MOUNT LAUREL, N.J., Aug. 7, 2007 (PRIME NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported net income of $5.2 million for the second quarter ended June 30, 2007, compared with net income of $5.3 million for the same period in 2006. Diluted earnings per share was $0.42 for the second quarter of 2007, compared to $0.44 for the same period in 2006. Excluding the impact of a one-time after-tax reduction of the allowance for credit losses of $545,000 or $0.045 per share in second quarter of 2006, due to better than expected collections in areas affected by Hurricane Katrina, net income and diluted earnings per share for the second quarter of 2007 increased 10.6% and 7.7%, respectively, compared to the second quarter of 2006.
For the six months ended June 30, 2007, net income was $10.2 million compared to $10.0 million for the same period in 2006. Diluted earnings per share was $0.83 for both six-month periods ended June 30, 2007 and 2006. Net income and diluted earnings per share for the six-month period ended June 30, 2006 was impacted by the same reduction due to Hurricane Katrina of $545,000 or $0.045 diluted earnings per share. Adjusted to exclude this after-tax reduction, net income and diluted earnings per share for the first six months of 2007 increased 7.4% and 6.4%, respectively, compared to the same period in 2006.
"Marlin continues to perform with solid returns posted for the quarter," said Daniel P. Dyer, Chairman and CEO of Marlin Business Services Corp. "Asset quality continues to perform solidly in line with our key credit performance indicators."
Highlights for the quarter ended June 30, 2007 include:
Asset Origination * Based on initial equipment cost, lease production was $97.3 million for the quarter ended June 30, 2007 compared to $97.9 million for the second quarter of 2006. * Direct sales volume increased by 1.6% year over year, while indirect sales volume decreased by 4.9%. * Average net investment in leases was $710.6 million at June 30, 2007 compared to $591.9 million for the second quarter of 2006, representing growth of 20.1% year over year. Average net investment in leases was up 3.4% or $23.1 million from the prior quarter. * Our end user customer base grew to more than 91,000 at June 30, 2007 compared with 85,000 for the second quarter of 2006 and 89,000 in the previous quarter. Growth in our end user customer base was 7.1% year over year and 2.2% from the previous quarter. The number of active leases in our portfolio was approximately 114,000 at June 30, 2007. * As of June 30, 2007 the Company had $182,000 of outstanding purchased receivables balances for its factoring business "Marlin Trade Receivables." * As of June 30, 2007 the Company had $7.7 million of loan balances outstanding for the new Business Capital Loan product compared to $4.8 million at the end of the prior quarter and none for the second quarter of 2006. Net Interest and Fee Margin and Cost of Funds * The average implicit yield on new leases was 13.04% for the quarter ended June 30, 2007 compared to 12.68% in the second quarter of 2006 and 12.80% for the first quarter ended March 31, 2007. * The portfolio yield was 12.34% as a percentage of average total finance receivables for the quarter ended June 30, 2007, a decrease of 20 basis points from the second quarter of 2006 and a decrease of 6 basis points from the first quarter ended March 31, 2007. * Fee income as a percentage of average net investment in finance receivables was 2.89% for the quarter ended June 30, 2007 compared to 3.44% for the second quarter of 2006 and 3.25% for the first quarter ended March 31, 2007. The decrease from the prior quarter is due primarily to a decrease in administrative and late fee income resulting from a decrease in the volume of late fee billings in the 0-30 day delinquency category and seasonal variation related to property tax fees. * The average cost of funds as a percentage of average total finance receivables was 4.60% for the quarter ended June 30, 2007. This was a 54 basis point increase from the second quarter of 2006 and a 14 basis point increase from the 4.46% reported in the first quarter ended March 31, 2007. The increase is due primarily to the changing vintage mix of our underlying term securitizations, along with higher average borrowings outstanding as a percentage of average total finance receivables. * Due to the factors discussed above, the net interest and fee margin was 10.63% as a percentage of average total finance receivables for the quarter ended June 30, 2007, a decrease of 56 basis points compared to 11.19% for the quarter ended March 31, 2007. * Included in interest income for the quarter ended June 30, 2007 is $57,000 of interest income related to the Company's factoring product, compared to $146,000 for the first quarter ended March 31, 2007 and none for the second quarter of 2006. * Included in interest income for the quarter ended June 30, 2007 is $207,000 of interest income related to the Company's Business Capital Loan product, compared to $79,000 for the first quarter ended March 31, 2007 and none for the second quarter of 2006. Credit Quality * Net charge-offs totaled $3.2 million for the quarter ended June 30, 2007 compared with $3.0 million for the previous quarter. On an annualized basis, net charge-offs were 1.79% of average total finance receivables for the quarter ended June 30, 2007 compared to 1.44% for the second quarter of 2006 and 1.75% for the quarter ended March 31, 2007. Included in net charge-offs is $14,000 related to the Business Capital Loan product. * As of June 30, 2007, 0.68% of our total lease portfolio was 60 or more days delinquent, up from 0.54% as of June 30, 2006 and a decrease compared to 0.76% as of March 31, 2007. As of June 30, 2007, 0.32% of the Business Capital Loan portfolio was 60 or more days delinquent, representing $26,000 in loan balances. * The allowance for credit losses was $8.8 million as of June 30, 2007, compared to $7.4 million in the second quarter of 2006 and $8.6 million in the previous quarter. Allowance for credit losses as a percentage of total finance receivables was 1.21% at June 30, 2007, June 30, 2006 and March 31, 2007. * At June 30, 2007, the allowance for credit losses was 151.6% of total finance receivables 60 or more days delinquent compared to 190.6% at June 30, 2006 and 135.4% at March 31, 2007. * In conjunction with this release, static pool loss statistics have been updated as supplemental information on the investor relations section of our website at http://www.marlincorp.com. Operating Expenses * Salaries and benefits expense was $5.1 million in the second quarter of 2007, down from $5.3 million in the second quarter of 2006, and down from $5.7 million in the previous quarter. Salaries and benefits were 2.85% as an annualized percentage of average finance receivables for the second quarter of 2007 versus 3.55% in the second quarter of 2006 and 3.31% in the previous quarter. Salaries and benefits were positively impacted $389,000 in the second quarter due to lower incentive accruals. * Other general and administrative expenses were $3.3 million in the second quarter of 2007 compared to $3.1 million in the second quarter of 2006 and $3.4 million in the prior quarter. Other general and administrative expenses as an annualized percentage of average finance receivables were 1.83% for the second quarter of 2007 compared to 2.08% in the second quarter of last year and 1.94% for the prior quarter. * Our efficiency ratio was 40.68% at June 30, 2007 compared to 44.16% for the quarter ended June 30, 2006 and 43.15% for the previous quarter. Funding and Liquidity * Our debt to equity ratio was 4.41:1 at June 30, 2007 compared to 4.49:1 at March 31, 2007.
Conference Call and Webcast
We will host a conference call on Wednesday, August 8, 2007 at 9:00 a.m. EDT to discuss our second quarter 2007. If you wish to participate, please call 800-819-9193 (toll free) or 913-981-4910 (international) 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 Marlin Business Services Corp. website, http://www.marlincorp.com. An audio replay will also be available on the Investor Relations section of Marlin's website for approximately 90 days.
About Marlin Business Services Corp.
Marlin Business Services Corp. is a nationwide provider of equipment leasing and working capital solutions primarily to small businesses. The Company's principal operating subsidiary, Marlin Leasing Corporation, finances over 70 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. In addition to its executive offices in Mount Laurel, NJ, