Press Release

Marlin Reports Fourth Quarter and Full Year 2019 Earnings and Declares a Cash Dividend of $0.14 Per Share

Company Release - 1/30/2020 4:27 PM ET

Fourth Quarter Summary:

  • Net income of $8.4 million, or $0.69 per diluted share, up 31.0% from $6.4 million, or $0.51 per diluted share a year ago and up from $7.4 million, or $0.60 per diluted share last quarter
  • Total sourced origination volume of $236.5 million, up 9.3% year-over-year; Direct origination volume of $50.4 million, up 24.9% year-over-year
  • Net Investment in Leases and Loans totaled $1.0 billion, relatively flat from a year ago, and total managed assets ended the fourth quarter at $1.3 billion, up 15.7% from a year ago
  • Total origination yield of 12.43%, down 95 basis points from the prior quarter and up 7 basis points year-over-year

Full Year 2019 Summary:

  • Net income of $27.1 million, or $2.20 per diluted share, up 8.6% from $25.0 million, or $2.00 per diluted share a year ago; Net income on an adjusted basis* of $27.2 million, or $2.20 per share, up from $25.4 million, or $2.04 per diluted share in the prior year
  • Total sourced origination volume of $877.9 million, up 18.7% from a year ago; Direct origination volume of $184.6 million, up 29% year-over-year
  • Operating efficiency of 54.18% compared to 55.32% in the prior year; operating efficiency on an adjusted basis* of 49.42% compared to 53.16% in the prior year
  • ROE of 13.33% compared to 13.27% in the prior year; ROE on an adjusted basis* of 13.36% compared with ROE on an adjusted basis* of 13.52% in the prior year
  • In addition to quarterly dividends, returned capital through share repurchases totaling $6.8 million, or 294,686 shares

MOUNT LAUREL, N.J., Jan. 30, 2020 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (NASDAQ: MRLN), a nationwide provider of capital solutions to small businesses (“Marlin” or the “Company”), today reported fourth quarter 2019 net income of $8.4 million, or $0.69 per diluted share, compared with $7.4 million, or $0.60 per diluted share in the prior quarter, and $6.4 million, or $0.51 per share a year ago.

Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “Marlin concluded 2019 with strong performance in the fourth quarter highlighted by record origination volume, disciplined expense management and excellent earnings growth. Total origination volume of $236.5 million increased 9.3% year-over-year, driven by increasing customer demand for both our equipment finance and working capital loan products, as well as solid growth in our direct origination channel.  For the full year, total origination volume of $877.9 million grew 18.7% year-over-year, more than double the prior year’s growth rate.  We also delivered solid earnings growth despite an increase in provisions for credit losses driven by higher delinquencies and charge-offs.  We continue to closely monitor the portfolio and are making appropriate adjustments to ensure optimal risk-adjusted portfolio performance.”

Mr. Hilzinger continued, “While the origination growth we experienced demonstrates the significant demand that exists for our financing products, market conditions during the quarter created both an increasingly competitive pricing environment and a favorable capital markets environment. These market conditions allowed us to offset continued yield compression with exceptionally strong capital markets execution. I also remain extremely pleased with our ability to carefully manage expenses as evidenced by decreases in our adjusted efficiency ratio, which improved on both a sequential quarter and year-over-year basis. As a result, fourth quarter net income expanded to $8.4 million, or $0.69 per diluted share, up 31% from a year ago.  For the full year net income of $27.1 million, or $2.20 per diluted share, was up 9% from a year ago. Overall, I believe that the fundamentals of our business remain strong as we enter 2020 and that Marlin is well-positioned for another year of profitable growth.”

Results of Operations
Total sourced origination volume for the fourth quarter of $236.5 million was up 9.3% from a year ago. Direct origination volume of $50.4 million in the fourth quarter was up 24.9% from $40.4 million in the fourth quarter of 2018. Indirect origination volume in the fourth quarter of 2019 was $167.7 million, up 5.1% from $159.5 million in the fourth quarter last year. Assets originated for sale in the fourth quarter of $16.3 million compared with $11.9 million in the fourth quarter last year. Referral volume totaled $2.0 million, down from $4.5 million in the fourth quarter last year.

Net interest and fee margin as a percentage of average finance receivables was 9.44% for the fourth quarter, down 11 basis points from the third quarter of 2019 and down 32 basis points from a year ago. The sequential quarter decrease was driven primarily by a decrease in new origination loan and lease yields. The year-over-year decrease in margin percentage was primarily a result of an increase in interest expense resulting from higher deposit rates and lower fee income, partially offset by an increase of seven basis points in new origination loan and lease yield. The Company’s interest expense as a percent of average total finance receivables was 236 basis points in the fourth quarter of 2019 compared with 250 basis points for the third quarter of 2019 and 220 basis points for the fourth quarter of 2018.  The year-over-year increase was due to a higher cost of funds associated with deposits.

On an absolute basis, net interest and fee income was $24.4 million for the fourth quarter of 2019 compared with $23.7 million for the fourth quarter last year.

