Second Quarter Highlights:
  • Net Income of $1.6 million for the second quarter of 2010
  • Increased sales force by 16 full time equivalents to 69
  • 30+ lease delinquencies improved 36 basis points in the second quarter of 2010 and improved 177 basis points from second quarter of 2009
  • Non-performing assets improved 17% in the second quarter of 2010 and 63% from second quarter 2009
  • Yield on new lease production of 14.56%
  • Strong capital position, equity to assets leverage ratio of 30.8%
  • Total risk-based capital of 37.87%

MOUNT LAUREL, N.J., Aug. 5, 2010 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported second quarter 2010 net income of $1.6 million, or $0.12 per diluted share, and net income on an adjusted basis of $1.6 million or $0.12 per share.

"We are encouraged by the operating results for the second quarter and the strengthening fundamentals of our business," says Daniel P. Dyer, Marlin's CEO. "During the quarter, we generated healthy growth in new asset originations at attractive margins. Portfolio credit quality continues its strong performance with lower delinquencies and charge-offs reported this quarter. Looking ahead, our focus is on disciplined growth and capitalizing on the opportunity to serve the growing credit needs of small businesses across the U.S."    

Second quarter 2010 lease production was $31.7 million, based on initial equipment cost, up 34% from $23.6 million for the first quarter of 2010. Approval rates on lease originations improved to 49% for the second quarter of 2010, versus 46% for the first quarter of 2010. The average implicit yield on new lease production was 14.56% in the second quarter of 2010. Net interest and fee margin was 11.66% for the second quarter of 2010 compared to 11.12% in the first quarter of 2010 and 9.69% a year ago.

The Company increased its sales force 30% in second quarter 2010 to 69 fulltime equivalents.

Credit trends continued to steadily improve. Highlights for the second quarter of 2010:
  • Leases over 30 days delinquent were 2.64% of Marlin's lease portfolio, which is 36 basis points lower than the first quarter of 2010 and the lowest since the second quarter of 2007.  On a dollar basis, 30+ day delinquencies have decreased 18% from the first quarter of 2010.
  • Leases over 60 days delinquent were 1.20% of Marlin's lease portfolio which is 17 basis points lower than the first quarter of 2010 and the lowest since the third quarter of 2008. On a dollar basis 60+ day delinquencies have decreased 18% from the first quarter of 2010.
  • Non-performing assets of $2.8 million were 17% lower than the first quarter of 2010.
  • Net lease charge-offs of $3.5 million were 28% lower than the first quarter of 2010 levels.  
  • Static pool credit losses and delinquency performance continue to be at or better than expectations for 2008, 2009 and 2010 vintages.
  • The provision for credit losses was $2.5 million for the quarter ended June 30, 2010, down from $3.1 million for the first quarter of 2010 and down from $6.8 million for the second quarter of 2009, due to strengthening credit fundamentals driving improvements in the delinquency migration rates of the lease portfolio and the reduction of lease outstandings.
  • Reflecting improving credit trends, the allowance as a percentage of total finance receivables stands at 2.40% as of June 30, 2010 compared to 2.50% as of March 31, 2010 and 2.71% as of December 31, 2009.

At June 30, 2010, the Company had outstanding $112.0 million of leases and loans funded through its banking subsidiary, Marlin Business Bank, and had $96.9 million in FDIC-insured deposits outstanding at an average borrowing rate of 2.68% with a weighted average term to maturity of 2.7 years. Average deposits outstanding for the second quarter of 2010, were $93.2 million at a weighted average interest rate of 2.82%.

At June 30, 2010, the Company had $83.6 million of available funding through its bank facility and certificates of deposits at Marlin Business Bank.

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

The Company is currently in discussions with the Federal Reserve Bank in connection with the Federal Reserve Bank's interpretation of the Interagency Policy Statement on the Allowance for Loan and Lease Losses (SR 06-17) dated December 13, 2006 (the "ALLL Policy Statement") and the appropriate application of the ALLL Policy Statement to management's estimates used in determining the Company's allowance for loan and lease losses (the "Allowance"). We do not know when or if the Company will receive a written determination from the Federal Reserve Bank in connection with such discussions, nor do we know what the contents of any such written determination will be. If, as a result of the review, management determines that it should revise its estimates used to compute the Allowance, such changes could have a material impact on the size of the Allowance. Conference Call and Webcast

We will host a conference call on Friday August 6, 2010 at 9:00 a.m. ET to discuss The Company's second quarter 2010 results. If you wish to participate, please call 888-312-5414 approximately 10 minutes in advance of the call time. The conference ID will be: "Marlin." The call will also be Webcast on the Investor Relations page of the Company's website, www.marlincorp.com . An audio replay will also be available on the Investor Relations section of Marlin's website for approximately 100 days.

