Marlin Business Services Corp. Reports Fourth Quarter and Year-End 2013 Earnings and a Cash Dividend of $0.11 per Share

Fourth Quarter and Full Year Highlights:

  • Net income of $16.2 million and net income on an adjusted basis of $17.5 million (excluding one-time charges) for the full year up 39% and 50%, respectively, year-over-year
  • New lease originations of $90.9 million for the fourth quarter of 2013, and $349.5 million for the full year, up 8% year-over-year for the full year
  • Return on average assets of 2.45% (2.65% excluding one-time charges) and return on average equity of 9.31% (10.04% excluding one-time charges) for the full year
  • Risk adjusted net interest and fee margin of 11.09% for the quarter
  • $503.0 million of insured deposits, up 33% year-over-year
  • Strong capital position, equity to assets ratio of 23.22%
  • Total risk-based capital ratio of 27.15%
  • Efficiency ratio for the full year improved to 54% (51% excluding one-time charges), compared to 60% for 2012

MOUNT LAUREL, N.J., Feb. 5, 2014 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported fourth quarter 2013 net income of $3.4 million, or $0.26 per diluted share, compared to $3.6 million, or $0.28 per diluted share, for fourth quarter 2012.

Net income on an adjusted basis (excluding the impact from adjustments related to a one-time charge due to the departure of Marlin's Chief Operating Officer) is $4.7 million, or $0.36 per diluted share.

For the year ended December 31, 2013, net income is $16.2 million, or $1.25 per diluted share, compared to $11.7 million for the year ended December 31, 2012. Net income on an adjusted basis is $17.5 million, or $1.35 per diluted share.

"In 2013, we delivered strong asset growth and profit performance and increased returns on capital" said Daniel P. Dyer, Co-founder and Chief Executive Officer. "Our financial strength provides the capacity to grow our business and the flexibility to return capital to our shareholders. Looking ahead, Marlin is well positioned to serve the financing needs of the small and mid-size business market, and we remain focused on our unique value proposition and steadfast commitment to our customers' success."

Fourth quarter 2013 lease production is $90.9 million based on initial equipment cost, compared to $86.1 million in the third quarter of 2013 and $87.8 million in fourth quarter of 2012. Full year lease origination volume is $349.5 million, an 8% increase year-over-year.

Net interest and fee margin of 13.36% is down slightly, 8 basis points from the third quarter of 2013, and is down 18 basis points from the fourth quarter of 2012. The Company's cost of funds remained stable at 76 basis points compared to 75 basis points for the third quarter of 2013 and improved 48 basis points from the fourth quarter of 2012. The improvement resulted from the Company's use of lower-cost insured deposits issued by the Company's subsidiary, Marlin Business Bank, as its primary funding source. For the full year, net interest and fee margin remained the same at 13.42% as compared to the prior year.

The allowance for credit losses as a percentage of total finance receivables is 1.42% at December 31, 2013, and represents 264% of total 60+ day delinquencies.

Finance receivables over 30 days delinquent are 1.08% of the Company's lease portfolio as of December 31, 2013, 25 basis points higher than at the end of the third quarter of 2013. The increase in 30+ delinquencies is a result of timing and seasonality. Finance receivables over 60 days delinquent are 0.47% of the Company's lease portfolio as of December 31, 2013, up slightly, 2 basis points from 0.45% at September 30, 2013. Fourth quarter net charge-offs are 1.30% of average total finance receivables versus 1.55% for the third quarter ended September 30, 2013 and 1.26% a year ago.

The Company's efficiency ratio is 56.9% and on an adjusted basis is 47.0% for the quarter ended December 31, 2013 compared to an efficiency ratio of 49.8% for the quarter ended September 30, 2013 and 53.5% for the quarter ended December 31, 2012. For the full year the efficiency ratio is 53.6% and on an adjusted basis is 51.0% compared to an efficiency ratio of 60.0% for 2012.