Non-interest income was $13.5 million for the fourth quarter of 2019, compared with $10.4 million in the prior quarter and $7.1 million in the prior year period. The sequential and year-over-year increase in non-interest income is primarily due to an increase in gains from the sale of assets. Non-interest expense was $16.4 million for the fourth quarter of 2019, compared with $17.0 million in the prior quarter and $16.4 million in the fourth quarter last year.

The Company’s efficiency ratio for the fourth quarter improved to 43.2% from 53.1% in the fourth quarter last year. The Company’s non-GAAP efficiency ratio for the fourth quarter was 40.2% compared with 50.9% in the fourth quarter last year. Marlin’s efficiency ratio has improved primarily due to an increase in non-interest income from capital markets activities coupled with a stable expense base.

Marlin recorded income tax expense of $2.9 million, representing an effective tax rate of 25.5% for the fourth quarter of 2019, compared with an income tax expense of $2.3 million, representing an effective tax rate of 26.0%, for the fourth quarter of 2018.

Portfolio Performance
Allowance for credit losses as a percentage of total finance receivables was 2.15% at December 31, 2019 compared with 1.86% at September 30, 2019 and 1.62% at December 31, 2018.

Finance receivables over 30 days delinquent were 1.41% of the Company’s total finance receivables portfolio as of December 31, 2019, up 13 basis points from September 30, 2019 and up 32 basis points from December 31, 2018. Finance receivables over 60 days delinquent were 0.85% of the Company’s total finance receivables portfolio as of December 31, 2019, up 1 basis point from September 30, 2019 and up 20 basis points from December 31, 2018. Annualized fourth quarter net charge-offs were 3.00% of average total finance receivables versus 1.99% in the third quarter of 2019 and 2.30% a year ago. Included in fourth quarter charge-offs was $0.9 million that was specifically reserved for during the third quarter, thereby eliminating the entire allowance related to the fraudulent activities within a specific dealer’s portfolio.

As of December 31, 2019, the Company’s consolidated equity to assets ratio was 17.80%. This compares to 16.74% and 17.01%, in the prior quarter and year ago quarter, respectively.

Corporate Developments
Marlin’s Board of Directors today declared a $0.14 per share quarterly dividend. The dividend is payable February 20, 2020, to shareholders of record on February 10, 2020. Based on the closing stock price on January 29, 2020, the annualized dividend yield on the Company’s common stock is 2.66%.

Business Outlook
The Company expects earnings per share on an adjusted basis* for the year ending December 31, 2020 to be between $2.17 and $2.27 per share.  The Company’s earnings guidance for the full year ending December 31, 2020 reflects the adoption of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses.  ASU 2016 – 13 replaces the currently used incurred loss methodology for estimating credit losses with a forward-looking current expected credit losses (“CECL”) methodology effective on January 1, 2020.  We estimate that the adoption of the CECL methodology could unfavorably impact earnings in 2020 by up to $0.25 per share.

The Company’s earnings guidance is based on the following assumptions:

  • Total sourced origination volume growth in 2020 of approximately 20% from 2019 levels, with continued disproportionate growth in the working capital loan product.
  • Portfolio performance does not deteriorate from year-end 2019 experience and delinquencies and net charge-offs remain at the higher end of our expected range.
  • Net interest and fee margin in 2020, as a percentage of average finance receivables, of between 9.25% and 9.75%.

* Non-GAAP Financial Measures: Net income on an adjusted basis, ROE on an adjusted basis and adjusted efficiency ratio are financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP).  See “Regulation G – Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for a detailed description and reconciliation of such Non-GAAP financial measures to their most directly comparable GAAP financial measures, in accordance with Regulation G.

Conference Call and Webcast
Marlin will host a conference call on Friday, January 31, 2020 at 9:00 a.m. ET to discuss the Company’s fourth quarter and full year 2019 results. The conference call details are as follows:

Fourth Quarter and Full Year 2019 Financial Results Conference Call

Date:Friday, January 31, 2020
Time:9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time
Dial-in:1-877-407-0792 (Domestic)
1-201-689-8263 (International)
Conference ID:13697822
Webcast:http://public.viavid.com/index.php?id=137519

For those unable to participate during the live broadcast, a replay of the call will also be available from 12:00 p.m. Eastern Time on January 31, 2020 through 11:59 p.m. Eastern Time on February 14, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13697822.

About Marlin
Marlin is a nationwide provider of capital solutions to small businesses with a mission of helping small businesses fulfill their American dream. Our products and services are offered directly to small businesses and through financing programs with independent equipment dealers and other intermediaries. For more information about Marlin, visit marlincapitalsolutions.com or call toll free at (888) 479-9111.

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. Such forward-looking statements represent only the company’s current beliefs regarding future events and are not guarantees of performance or results.  All forward-looking statements (including statements regarding expectations of 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,” “could”, “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 under the headings “Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the United States Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are also available in the “Investors” section of our website. 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.  Investors are cautioned not to place undue reliance on such forward-looking statements.

