×

Marlin Business Services Corp. Reports Second Quarter 2013 Earnings Growth and Increases Its Cash Dividend to $0.11 Per Share

Second Quarter:

  • Net income of $4.5 million for the second quarter of 2013, an increase of 50% compared to the second quarter of 2012
  • New lease originations of $91.4 million for the second quarter of 2013
  • Risk adjusted net interest and fee margin of 11.93% for the quarter
  • $461.5 million of insured deposits, up 63% year-over-year
  • Strong capital position, equity to assets ratio of 26.68%
  • Total risk-based capital ratio of 30.86%

MOUNT LAUREL, N.J., July 30, 2013 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported second quarter 2013 net income of $4.5 million, or $0.34 per diluted share. Net income improved 50%, or $0.11 per diluted share over second quarter 2012. For the six-month period ended June 30, 2013, net income was $8.1 million, or $0.63 per diluted share.

"Our performance results reflect upon the favorable growth trends and attractive operating metrics of our business," says Daniel P. Dyer, co-founder and Chief Executive Officer. "We continue to see attractive growth opportunities by focusing on serving small and midsize businesses and their credit financing needs by delivering quality products with exceptional service," says Dyer.

Second quarter 2013 lease production was $91.4 million based on initial equipment cost, 13% higher than first quarter 2013 and 14% higher than the second quarter of 2012.

Net interest and fee margin of 13.4% is down 14 basis points from the first quarter of 2013 and is up 14 basis points from the second quarter of 2012. The Company's cost of funds improved 12 basis points from the first quarter of 2013 and 84 basis points from the second 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.

The allowance for credit losses as a percentage of total finance receivables is 1.25% at June 30, 2013, and represents 218% of total 60+ day delinquencies.

Leases over 30 days delinquent were 0.95% of the Company's lease portfolio as of June 30, 2013, 4 basis points lower than the first quarter of 2013. Leases over 60 days delinquent were 0.50% of the Company's lease portfolio as of June 30, 2013, down 7 basis points from 0.57% at March 31, 2013. Second quarter net charge-offs were 1.55% of average total finance receivables versus 1.25% for the quarter ended March 31, 2013 and 1.04% a year ago.

The Company's efficiency ratio was 53.0% for the quarter ended June 30, 2013, compared to 54.7% at March 31, 2013 and 60.0% at June 30, 2012.

The Company's consolidated equity to assets ratio is 26.68%. Our risk based capital ratio is 30.86%, 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.marlinfinance.com.

The Board of Directors of Marlin Business Services Corp. declared a $0.11 per share quarterly dividend, an increase of 10% over the prior quarter. The dividend is payable August 21, 2013, to shareholders of record on August 9, 2013. Based on the closing stock price on July 29, 2013, the annualized dividend yield on the Company's common stock is 1.84%.

Conference Call and Webcast

We will host a conference call on Wednesday, July 31, 2013 at 9:00 a.m. ET to discuss the Company's second 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.marlinfinance.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.marlinfinance.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.

MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2013 2012
(Dollars in thousands, except per-share data)
ASSETS
Cash and due from banks $3,916 $2,472
Interest-earning deposits with banks 81,914 62,498
Total cash and cash equivalents 85,830 64,970
Restricted interest-earning deposits with banks 1,786 3,520
Securities available for sale (amortized cost of $5.8 million and $4.8 million at June 30, 2013 and December 31, 2012, respectively) 5,544 4,845
Net investment in leases and loans 556,309 503,017
Property and equipment, net 2,122 1,970
Property tax receivables 4,692 397
Other assets 23,256 23,629
Total assets $679,539 $602,348
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $461,516 $378,188
Long-term borrowings 1,021 15,514
Other liabilities:
Sales and property taxes payable 7,687 4,505
Accounts payable and accrued expenses 10,586 12,062
Net deferred income tax liability 17,454 17,829
Total liabilities 498,264 428,098
Stockholders' equity:
Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,901,597 and 12,774,829 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively 129 128
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued
Additional paid-in capital 89,163 87,494
Stock subscription receivable (2) (2)
Accumulated other comprehensive income (loss) (152) 55
Retained earnings 92,137 86,575
Total stockholders' equity 181,275 174,250
Total liabilities and stockholders' equity $679,539 $602,348
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
(Dollars in thousands, except per-share data)
Interest income $15,732 $12,831 $30,789 $24,883
Fee income 3,148 2,774 6,323 5,889
Interest and fee income 18,880 15,605 37,112 30,772
Interest expense 1,166 1,792 2,422 3,922
Net interest and fee income 17,714 13,813 34,690 26,850
Provision for credit losses 1,893 1,031 4,057 2,133
Net interest and fee income after provision for credit losses 15,821 12,782 30,633 24,717
Other income:
Insurance income 1,246 1,021 2,386 2,030
Gain (loss) on derivatives (2) 2 (2) (3)
Other income 400 363 814 667
Other income 1,644 1,386 3,198 2,694
Other expense:
Salaries and benefits 6,355 5,633 12,942 12,695
General and administrative 3,900 3,489 7,443 6,783
Financing related costs 274 186 513 387
Other expense 10,529 9,308 20,898 19,865
Income before income taxes 6,936 4,860 12,933 7,546
Income tax expense 2,469 1,872 4,815 2,909
Net income $4,467 $2,988 $8,118 $4,637
Basic earnings per share $0.35 $0.24 $0.63 $0.37
Diluted earnings per share $0.34 $0.23 $0.63 $0.36
Cash dividends declared and paid per share $0.10 $0.06 $0.20 $0.12
SUPPLEMENTAL QUARTERLY DATA
(Dollars in thousands, except share amounts)
(Unaudited)
Quarter Ended: 6/30/2012 9/30/2012 12/31/2012 3/31/2013 6/30/2013
Net Income:
Net Income $2,988 $3,415 $3,645 $3,651 $4,467
Annualized Performance Measures:
Return on Average Assets 2.29% 2.50% 2.48% 2.38% 2.74%
Return on Average Stockholders' Equity 7.17% 8.08% 8.44% 8.35% 9.98%
EPS Data:
Net Income Allocated to Common Stock $2,861 $3,270 $3,497 $3,516 $4,292
Number of Shares - Basic 12,172,628 12,186,832 12,238,081 12,301,998 12,365,622
Basic Earnings per Share $0.24 $0.27 $0.29 $0.29 $0.35
Number of Shares - Diluted 12,240,154 12,280,123 12,331,766 12,394,959 12,461,892
Diluted Earnings per Share $0.23 $0.27 $0.28 $0.28 $0.34
Cash Dividends Declared per share $0.06 $0.08 $0.08 $0.10 $0.10
New Asset Production:
# of Sales Reps 106 112 114 118 121
# of Leases 6,172 6,227 6,500 6,293 6,931
Leased Equipment Volume $80,442 $81,623 $87,771 $80,944 $91,448