About Marlin Business Services Corp.

Marlin Business Services Corp. is a nationwide provider of equipment leasing to small businesses. The Company's principal operating subsidiary, Marlin Leasing Corporation, finances over 100 equipment categories in a segment of the market generally referred to as "small-ticket" leasing (i.e., leasing transactions less than $250,000). The Company was founded in 1997 and completed its initial public offering of common stock on November 12, 2003. For more information, visit www.marlincorp.com or call toll free at (888) 479-9111.

The Marlin Business Services Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4087

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements (including statements regarding future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," "may," "intend," and similar expressions are generally intended to identify forward-looking statements. Economic, business, funding, market, competitive, legal and/or regulatory factors, among others, affecting our business are examples of factors that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these factors is contained in our filings with the SEC, including the sections captioned "Risk Factors" and "Business" in the Company's Form 10-K filed with the Securities and Exchange Commission. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
  June 30, December 31,
  2010  2009
     
  (Dollars in thousands, except per-share data)
ASSETS    
Cash and due from banks $ 991  $ 1,372 
Interest-earning deposits with banks  34,187  35,685 
Total cash and cash equivalents 35,178  37,057 
Restricted interest-earning deposits with banks (includes $64.4 million and $57.1 million, respectively, related to consolidated variable interest entities ("VIEs")) 66,546  63,400 
Securities available for sale (amortized cost of $1.5 million) 1,533  — 
Net investment in leases and loans (includes $228.4 million and $238.0 million, respectively, related to consolidated VIEs) 380,660  448,610 
Property and equipment, net 2,228  2,431 
Property tax receivables 1,127  1,135 
Other assets 7,723  13,170 
Total assets $ 494,995  $ 565,803 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Short-term borrowings $ —  $ 62,541 
Long-term borrowings (includes $202.9 million and $226.7 million, respectively, related to consolidated VIEs) 218,987  244,445 
Deposits 96,852  80,288 
Other liabilities:    
 Fair value of derivatives —  2,408 
 Sales and property taxes payable 6,342  4,197 
 Accounts payable and accrued expenses 7,376  7,649 
 Net deferred income tax liability 12,816  16,037 
Total liabilities 342,373  417,565 
     
Commitments and contingencies     
     
Stockholders' equity:    
Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,861,656 and 12,778,935 shares issued and outstanding, respectively 129  128 
 Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued —  — 
 Additional paid-in capital 86,206  84,674 
 Stock subscription receivable (2) (3)
 Accumulated other comprehensive loss (205) (267)
 Retained earnings 66,494  63,706 
 Total stockholders' equity 152,622  148,238 
Total liabilities and stockholders' equity $ 494,995  $ 565,803 
 
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES 
Condensed Consolidated Statements of Operations
(Unaudited)
         
  Three Months Ended June 30, Six Months Ended June 30,
  2010  2009  2010  2009 
         
  (Dollars in thousands, except per-share data)
         
Interest income $ 11,994  $ 17,281  $ 24,823  $ 36,353 
Fee income 3,501  4,380  7,317  9,414 
Interest and fee income 15,495  21,661  32,140  45,767 
Interest expense 3,955  7,444  8,614  15,276 
Net interest and fee income 11,540  14,217  23,526  30,491 
Provision for credit losses 2,494  6,793  5,617  15,542 
Net interest and fee income after provision for credit losses 9,046  7,424  17,909  14,949 
         
Other income:        
Insurance income 987  1,322  2,144  2,865 
Gain (loss) on derivatives  (25) 646  (119) (661)
Other income  306  387  596  795 
Other income  1,268  2,355  2,621  2,999 
Other expense:        
Salaries and benefits 4,588  5,057  9,713  10,942 
General and administrative 3,073  3,287  6,118  6,686 
Financing related costs 155  55  302  310 
Other expense 7,816  8,399  16,133  17,938 
Income before income taxes 2,498  1,380  4,397  10 
Income tax expense (benefit) 947  434  1,609  (57)
Net income $ 1,551  $ 946  $ 2,788  $ 67 
         
Basic earnings per share $ 0.12  $ 0.08  $ 0.22  $ 0.01 
Diluted earnings per share $ 0.12  $ 0.08  $ 0.22  $ 0.01 
         
Weighted average shares used in computing basic earnings per share 12,832,792  12,593,514  12,802,579  12,456,874 
Weighted average shares used in computing diluted earnings per share 12,904,163  12,603,305  12,865,857  12,465,312 
 
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Net Income on an Adjusted Basis Reconciliation to GAAP Results
(Unaudited)
         
  Three Months Ended June 30, Six Months Ended June 30,
  2010 2009 2010 2009
  (Dollars in thousands)
         
Net income as reported $ 1,551 $ 946 $ 2,788 $ 67
         
Deduct:        
Gain (loss) on derivatives  (25) 646 (119) (661)
Tax effect 10 (255) 47 261
Gain (loss) on derivatives, net of tax (15) 391 (72) (400)
Net Income on an Adjusted Basis $ 1,566 $ 555 $ 2,860 $ 467
         
Net Income on an Adjusted Basis is defined as net income excluding the gain (loss) on derivatives, net of tax. The Company believes that Net Income on an Adjusted Basis is a useful performance metric for management, investors and lenders, because it excludes the volatility resulting from derivatives activities subsequent to discontinuing hedge accounting in mid-2008.
SUPPLEMENTAL QUARTERLY DATA 
(Dollars in thousands, except share amounts)
(Unaudited)
           
           
Quarter Ended: 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010
           
New Asset Production:          
# of Sales Reps 33 34 38 53 69
# of Leases 1,831 1,916 2,205 2,476 3,009
Leased Equipment Volume $15,811 $16,813 $20,031 $23,636 $31,729
           
Approval Percentage  36% 38% 44% 46% 49%
           
Average Monthly Sources 374 371 421 484 581
           
Implicit Yield on New Leases 15.83% 15.62% 15.32% 15.32% 14.56%
           
Net Interest and Fee Margin:          
Interest Income Yield 11.78% 11.84% 11.89% 11.90% 12.12%
Fee Income Yield 2.99% 3.25% 3.12% 3.54% 3.54%
Interest and Fee Income Yield 14.77% 15.09% 15.01% 15.44% 15.66%
Cost of Funds 5.08% 4.89% 4.73% 4.32% 4.00%
Net Interest and Fee Margin 9.69% 10.20% 10.28% 11.12% 11.66%
           
Average Total Finance Receivables  $586,608 $526,829 $474,326 $431,176 $395,906
Average Net Investment in Leases $577,493 $519,791 $469,040 $427,416 $393,248
           
End of Period Net Investment in Leases $547,892 $494,102 $444,583 $405,424 $378,559
End of Period Loans $7,190 $5,454 $4,027 $2,781 $2,101
           
Portfolio Asset Quality:          
           
Total Finance Receivables          
30+ Days Past Due Delinquencies 4.53% 3.62% 3.46% 3.06% 2.70%
30+ Days Past Due Delinquencies $28,493 $20,215 $17,297 $13,829 $11,358
           
60+ Days Past Due Delinquencies 2.32% 1.69% 1.67% 1.39% 1.24%
60+ Days Past Due Delinquencies $14,579 $9,431 $8,334 $6,288 $5,202
           
Leasing          
30+ Days Past Due Delinquencies 4.41% 3.55% 3.38% 3.00% 2.64%
30+ Days Past Due Delinquencies $27,399 $19,583 $16,790 $13,470 $11,031
           
60+ Days Past Due Delinquencies 2.26% 1.65% 1.63% 1.37% 1.20%
60+ Days Past Due Delinquencies $14,055 $9,103 $8,101 $6,135 $5,015
           
Loans          
30+ Days Past Due Delinquencies 13.55% 10.47% 11.43% 11.75% 14.11%
30+ Days Past Due Delinquencies $1,094 $632 $507 $359 $327
           
60+ Days Past Due Delinquencies 6.49% 5.43% 5.25% 5.01% 8.07%
60+ Days Past Due Delinquencies $524 $328 $233 $153 $187
           