Regulation G – Non-GAAP Financial Measures
The Company uses certain financial measures which are not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines net income on an adjusted basis as net income excluding after-tax income and expenses that are deemed to be unusual in nature or infrequent in occurrence and are not indicative of the underlying performance of the business for the period presented.  The Company defines diluted earnings per share on an adjusted basis, return on average assets on an adjusted basis and return on average equity on an adjusted basis as the calculation used for the “as reported” number substituting net income as reported with net income on an adjusted basis while using the same denominator in the “as reported” number, where appropriate. The Company defines efficiency ratio on an adjusted basis as the calculation used for the “as reported” ratio adjusting the numerator for any discrete adjustments used to present net income on an adjusted basis as well as the impact of pass-through lease expenses that are required to be presented on a gross basis in the income statement and acquisition related expense, as applicable.  The Company adjusts the denominator in the “as reported” ratio for pass-through lease revenue that is required to be presented on a gross basis in the income statement, as applicable. The Company defines General and administrative annualized percent of average finance receivables, on an adjusted basis, as the calculation used for the “as reported” ratio, adjusting the numerator for acquisition related general and administrative expenses and pass-through lease expenses that are required to be presented on a gross basis in the income statement, as applicable.  The adjusted ratio uses the same denominator as the “as reported” ratio.  The Company defines Non-interest expense divided by average total managed assets, on an adjusted basis, as the calculation used for the “as reported” ratio adjusting the number for any discrete adjustments used to present net income on an adjusted basis as well as the impact of pass-through lease expenses that are required to be presented on a gross basis in the income statement and acquisition related expenses, as applicable.  The adjusted ratio uses the same denominator as the “as reported” ratio.  The Company believes that these non-GAAP measures are useful performance metrics for management, investors and lenders, because it provides a means to evaluate period-to-period comparisons of the Company's financial performance without the effects of certain adjustments in accordance with GAAP that may not necessarily be indicative of current operating performance. 

Non-GAAP financial measures should not be considered as an alternative to GAAP financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Investor Contacts:
Mike Bogansky, Senior Vice President & Chief Financial Officer
856-505-4108

Lasse Glassen, Addo Investor Relations
lglassen@addoir.com
424-238-6249

--Tables to Follow--

          
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
          
     December 31,  December 31, 
     2019  2018 
          
    (Dollars in thousands, except per-share data) 
          
ASSETS      
Cash and due from banks$4,701 $5,088 
Interest-earning deposits with banks 118,395  92,068 
Total cash and cash equivalents 123,096  97,156 
Time deposits with banks 12,927  9,659 
Restricted interest-earning deposits (includes $6.9 and $10.0 million at December 31, 2019, and  December 31, 2018, respectively, related to consolidated VIEs) 6,931  14,045 
Investment securities (amortized cost of $11.1 million and $11.2 million at December 31, 2019 and December 31, 2018, respectively) 11,076  10,956 
Net investment in leases and loans:      
Leases 426,608  489,299 
Loans 601,607  527,541 
Net investment in leases and loans, excluding allowance for credit losses (includes $76.1 million and $150.2 million at December 31, 2019 and December 31, 2018, respectively, related to consolidated VIEs) 1,028,215  1,016,840 
Allowance for credit losses (21,695)  (16,100)
Total net investment in leases and loans 1,006,520  1,000,740 
Intangible assets 7,461  7,912 
Goodwill 6,735  7,360 
Operating lease right-of-use assets 8,863   
Property and equipment, net of allowance 7,888  4,317 
Property tax receivables 5,493  5,245 
Other assets 10,453  9,656 
Total assets$1,207,443 $1,167,046 
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Deposits$839,132 $755,776 
Long-term borrowings related to consolidated VIEs 76,091  150,055 
Operating lease liabilities 9,730   
Other liabilities:      
Sales and property taxes payable 2,678  3,775 
Accounts payable and accrued expenses 34,028  36,369 
Net deferred income tax liability 30,828  22,560 
Total liabilities 992,487  968,535 
       
       
Stockholders’ equity:      
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued    
Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,113,585 and 12,367,724 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively 121  124 
Additional paid-in capital 79,665  83,496 
Accumulated other comprehensive income (loss) 58  (44) 
Retained earnings 135,112  114,935 
Total stockholders’ equity 214,956  198,511 
Total liabilities and stockholders’ equity$1,207,443 $1,167,046 
          

 


                
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
            
    Three Months Ended December 31,  Twelve Months Ended December 31,
    2019 2018  2019 2018
                
    (Dollars in thousands, except per-share data)
                
Interest income$26,747 $24,946  $107,420 $97,025
Fee income 3,787  4,078   15,205  15,843
Interest and fee income 30,534  29,024   122,625  112,868
Interest expense 6,102  5,349   25,033  17,414
Net interest and fee income 24,432  23,675   97,592  95,454
Provision for credit losses 10,255  5,761   28,036  19,522
Net interest and fee income after provision for credit losses 14,177  17,914   69,556  75,932
             
Non-interest income:            
Gain on leases and loans sold 8,810  3,505   22,210  8,363
Insurance premiums written and earned 2,258  2,108   8,796  8,087
Other income 2,452  1,512   13,025  4,984
Non-interest income 13,520  7,125   44,031  21,434
Non-interest expense:            
Salaries and benefits 9,351  9,908   44,168  39,750
General and administrative 7,052  6,450   32,566  24,915
Non-interest expense 16,403  16,358   76,734  64,665
Income before income taxes 11,294  8,681   36,853  32,701
Income tax expense 2,880  2,259   9,737  7,721
Net income$8,414 $6,422  $27,116 $24,980
             