At December 31, 2013, the Company's consolidated equity to assets ratio is 23.22%. At December 31, 2013, the Company's risk based capital ratio is 27.15%, which is well above regulatory requirements.

In conjunction with this release, static pool loss statistics and a vintage delinquency analysis have been updated as supplemental information on the Investor Relations section of the Company's website at www.marlincorp.com.

The Board of Directors of Marlin Business Services Corp. today declared a $0.11 per share quarterly dividend. The dividend is payable February 27, 2014, to shareholders of record on February 17, 2014. Based on the closing stock price on February 4, 2014, the annualized dividend yield on the Company's common stock is 1.77%.

Conference Call and Webcast

We will host a conference call on Thursday, February 6, 2014 at 9:00 a.m. ET to discuss the Company's fourth quarter 2013 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. 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 innovative equipment financing solutions for small and mid-size businesses. Since its inception in 1997, Marlin has financed a wide array of commercial equipment and software for a quarter of a million business customers. Marlin's mission is to offer convenient and cost-effective financing products while providing the highest level of customer service. Marlin is publicly traded (Nasdaq:MRLN) and owns and operates a federally regulated commercial bank, Marlin Business Bank. For more information, visit www.marlincorp.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. 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.

Regulation G – Non-GAAP Financial Measures

In this release 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 the one-time after-tax charge due to the departure of Marlin's Chief Operating Officer. The Company believes that net income on an adjusted basis is a useful performance metric for management, investors and lenders, because it 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.

MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, December 31,
2013 2012
(Dollars in thousands, except
per-share data)
ASSETS
Cash and due from banks $ 3,534 $ 2,472
Interest-earning deposits with banks 82,119 62,498
Total cash and cash equivalents 85,653 64,970
Restricted interest-earning deposits with banks 1,273 3,520
Securities available for sale (amortized cost of $5.8 million and $4.8 million at
December 31, 2013 and December 31, 2012, respectively) 5,387 4,845
Net investment in leases and loans 597,075 503,017
Property and equipment, net 2,265 1,970
Property tax receivables 377 397
Other assets 10,177 23,629
Total assets $ 702,207 $ 602,348
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 503,038 $ 378,188
Long-term borrowings 15,514
Other liabilities:
Sales and property taxes payable 4,035 4,505
Accounts payable and accrued expenses 14,220 12,062
Net deferred income tax liability 17,876 17,829
Total liabilities 539,169 428,098
Stockholders' equity:
Common Stock, $0.01 par value; 75,000,000 shares authorized;
12,994,758 and 12,774,829 shares issued and outstanding at December 31, 2013
and December 31, 2012, respectively 130 128
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued
Additional paid-in capital 91,730 87,494
Stock subscription receivable (2) (2)
Accumulated other comprehensive income (loss) (257) 55
Retained earnings 71,437 86,575
Total stockholders' equity 163,038 174,250
Total liabilities and stockholders' equity $ 702,207 $ 602,348
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
2013 2012 2013 2012
(Dollars in thousands, except per-share data)
Interest income $ 16,610 $ 14,404 $ 63,685 $ 52,975
Fee income 3,657 3,122 13,390 11,976
Interest and fee income 20,267 17,526 77,075 64,951
Interest expense 1,087 1,465 4,545 6,882
Net interest and fee income 19,180 16,061 72,530 58,069
Provision for credit losses 3,257 2,373 9,617 5,920
Net interest and fee income after provision for credit losses 15,923 13,688 62,913 52,149
Other income:
Insurance income 1,352 1,042 4,924 4,101
Loss on derivatives (5) (2) (6)
Other income 476 750 1,676 1,869
Other income 1,828 1,787 6,598 5,964
Other expense:
Salaries and benefits 8,137 6,179 27,680 24,862
General and administrative 3,807 3,374 14,725 13,547
Financing related costs 297 213 1,106 850
Other expense 12,241 9,766 43,511 39,259
Income before income taxes 5,510 5,709 26,000 18,854
Income tax expense 2,084 2,064 9,769 7,157
Net income $ 3,426 $ 3,645 $ 16,231 $ 11,697
Basic earnings per share $ 0.26 $ 0.29 $ 1.26 $ 0.92
Diluted earnings per share $ 0.26 $ 0.28 $ 1.25 $ 0.91
Cash dividends declared per share $ 0.11 $ 0.08 $ 2.42 $ 0.28
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Net Income on an Adjusted Basis Reconciliation to GAAP Results
Three Months Ended December 31, Twelve Months Ended December 31,
2013 2012 2013 2012
(Dollars in thousands) (Dollars in thousands)
(Unaudited) (Unaudited)
Net income as reported $3,426 $3,645 $16,231 $11,697
Deduct:
One time charge (2,076) (2,076)
Tax effect 797 797
One time charge, net of tax (1,279) (1,279)
Net Income on an Adjusted Basis $4,705 $3,645 $17,510 $11,697
Diluted earnings per share as reported $0.26 $0.28 $1.25 $0.91
Diluted earnings per share on an adjusted basis $0.36 $0.28 $1.35 $0.91
Return on Average Assets as reported 1.98% 2.48% 2.45% 2.18%
Return on Average Assets on an adjusted basis 2.72% 2.48% 2.65% 2.18%
Return on Average Equity as reported 8.46% 8.44% 9.31% 6.96%
Return on Average Equity on an adjusted basis 11.62% 8.44% 10.04% 6.96%
Efficiency Ratio as reported 56.9% 53.5% 53.6% 60.0%
Efficiency Ratio on an adjusted basis 47.0% 53.5% 51.0% 60.0%
Net Income on an Adjusted Basis is defined as net income excluding the one time charge related to the departure of Marlin's Chief Operating Officer.
SUPPLEMENTAL QUARTERLY DATA
(Dollars in thousands, except share amounts)
(Unaudited)
Quarter Ended: 12/31/2012 3/31/2013 6/30/2013 9/30/2013 12/31/2013
Net Income:
Net Income $3,645 $3,651 $4,467 $4,687 $3,426
Annualized Performance Measures:
Return on Average Assets 2.48% 2.38% 2.74% 2.73% 1.98%
Return on Average Stockholders' Equity 8.44% 8.35% 9.98% 10.32% 8.46%
