 3,984 |
| Leased Equipment Volume | $23,636 | $31,729 | $35,759 | $42,906 | $47,024 |
| Approval Percentage | 46% | 49% | 49% | 54% | 56% |
| Average Monthly Sources | 484 | 581 | 625 | 725 | 740 |
| Implicit Yield on New Leases | 15.32% | 14.56% | 14.40% | 13.98% | 13.39% |
| Net Interest and Fee Margin: | |||||
| Interest Income Yield | 11.90% | 12.12% | 12.28% | 12.38% | 12.48% |
| Fee Income Yield | 3.54% | 3.54% | 3.84% | 3.54% | 3.59% |
| Interest and Fee Income Yield | 15.44% | 15.66% | 16.12% | 15.92% | 16.07% |
| Cost of Funds | 4.32% | 4.00% | 3.86% | 3.82% | 3.77% |
| Net Interest and Fee Margin | 11.12% | 11.66% | 12.26% | 12.10% | 12.30% |
| Average Total Finance Receivables | $431,176 | $395,906 | $371,833 | $357,089 | $349,203 |
| Average Net Investment in Leases | $427,416 | $393,248 | $369,973 | $355,863 | $348,276 |
| End of Period Net Investment in Leases | $405,424 | $378,559 | $359,859 | $350,528 | $347,254 |
| End of Period Loans | $2,781 | $2,101 | $1,284 | $1,041 | $765 |
| Portfolio Asset Quality: | |||||
| Leasing | |||||
| 30+ Days Past Due Delinquencies | 3.00% | 2.64% | 2.35% | 1.97% | 1.67% |
| 30+ Days Past Due Delinquencies | $13,470 | $11,031 | $9,359 | $7,665 | $6,475 |
| 60+ Days Past Due Delinquencies | 1.37% | 1.20% | 1.03% | 0.89% | 0.75% |
| 60+ Days Past Due Delinquencies | $6,135 | $5,015 | $4,099 | $3,460 | $2,891 |
| Total Finance Receivables | |||||
| 30+ Days Past Due Delinquencies | 3.06% | 2.70% | 2.38% | 1.98% | 1.68% |
| 30+ Days Past Due Delinquencies | $13,829 | $11,358 | $9,537 | $7,726 | $6,514 |
| 60+ Days Past Due Delinquencies | 1.39% | 1.24% | 1.05% | 0.90% | 0.75% |
| 60+ Days Past Due Delinquencies | $6,288 | $5,202 | $4,213 | $3,504 | $2,914 |
| Net Charge-offs - Leasing | $4,843 | $3,489 | $2,778 | $2,324 | $2,002 |
| % on Average Net Investment in | |||||
| Leases Annualized | 4.53% | 3.55% | 3.00% | 2.61% | 2.30% |
| Net Charge-offs - Total Finance Receivables | $5,063 | $3,596 | $2,879 | $2,375 | $2,010 |
| % on Average Total Finance Receivables | |||||
| Annualized | 4.70% | 3.63% | 3.10% | 2.66% | 2.30% |
| Allowance for Credit Losses | $10,253 | $9,151 | $8,355 | $7,718 | $6,887 |
| % of 60+ Delinquencies | 163.06% | 175.91% | 198.31% | 220.26% | 236.34% |
| 90+ Day Delinquencies (Non-earning total finance receivables) | $3,399 | $2,819 | $2,398 | $1,996 | $1,407 |
| Balance Sheet: | |||||
| Assets | |||||
| Investment in Leases and Loans | $409,637 | $381,978 | $362,328 | $352,527 | $348,290 |
| Initial Direct Costs and Fees | 8,821 | 7,833 | 7,170 | 6,760 | 6,616 |
| Reserve for Credit Losses | (10,253) | (9,151) | (8,355) | (7,718) | (6,887) |
| Net Investment in Leases and Loans | $408,205 | $380,660 | $361,143 | $351,569 | $348,019 |
| Cash and Cash Equivalents | 44,334 | 35,178 | 44,100 | 37,026 | 40,064 |