Approval Percentage 68% 67% 67% 67% 67%
Average Monthly Sources 1,128 1,117 1,207 1,132 1,247
Implicit Yield on New Leases 13.19% 12.97% 12.56% 12.29% 12.34%
Net Interest and Fee Margin:
Interest Income Yield 12.28% 12.20% 12.15% 11.98% 11.86%
Fee Income Yield 2.66% 2.64% 2.63% 2.52% 2.38%
Interest and Fee Income Yield 14.94% 14.84% 14.78% 14.50% 14.24%
Cost of Funds 1.72% 1.33% 1.24% 1.00% 0.88%
Net Interest and Fee Margin 13.22% 13.51% 13.54% 13.50% 13.36%
Average Total Finance Receivables $417,794 $448,691 $474,225 $502,850 $530,463
Average Net Investment in Leases $417,342 $448,211 $473,699 $502,330 $529,910
End of Period Net Investment in Leases $442,781 $471,545 $502,496 $525,381 $555,701
Portfolio Asset Quality:
Total Finance Receivables
30+ Days Past Due Delinquencies 0.70% 0.87% 0.92% 0.99% 0.95%
30+ Days Past Due Delinquencies $3,560 $4,713 $5,296 $5,974 $6,033
60+ Days Past Due Delinquencies 0.27% 0.40% 0.42% 0.57% 0.50%
60+ Days Past Due Delinquencies $1,385 $2,173 $2,444 $3,415 $3,179
Net Charge-offs - Total Finance Receivables $1,090 $1,003 $1,493 $1,568 $2,058
% on Average Total Finance Receivables
Annualized 1.04% 0.89% 1.26% 1.25% 1.55%
Allowance for Credit Losses $5,197 $5,608 $6,488 $7,084 $6,919
% of 60+ Delinquencies 375.23% 258.08% 265.47% 207.44% 217.65%
90+ Day Delinquencies (Non-earning total finance
receivables)
$686 $989 $1,395 $1,628 $1,610
Expense Ratios:
Salaries and Benefits Expense $5,633 $5,988 $6,179 $6,587 $6,355
Salaries and Benefits Expense
Annualized % of Avg. Fin. Recbl. 5.39% 5.34% 5.21% 5.24% 4.79%
Total personnel end of quarter 258 258 265 272 281
General and Administrative Expense $3,489 $3,390 $3,374 $3,543 $3,900
General and Administrative Expense
Annualized % of Avg. Fin. Recbl. 3.34% 3.02% 2.85% 2.82% 2.94%
Efficiency Ratio 60.03% 56.36% 53.51% 54.67% 52.97%
Balance Sheet:
Assets
Investment in Leases and Loans $439,933 $468,722 $500,203 $523,475 $553,296
Initial Direct Costs and Fees 8,495 8,945 9,302 9,510 9,932
Reserve for Credit Losses (5,197) (5,608) (6,488) (7,084) (6,919)
Net Investment in Leases and Loans $443,231 $472,059 $503,017 $525,901 $556,309
Cash and Cash Equivalents 49,007 70,025 64,970 75,537 85,830
Restricted Cash 13,175 10,747 3,520 2,161 1,786
Other Assets 27,108 26,206 30,841 36,041 35,614
Total Assets $532,521 $579,037 $602,348 $639,640 $679,539
Liabilities
Deposits 283,782 341,993 378,188 419,598 461,516
Total Debt $48,046 $33,083 $15,514 $5,413 $1,021
Other Liabilities 32,228 32,462 34,396 37,194 35,727
Total Liabilities $364,056 $407,538 $428,098 $462,205 $498,264
Stockholders' Equity
Common Stock $127 $127 $128 $129 $129
Paid-in Capital, net 86,740 87,359 87,492 88,312 89,161
Other Comprehensive Income (Loss) 51 66 55 41 (152)
Retained Earnings 81,547 83,947 86,575 88,953 92,137
Total Stockholders' Equity $168,465 $171,499 $174,250 $177,435 $181,275
Total Liabilities and
Stockholders' Equity $532,521 $579,037 $602,348 $639,640 $679,539
Capital and Leverage:
Equity $168,465 $171,499 $174,250 $177,435 $181,275
Debt to Equity 1.97 2.19 2.26 2.40 2.55
Equity to Assets 31.64% 29.62% 28.93% 27.74% 26.68%
Regulatory Capital Ratios:
Tier 1 Leverage Capital 32.04% 31.22% 29.35% 28.70% 27.67%
Tier 1 Risk-based Capital 34.77% 33.30% 31.76% 30.85% 29.73%
Total Risk-based Capital 35.85% 34.40% 32.95% 32.09% 30.86%
Notes:
Net investment in total finance receivables includes net investment in direct financing leases and loans.

CONTACT: www.marlinfinance.com (888) 479-9111

Source:Marlin Business Services Corp.