Basic earnings per share$0.69 $0.52  $2.21 $2.01
Diluted earnings per share$0.69 $0.51  $2.20 $2.00
                

 


            
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures

            
 Three Months Ended December 31, Twelve Months Ended December 31,
  2019   2018   2019   2018 
    
 (Dollars in thousands, except per-share data) (Dollars in thousands, except per-share data)
            
Net income as reported$8,414  $6,422  $27,116  $24,980 
Deduct:           
Reversal of charges in connection with executive separation -   -   218   - 
Charges in connection with executive separation -   -      (631)
Charge in connection with workforce reorganization -   -   (311)  - 
Tax effect -   -   24   162 
Total adjustments, net of tax -   -   (69)  (469)
Net Income on an adjusted basis$8,414  $6,422  $27,185  $25,449 
            
Diluted earnings per share as reported0.69  0.51  2.20  2.00 
Diluted earnings per share on an adjusted basis0.69  0.51  2.20  2.04 
Return on Average Assets as reported 2.74%  2.28%  2.18%  2.29%
Return on Average Assets on an adjusted basis 2.74%  2.28%  2.19%  2.33%
Return on Average Equity as reported 16.04%  13.16%  13.33%  13.27%
Return on Average Equity on an adjusted basis 16.04%  13.16%  13.36%  13.52%
            
Efficiency Ratio numerator as reported$16,403  $16,358  $76,734  $64,665 
Adjustments to Numerator:           
Expense adjustments as seen in Net Income reconciliation above -   -   (93)  (631)
Acquisition related expenses (1,050)  (680)  (3,193)  (1,900)
Pass-through expenses (374)  -   (6,624)  - 
Efficiency ratio numerator on an adjusted basis$14,979  $15,678  $66,824  $62,134 
Adjustments to Denominator:           
Efficiency Ratio denominator as reported$37,952  $30,800  $141,623  $116,888 
Pass-through revenue (721)  -   (6,401)  - 
Efficiency Ratio denominator on an adjusted basis$37,231  $30,800  $135,222  $116,888 
            
Efficiency Ratio as reported 43.22%  53.11%  54.18%  55.32%
Efficiency Ratio on an adjusted basis 40.23%  50.90%  49.42%  53.16%
            
Non-interest Expense / Average total managed assets numerator, as reported$16,403  $16,358  $76,734  $64,665 
Adjustments to Numerator:           
Expense adjustments as seen in Net Income reconciliation above -   -   (93)  (631)
Acquisition related expenses (1,050)  (680)  (3,193)  (1,900)
Pass-through expenses (374)  -   (6,624)  - 
Non-interest Expense / Average total managed assets numerator, on an adjusted basis$14,979  $15,678  $66,824  $62,134 
            
Non-interest Expense / Average total managed assets as reported 4.99%  5.86%  6.14%  6.14%
Non-interest Expense / Average total managed assets on an adjusted basis 4.56%  5.61%  5.35%  5.90%
            
General and administrative expense Annualized % of Average           
Finance Receivables numerator as reported$7,052  $6,450  $32,566  $24,915 
Adjustments to Numerator:           
Expense adjustments as seen in Net Income reconciliation above -   -   -   (136)
Acquisition related expenses (480)  (219)  (1,181)  (378)
Pass-through expenses (374)  -   (6,624)  - 
General and administrative expense Annualized % of Average           
Finance Receivables numerator as adjusted$6,198  $6,231  $24,761  $24,401 
            
General and administrative expense Annualized % of Average           
Finance Receivables as reported 2.73%  2.66%  3.17%  2.64%
General and administrative expense Annualized % of Average           
Finance Receivables on an adjusted basis 2.40%  2.57%  2.41%  2.58%
            

 

      
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
                    
Quarter Ended:12/31/2018
 3/31/2019
 6/30/2019
 9/30/2019
 12/31/2019
      
Net Income:     
Net Income$6,422  $5,141  $6,115  $7,446  $8,414 
      
Annualized Performance Measures:     
Return on Average Assets 2.28%  1.69%  1.94%  2.34%  2.74%
Return on Average Stockholders' Equity 13.16%  10.45%  12.05%  14.58%  16.04%
      
      
EPS Data:     
Net Income Allocated to Common Stock$6,322  $5,069  $6,041  $7,357  $8,313 
Number of Shares - Basic 12,202,652   12,165,646   12,184,996   12,054,944   11,996,446 
Basic Earnings per Share$0.52  $0.42  $0.50  $0.61  $0.69 
      
Number of Shares - Diluted 12,286,748   12,252,116   12,266,851   12,167,962   12,118,193 
Diluted Earnings per Share$0.51  $0.41  $0.49  $0.60  $0.69 
      
Cash Dividends Declared per share$0.14  $0.14  $0.14  $0.14  $0.14 
      
New Asset Production:     
Direct Originations$40,381  $43,565  $49,038  $41,556  $50,421 
Indirect Originations$159,534  $149,875  $160,279  $139,472  $167,740 
Total Originations$199,915  $193,440  $209,317  $181,028  $218,161 
      