Net Charge-offs - Leasing $7,593 $7,039 $5,469 $4,843 $3,489
 % on Average Net Investment in Leases Annualized 5.26% 5.42% 4.66% 4.53% 3.55%
           
Net Charge-offs - Loans $531 $597 $327 $220 $107
% on Average Loans Annualized 23.30% 33.93% 25.17% 23.40% 16.10%
           
Allowance for Credit Losses $13,978 $12,293 $12,193 $10,253 $9,151
% of 60+ Delinquencies 95.88% 130.35% 146.30% 163.06% 175.91%
           
90+ Day Delinquencies (Non-earning total finance  receivables) $7,650 $5,209 $4,557 $3,399 $2,819
Balance Sheet:          
Assets          
Investment in Leases and Loans $554,712 $499,802 $450,595 $409,637 $381,978
Initial Direct Costs and Fees 14,348 12,047 10,208 8,821 7,833
Reserve for Credit Losses (13,978) (12,293) (12,193) (10,253) (9,151)
Net Investment in Leases and Loans $555,082 $499,556 $448,610 $408,205 $380,660
Cash and Cash Equivalents 53,529 50,441 37,057 44,334 35,178
Restricted Cash 67,751 64,920 63,400 65,521 66,546
Other Assets 14,284 13,140 16,736 16,461 12,611
Total Assets $690,646 $628,057 $565,803 $534,521 $494,995
Liabilities          
Total Debt $426,203 $362,966 $306,986 $268,434 $218,987
Deposits  77,305  80,060  80,288  85,135  96,852
Other Liabilities 40,477 37,573 30,291 30,434 26,534
Total Liabilities $543,985 $480,599 $417,565 $384,003 $342,373
Stockholders' Equity          
Common Stock $126 $126 $128 $128 $129
Paid-in Capital, net 83,838 84,239 84,671 85,689 86,204
Other Comprehensive Income (40) (152) (267) (242) (205)
Retained Earnings 62,737 63,245 63,706 64,943 66,494
Total Stockholders' Equity $146,661 $147,458 $148,238 $150,518 $152,622
Total Liabilities and           
Stockholders' Equity $690,646 $628,057 $565,803 $534,521 $494,995
           
Capital and Leverage:          
Tangible Equity $146,661 $147,458 $148,238 $150,518 $152,622
Debt to Tangible Equity 3.43 3.00 2.61 2.35 2.07
Equity to Assets 21.24% 23.48% 26.20% 28.16% 30.83%
           
Regulatory Capital Ratios:          
Tier 1 Leverage Capital 20.12% 22.31% 24.89% 27.69% 29.43%
Tier 1 Risk-based Capital 24.36% 27.16% 30.19% 33.35% 36.61%
Total Risk-based Capital 25.63% 28.43% 31.45% 34.61% 37.87%
           
Expense Ratios:          
Salaries and Benefits Expense $5,057 $4,051 $4,078 $5,124 $4,588
Salaries and Benefits Expense          
Annualized % of Avg. Fin. Recbl. 3.45% 3.08% 3.44% 4.75% 4.64%
           
Total personnel end of quarter 169 175 181 196 211
           
General and Administrative Expense $3,287 $3,076 $3,092 $3,046 $3,073
General and Administrative Expense           
Annualized % of Avg. Fin. Recbl. 2.24% 2.34% 2.61% 2.83% 3.10%
Efficiency Ratio 52.39% 47.43% 52.01% 60.82% 59.70%
Net Income:          
Net Income $946 $508 $461 $1,237 $1,551
Annualized Performance Measures:          
Return on Average Assets 0.52% 0.31% 0.31% 0.90% 1.20%
Return on Average Stockholders' Equity 2.58% 1.38% 1.25% 3.31% 4.09%
Per Share Data:          
Number of Shares - Basic 12,593,514 12,607,147 12,681,773 12,778,463 12,832,792
Basic Earnings per Share $0.08 $0.04 $0.04 $0.10 $0.12
           
Number of Shares - Diluted 12,603,305 12,649,800 12,724,998 12,833,643 12,904,163
Diluted Earnings per Share $0.08 $0.04 $0.04 $0.10 $0.12
           
Net investment in total finance receivables includes net investment in direct financing leases and loans.  
CONTACT:  Marlin Business Services Corp.          Lynne Wilson           888 479 9111 Ext. 4108

company logo