| Restricted Cash | 65,521 | 66,546 | 47,384 | 47,107 | 51,212 |
| Other Assets | 16,461 | 12,611 | 13,678 | 32,360 | 34,972 |
| Total Assets | $534,521 | $494,995 | $466,305 | $468,062 | $474,267 |
| Liabilities | |||||
| Total Debt | $268,434 | $218,987 | $191,858 | $178,650 | $178,323 |
| Deposits | 85,135 | 96,852 | 95,358 | 92,919 | 95,731 |
| Other Liabilities | 26,787 | 22,887 | 20,932 | 36,490 | 38,845 |
| Total Liabilities | $380,356 | $338,726 | $308,148 | $308,059 | $312,899 |
| Stockholders' Equity | |||||
| Common Stock | $128 | $129 | $129 | $129 | $130 |
| Paid-in Capital, net | 85,689 | 86,204 | 86,606 | 86,985 | 87,563 |
| Other Comprehensive Income | (242) | (205) | (153) | (132) | (100) |
| Retained Earnings | 68,590 | 70,141 | 71,575 | 73,021 | 73,775 |
| Total Stockholders' Equity | $154,165 | $156,269 | $158,157 | $160,003 | $161,368 |
| Total Liabilities and | |||||
| Stockholders' Equity | $534,521 | $494,995 | $466,305 | $468,062 | $474,267 |
| Capital and Leverage: | |||||
| Equity | $154,165 | $156,269 | $158,157 | $160,003 | $161,368 |
| Debt to Equity | 2.29 | 2.02 | 1.82 | 1.70 | 1.70 |
| Equity to Assets | 28.84% | 31.57% | 33.92% | 34.18% | 34.02% |
| Regulatory Capital Ratios: | |||||
| Tier 1 Leverage Capital | 28.36% | 30.13% | 32.67% | 34.87% | 34.30% |
| Tier 1 Risk-based Capital | 34.15% | 37.48% | 39.90% | 39.58% | 39.88% |
| Total Risk-based Capital | 35.42% | 38.74% | 41.16% | 40.84% | 41.14% |
| Expense Ratios: | |||||
| Salaries and Benefits Expense | $5,124 | $4,588 | $4,947 | $5,307 | $5,937 |
| Salaries and Benefits Expense | |||||
| Annualized % of Avg. Fin. Recbl. | 4.75% | 4.64% | 5.32% | 5.94% | 6.80% |
| Total personnel end of quarter | 196 | 211 | 229 | 234 | 243 |
| General and Administrative Expense | $3,046 | $3,073 | $3,156 | $3,487 | $3,471 |
| General and Administrative Expense | |||||
| Annualized % of Avg. Fin. Recbl. | 2.83% | 3.10% | 3.40% | 3.91% | 3.98% |
| Efficiency Ratio | 60.82% | 59.70% | 63.62% | 72.55% | 78.41% |
| Net Income: | |||||
| Net Income | $1,237 | $1,551 | $1,434 | $1,446 | $754 |
| Annualized Performance Measures: | |||||
| Return on Average Assets | 0.90% | 1.20% | 1.19% | 1.28% | 0.65% |
| Return on Average Stockholders' Equity | 3.31% | 4.09% | 3.73% | 3.72% | 1.88% |
| Per Share Data: | |||||
| Number of Shares - Basic | 12,778,463 | 12,832,792 | 12,872,123 | 12,866,214 | 12,927,477 |
| Basic Earnings per Share | $0.10 | $0.12 | $0.11 | $0.11 | $0.06 |
| Number of Shares - Diluted | 12,833,643 | 12,904,163 | 12,933,439 | 12,942,524 | 13,005,882 |
| Diluted Earnings per Share | $0.10 | $0.12 | $0.11 | $0.11 | $0.06 |
| Net investment in total finance receivables includes net investment in direct financing leases and loans. | |||||