Equipment Finance Originations$180,116  $169,831  $181,824  $154,781  $186,852 
Working Capital Loans Originations$19,799  $23,609  $27,493  $26,247  $31,309 
Total Originations$199,915  $193,440  $209,317  $181,028  $218,161 
      
Assets originated for sale in the period$11,905  $11,298  $18,025  $18,174  $16,344 
Assets referred in the period$4,451  $3,617  $4,140  $2,408  $1,961 
Total Sourced Originations$216,271  $208,355  $231,482  $201,610  $236,466 
Assets sold in the period$58,138  $52,867  $57,640  $85,425  $114,483 
      
Implicit Yield on Direct Originations 21.79%  23.09%  23.09%  24.38%  23.20%
Implicit Yield on Indirect Originations 9.97%  9.76%  9.85%  10.10%  9.19%
Total Implicit Yield on Total Originations 12.36%  12.76%  12.95%  13.38%  12.43%
      
Implicit Yield on Equipment Finance Originations 9.68%  9.59%  9.71%  9.57%  8.91%
Implicit Yield on Working Capital Loans Originations 36.67%  35.55%  34.34%  35.81%  33.51%
      
# of Leases / Loans Equipment Finance 7,873   7,467   7,648   6,836   7,279 
Equipment Finance Approval Percentage 59%  58%  55%  53%  54%
Average Monthly Equipment Finance Sources 1,140   1,074   1,149   1,067   1,033 
      
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.
 
 
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
                    
Quarter Ended:12/31/2018 3/31/2019
 6/30/2019 9/30/2019 12/31/2019
                    
Net Interest and Fee Margin (NIM)                   
Percent of Average Total Finance Receivables:                   
Interest Income 10.28%  10.36%  10.50%  10.57%  10.34%
Fee Income 1.68%  1.62%  1.36%  1.48%  1.46%
Interest and Fee Income 11.96%  11.98%  11.86%  12.05%  11.80%
Interest Expense 2.20%  2.39%  2.48%  2.50%  2.36%
Net Interest and Fee Margin (NIM) 9.76%  9.59%  9.38%  9.55%  9.44%
      
Cost of Funds (1) 2.43%  2.49%  2.60%  2.63%  2.57%
      
Interest Income Equipment Finance$21,590  $21,722  $22,390  $22,355  $21,620 
Interest Income Working Capital Loans$2,824  $3,228  $3,767  $4,389  $4,545 
      
Average Total Finance Receivables$970,785  $999,432  $1,031,774  $1,048,798  $1,034,464 
Average Net Investment Equipment Finance$937,004  $960,501  $986,075  $995,346  $977,225 
Average Working Capital Loans$33,781  $38,931  $45,699  $53,452  $57,239 
      
End of Period Net Investment Equipment Finance$965,351  $981,664  $1,012,463  $980,799  $947,477 
End of Period Working Capital Loans$35,389  $41,526  $49,808  $53,699  $59,043 
Total Owned Net Investment in Leases and Loans (2)$1,000,740  $1,023,190  $1,062,271  $1,034,498  $1,006,520 
      
Total Assets Serviced for Others$164,029  $192,731  $213,797  $264,226  $341,064 
      
Total Managed Assets$1,164,769  $1,215,921  $1,276,068  $1,298,724  $1,347,584 
      
Average Total Managed Assets$1,117,069  $1,177,812  $1,229,588  $1,278,394  $1,314,728 
      
Portfolio Asset Quality:     
      
Total Finance Receivables     
30+ Days Past Due Delinquencies 1.09%  1.11%  1.05%  1.28%  1.41%
30+ Days Past Due Delinquencies$12,295  $12,849  $12,594  $14,916  $16,076 
      
60+ Days Past Due Delinquencies 0.65%  0.66%  0.64%  0.84%  0.85%
60+ Days Past Due Delinquencies$7,292  $7,626  $7,686  $9,783  $9,688 
      
Equipment Finance     
30+ Days Past Due Delinquencies 1.08%  1.13%  1.08%  1.28%  1.41%
30+ Days Past Due Delinquencies$11,803  $12,565  $12,354  $14,176  $15,221 
      
60+ Days Past Due Delinquencies 0.65%  0.68%  0.67%  0.88%  0.87%
60+ Days Past Due Delinquencies$7,100  $7,626  $7,686  $9,756  $9,417 
      
Working Capital Loans     
15+ Days Past Due Delinquencies 1.44%  1.41%  0.52%  1.89%  1.75%
15+ Days Past Due Delinquencies$526  $605  $268  $1,043  $1,058 
      
30+ Days Past Due Delinquencies 1.35%  0.66%  0.47%  1.34%  1.42%
30+ Days Past Due Delinquencies$492  $284  $240  $740  $855 
 
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.
 