EPS Data:
Net Income Allocated to Common Stock $3,497 $3,516 $4,292 $4,537 $3,294
Number of Shares - Basic 12,238,081 12,301,998 12,365,622 12,429,065 12,493,370
Basic Earnings per Share $0.29 $0.29 $0.35 $0.37 $0.26
Number of Shares - Diluted 12,331,766 12,394,959 12,461,892 12,516,186 12,560,018
Diluted Earnings per Share $0.28 $0.28 $0.34 $0.36 $0.26
Cash Dividends Declared per share $0.08 $0.10 $0.10 $2.11 $0.11
New Asset Production:
# of Sales Reps 114 118 121 115 124
# of Leases 6,500 6,293 6,931 6,223 6,265
Leased Equipment Volume $87,771 $80,944 $91,448 $86,146 $90,923
Approval Percentage 67% 67% 67% 65% 67%
Average Monthly Sources 1,207 1,132 1,247 1,146 1,166
Implicit Yield on New Leases 12.56% 12.29% 12.34% 11.86% 11.65%
Net Interest and Fee Margin:
Interest Income Yield 12.15% 11.98% 11.86% 11.73% 11.57%
Fee Income Yield 2.63% 2.52% 2.38% 2.46% 2.55%
Interest and Fee Income Yield 14.78% 14.50% 14.24% 14.19% 14.12%
Cost of Funds 1.24% 1.00% 0.88% 0.75% 0.76%
Net Interest and Fee Margin 13.54% 13.50% 13.36% 13.44% 13.36%
Average Total Finance Receivables $474,225 $502,850 $530,463 $555,422 $574,132
Average Net Investment in Leases $473,699 $502,330 $529,910 $554,783 $573,334
End of Period Net Investment in Leases $502,496 $525,381 $555,701 $575,718 $596,121
Portfolio Asset Quality:
Total Finance Receivables
30+ Days Past Due Delinquencies 0.92% 0.99% 0.95% 0.83% 1.08%
30+ Days Past Due Delinquencies $5,296 $5,974 $6,033 $5,472 $7,411
60+ Days Past Due Delinquencies 0.42% 0.57% 0.50% 0.45% 0.47%
60+ Days Past Due Delinquencies $2,444 $3,415 $3,179 $2,941 $3,204
Net Charge-offs - Total Finance Receivables $1,493 $1,568 $2,058 $2,147 $1,865
% on Average Total Finance Receivables Annualized 1.26% 1.25% 1.55% 1.55% 1.30%
Allowance for Credit Losses $6,488 $7,084 $6,919 $7,075 $8,467
% of 60+ Delinquencies 265.47% 207.44% 217.65% 240.56% 264.26%
90+ Day Delinquencies (Non-earning total finance receivables) $1,395 $1,628 $1,610 $1,697 $1,665
Expense Ratios:
Salaries and Benefits Expense $6,179 $6,587 $6,355 $6,601 $8,137
Salaries and Benefits Expense Annualized % of Avg. Fin. Recbl. 5.21% 5.24% 4.79% 4.75% 5.67%
Total personnel end of quarter 265 272 281 275 285
General and Administrative Expense $3,374 $3,543 $3,900 $3,475 $3,807
General and Administrative Expense Annualized % of Avg. Fin. Recbl. 2.85% 2.82% 2.94% 2.50% 2.65%
Efficiency Ratio 53.51% 54.67% 52.97% 49.80% 56.85%
Balance Sheet:
Assets
Investment in Leases and Loans $500,203 $523,475 $553,296 $573,325 $595,253
Initial Direct Costs and Fees 9,302 9,510 9,932 10,127 10,289
Reserve for Credit Losses (6,488) (7,084) (6,919) (7,075) (8,467)
Net Investment in Leases and Loans $503,017 $525,901 $556,309 $576,377 $597,075
Cash and Cash Equivalents 64,970 75,537 85,830 75,817 85,653
Restricted Cash 3,520 2,161 1,786 1,600 1,273
Other Assets 30,841 36,041 35,614 19,357 18,206
Total Assets $602,348 $639,640 $679,539 $673,151 $702,207
Liabilities
Deposits 378,188 419,598 461,516 477,423 503,038
Total Debt $15,514 $5,413 $1,021 $0 $0
Other Liabilities 34,396 37,194 35,727 35,749 36,131
Total Liabilities $428,098 $462,205 $498,264 $513,172 $539,169
Stockholders' Equity
Common Stock $128 $129 $129 $130 $130
Paid-in Capital, net 87,492 88,312 89,161 90,608 91,728
Other Comprehensive Income (Loss) 55 41 (152) (198) (257)
Retained Earnings 86,575 88,953 92,137 69,439 71,437
Total Stockholders' Equity $174,250 $177,435 $181,275 $159,979 $163,038
Total Liabilities and
Stockholders' Equity $602,348 $639,640 $679,539 $673,151 $702,207
Capital and Leverage:
Equity $174,250 $177,435 $181,275 $159,979 $163,038
Debt to Equity 2.26 2.40 2.55 2.98 3.09
Equity to Assets 28.93% 27.74% 26.68% 23.77% 23.22%
Regulatory Capital Ratios:
Tier 1 Leverage Capital 29.35% 28.70% 27.67% 23.20% 23.46%
Tier 1 Risk-based Capital 31.76% 30.85% 29.73% 26.27% 25.90%
Total Risk-based Capital 32.95% 32.09% 30.86% 27.43% 27.15%
Notes:
Net investment in total finance receivables includes net investment in direct financing leases and loans.

CONTACT: Lynne Wilson 888 479 9111 Ext. 4108 lwilson@marlinleasing.com

Source:Marlin Business Services Corp.