 
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
          
Quarter Ended:12/31/2018
 3/31/2019 6/30/2019 9/30/2019 12/31/219
      
Portfolio Asset Quality:     
Net Charge-offs - Total Finance Receivables$5,578  $4,581  $4,861  $5,228  $7,771 
% on Average Total Finance Receivables     
Annualized 2.30%  1.83%  1.88%  1.99%  3.00%
      
Net Charge-offs - Equipment Finance$5,132  $3,927  $4,310  $5,038  $6,634 
% on Average Net Investment in Equipment Finance     
Annualized 2.19%  1.64%  1.75%  2.02%  2.72%
      
Net Charge-offs - Working Capital Loans$446  $654  $551  $190  $1,137 
% of Average Working Capital Loans     
Annualized 5.28%  6.72%  4.82%  1.42%  7.95%
      
Total Allowance for Credit Losses$16,100  $16,882  $16,777  $19,211  $21,695 
% of Total Finance Receivables 1.62%  1.66%  1.59%  1.86%  2.15%
% of 60+ Delinquencies 220.79%  221.37%  218.28%  196.37%  223.94%
      
Allowance for Credit Losses - Equipment Finance$14,633  $15,198  $14,837  $17,115  $19,796 
% of Net Investment Equipment Finance 1.52%  1.56%  1.47%  1.75%  2.09%
% of 60+ Delinquencies 206.10%  199.28%  193.03%  175.43%  210.21%
      
Allowance for Credit Losses - Working Capital Loans$1,467  $1,684  $1,940  $2,096  $1,899 
% of Total Working Capital Loans 4.02%  3.94%  3.79%  3.80%  3.14%
      
      
Non-accrual - Equipment Finance$3,720  $4,390  $4,282  $7,209  $5,441 
Non-accrual - Equipment Finance 0.34%  0.39%  0.37%  0.65%  0.50%
      
Non-accrual - Working Capital Loans$492  $284  $248  $740  $946 
Non-accrual - Working Capital Loans 1.35%  0.66%  0.48%  1.34%  1.57%
      
Non-accrual - Total Finance Receivables$4,212  $4,674  $4,530  $7,949  $6,387 
Non-accrual - Total Finance Receivables 0.37%  0.40%  0.38%  0.68%  0.56%
      
Restructured - Total Finance Receivables$3,636  $3,363  $3,122  $2,533  $2,906 
      
Expense Ratios:     
Salaries and Benefits Expense$9,908  $11,451  $12,469  $10,897  $9,351 
Salaries and Benefits Expense     
Annualized % of Avg. Fin. Recbl. 4.08%  4.58%  4.83%  4.16%  3.62%
      
Total personnel end of quarter 341   352   356   348   348 
      
General and Administrative Expense$6,450  $13,354  $6,068  $6,092  $7,052 
General and Administrative Expense     
Annualized % of Avg. Fin. Recbl. 2.66%  5.34%  2.35%  2.32%  2.73%
Adjusted General and Administrative Expense     
Annualized % of Avg. Fin. Recbl. (3) 2.57%  2.75%  2.26%  2.23%  2.40%
 
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.
 
 
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
 
Quarter Ended:12/31/2018 3/31/3019 6/30/2019 9/30/2019 12/31/2019
      
Expense Ratios:     
Non-Interest Expense/Average Total Managed Assets 5.86%  8.42%  6.03%  5.32%  4.99%
Adjusted Non-Interest Expense/Average Total Managed Assets (4) 5.61%  6.14%  5.68%  5.10%  4.56%
      
Efficiency Ratio 53.11%  67.20%  59.07%  48.02%  43.22%
Adjusted Efficiency Ratio (4) 50.90%  57.80%  55.78%  46.05%  40.23%
      
Balance Sheet:     
      
Assets     
Investment in Leases and Loans$996,384  $1,019,311  $1,057,726  $1,032,868  $1,007,707 
Initial Direct Costs and Fees 20,456   20,761   21,322   20,841   20,508 
Reserve for Credit Losses (16,100)  (16,882)  (16,777)  (19,211)  (21,695)
Net Investment in Leases and Loans$1,000,740  $1,023,190  $1,062,271  $1,034,498  $1,006,520 
Cash and Cash Equivalents 97,156   140,942   139,731   132,461   123,096 
Restricted Cash 14,045   13,174   8,152   7,576   6,931 
Other Assets 55,105   69,409   69,829   72,881   70,896 
Total Assets$1,167,046  $1,246,725  $1,279,983  $1,247,416  $1,207,443 
      
Liabilities     
Deposits 755,776   840,167   888,561   869,257   839,132 
Total Debt 150,055   129,171   109,637   91,739   76,091 
Other Liabilities 62,704   75,737   76,231   77,633   77,264 
Total Liabilities$968,535  $1,045,075  $1,074,429  $1,038,629  $992,487 
      
Stockholders' Equity     
Common Stock$124  $123  $123  $122  $121 
Paid-in Capital, net 83,496   83,213   82,724   80,226   79,665 
Other Comprehensive Income (Loss) (44)  (4)  48   89   58 
Retained Earnings 114,935   118,318   122,659   128,350   135,112 
Total Stockholders' Equity$198,511  $201,650  $205,554  $208,787  $214,956 
      
Total Liabilities and     
Stockholders' Equity$1,167,046  $1,246,725  $1,279,983  $1,247,416  $1,207,443 
      
Capital and Leverage:     
Equity$198,511  $201,650  $205,554  $208,787  $214,956 
Debt to Equity 4.56   4.81   4.86   4.60   4.26 
Equity to Assets 17.01%  16.17%  16.06%  16.74%  17.80%
      
Regulatory Capital Ratios:     
Tier 1 Leverage Capital 16.38%  15.41%  15.24%  15.28%  16.31%
Common Equity Tier 1 Risk-based Capital 17.50%  17.25%  17.01%  17.72%  18.73%
Tier 1 Risk-based Capital 17.50%  17.25%  17.01%  17.72%  18.73%
Total Risk-based Capital 18.76%  18.50%  18.26%  18.98%  19.99%
      
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted General and administrative adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.     
      


MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Annual Data
(Dollars in thousands, except share amounts)
    
Year Ended:2017 2018 2019
    
Net Income:   
Net Income$25,292  $24,980  $27,116 
    
Annualized Performance Measures:   
Return on Average Assets 2.59%  2.29%  2.18%
Return on Average Stockholders' Equity 15.38%  13.27%  13.33%
    
    
EPS Data:   
Net Income Allocated to Common Stock$24,664  $24,548  $26,777 
Number of Shares - Basic 12,216,020   12,201,465   12,099,920 
Basic Earnings per Share$2.02  $2.01  $2.21 
    
Number of Shares - Diluted 12,249,623   12,273,406   12,197,797 
Diluted Earnings per Share$2.01  $2.00  $2.20 
    
Cash Dividends Declared per share$0.56  $0.56  $0.56 
    
New Asset Production:   
Direct Originations$91,182  $143,057  $184,580 
Indirect Originations$538,263  $561,837  $617,366 
Total Originations$629,445  $704,894  $801,946 
    
Equipment Finance Originations$570,555  $630,650  $693,288 
Working Capital Loans Originations$58,890  $74,244  $108,658 
Total Originations$629,445  $704,894  $801,946 
    
Assets originated for sale in the period$0  $17,596  $63,841 
Assets referred in the period$54,110  $16,830  $12,126 
Total Sourced Originations$683,555  $739,320  $877,913 
Assets sold in the period$66,744  $138,995  $310,415 
    
Implicit Yield on Direct Originations 21.58%  20.63%  23.41%
Implicit Yield on Indirect Originations 10.32%  10.37%  9.71%
Total Implicit Yield on Total Originations 11.95%  12.45%  12.86%
    
Implicit Yield on Equipment Finance Originations 9.76%  9.88%  9.43%
Implicit Yield on Working Capital Loans Originations 33.19%  34.26%  34.72%
    
# of Leases / Loans Equipment Finance 30,682   31,478   29,230 
Equipment Finance Approval Percentage 56%  57%  55%
Average Monthly Equipment Finance Sources 1,198   1,186   1,081 
    
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted General and administrative adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.
 
 
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Annual Data
(Dollars in thousands, except share amounts)
 
Year Ended: 2017   2018   2019 
 
Net Interest and Fee Margin (NIM)   
Percent of Average Total Finance Receivables:   
Interest Income 10.33%  10.27%  10.44%
Fee Income 1.76%  1.68%  1.48%
Interest and Fee Income 12.09%  11.95%  11.92%
Interest Expense 1.32%  1.84%  2.43%
Net Interest and Fee Margin (NIM) 10.77%  10.11%  9.49%
    
Cost of Funds (1) 1.43%  2.02%  2.58%
    
Interest Income Equipment Finance$78,171  $84,800   88,087 
Interest Income Working Capital Loans$8,355  $10,234   15,929 
    
Average Total Finance Receivables$846,743  $944,588  $1,028,617 
Average Net Investment Equipment Finance$821,972  $913,358  $979,787 
Average Working Capital Loans$24,771  $31,230  $48,830 
    
End of Period Net Investment Equipment Finance$887,328  $965,351  $947,477 
End of Period Working Capital Loans$27,092  $35,389  $59,043 
Total Owned Net Investment in Leases and Loans (2)$914,420  $1,000,740  $1,006,520 
    
Total Assets Serviced for Others$74,359  $164,029  $341,064 
    
Total Managed Assets$988,779  $1,164,769  $1,347,584 
    
Average Total Managed Assets$884,851  $1,053,829  $1,250,131 
    
Portfolio Asset Quality:   
    
Total Finance Receivables   
30+ Days Past Due Delinquencies 1.02%  1.09%  1.41%
30+ Days Past Due Delinquencies$10,565  $12,295  $16,076 
    
60+ Days Past Due Delinquencies 0.55%  0.65%  0.85%
60+ Days Past Due Delinquencies$5,647  $7,292  $9,688 
    
Equipment Finance   
30+ Days Past Due Delinquencies 1.04%  1.08%  1.41%
30+ Days Past Due Delinquencies$10,446  $11,803  $15,221 
    
60+ Days Past Due Delinquencies 0.56%  0.65%  0.87%
60+ Days Past Due Delinquencies$5,647  $7,100  $9,417 
    
Working Capital Loans   
15+ Days Past Due Delinquencies 0.95%  1.44%  1.75%
15+ Days Past Due Delinquencies$264  $526  $1,058 
    
30+ Days Past Due Delinquencies 0.43%  1.35%  1.42%
30+ Days Past Due Delinquencies$119  $492  $855 
    
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted General and administrative adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.
    
    
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Annual Data
(Dollars in thousands, except share amounts) 
    
Year Ended: 2017   2018   2019 
    
Portfolio Asset Quality:   
Net Charge-offs - Total Finance Receivables$14,480  $18,273  $22,441 
% on Average Total Finance Receivables   
Annualized 1.71%  1.93%  2.18%
    
Net Charge-offs - Equipment Finance$13,383  $16,795  $19,909 
% on Average Net Investment in Equipment Finance   
Annualized 1.63%  1.84%  2.03%
    
Net Charge-offs - Working Capital Loans$1,097  $1,478  $2,532 
% of Average Working Capital Loans   
Annualized 4.43%  4.73%  5.19%
    
    
Total Allowance for Credit Losses$14,851  $16,100  $21,695 
% of Total Finance Receivables 1.63%  1.62%  2.15%
% of 60+ Delinquencies 262.99%  220.79%  223.94%
    
Allowance for Credit Losses - Equipment Finance$13,815  $14,633  $19,796 
% of Net Investment Equipment Finance 1.56%  1.52%  2.09%
% of 60+ Delinquencies 244.64%  206.10%  210.21%
    
Allowance for Credit Losses - Working Capital Loans$1,036  $1,467  $1,899 
% of Total Working Capital Loans 3.73%  4.02%  3.14%
    
Non-accrual - Equipment Finance$3,065  $3,720  $5,441 
Non-accrual - Equipment Finance 0.30%  0.34%  0.50%
    
Non-accrual - Working Capital Loans$118  $492  $946 
Non-accrual - Working Capital Loans 0.42%  1.35%  1.57%
    
Non-accrual - Total Finance Receivables$3,183  $4,212  $6,387 
Non-accrual - Total Finance Receivables 0.31%  0.37%  0.56%
    
Restructured - Total Finance Receivables$4,489  $3,636  $2,906 
    
Expense Ratios:   
Salaries and Benefits Expense$37,569  $39,750  $44,168 
Salaries and Benefits Expense   
Annualized % of Avg. Fin. Recbl. 4.44%  4.21%  4.29%
    
Total personnel end of quarter 330   341   348 
    
General and Administrative Expense$28,272  $24,915  $32,566 
General and Administrative Expense   
Annualized % of Avg. Fin. Recbl. 3.34%  2.64%  3.17%
Adjusted General and Administrative Expense   
Annualized % of Avg. Fin. Recbl. (3) 2.71%  2.58%  2.41%
 
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted General and administrative adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.
 
 
MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Annual Data
(Dollars in thousands, except share amounts)
 
Year Ended: 2017   2018   2019 
 
Expense Ratios:   
Non-Interest Expense/Average Total Managed Assets 7.44%  6.14%  6.14%
Adjusted Non-Interest Expense/Average Total Managed Assets (4) 6.71%  5.90%  5.35%
    
Efficiency Ratio 61.04%  55.32%  54.18%
Adjusted Efficiency Ratio (4) 55.04%  53.16%  49.42%
    
Balance Sheet:   
    
Assets   
Investment in Leases and Loans$911,242  $996,384  $1,007,707 
Initial Direct Costs and Fees 18,029   20,456   20,508 
Reserve for Credit Losses (14,851)  (16,100)  (21,695)
Net Investment in Leases and Loans$914,420  $1,000,740  $1,006,520 
Cash and Cash Equivalents 67,146   97,156   123,096 
Restricted Cash -   14,045   6,931 
Other Assets 58,594   55,105   70,896 
Total Assets$1,040,160  $1,167,046  $1,207,443 
    
Liabilities   
Deposits 809,315   755,776   839,132 
Total Debt -   150,055   76,091 
Other Liabilities 51,196   62,704   77,264 
Total Liabilities$860,511  $968,535  $992,487 
    
Stockholders' Equity   
Common Stock$124  $124  $121 
Paid-in Capital, net 82,586   83,496   79,665 
Other Comprehensive Income (Loss) (96)  (44)  58 
Retained Earnings 97,035   114,935   135,112 
Total Stockholders' Equity$179,649  $198,511  $214,956 
    
Total Liabilities and   
Stockholders' Equity$1,040,160  $1,167,046  $1,207,443 
    
Capital and Leverage:   
Equity$179,649  $198,511  $214,956 
Debt to Equity 4.50   4.56   4.26 
Equity to Assets 17.27%  17.01%  17.80%
    
Regulatory Capital Ratios:   
Tier 1 Leverage Capital 17.25%  16.38%  16.31%
Common Equity Tier 1 Risk-based Capital 18.22%  17.50%  18.73%
Tier 1 Risk-based Capital 18.22%  17.50%  18.73%
Total Risk-based Capital 19.47%  18.76%  19.99%
    
Notes and Footnotes:
(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted General and administrative adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.   
    
    

 


* Non-GAAP Financial Measures: Net income on an adjusted basis, ROE on an adjusted basis and adjusted efficiency ratio are financial measures that are not in accordance with U. S. generally accepted accounting principles (GAAP).  See “Regulation G – Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for a detailed description and reconciliation of such Non-GAAP financial measures to their most directly comparable GAAP financial measures, in accordance with Regulation G.

Source: Marlin Business Services Corp.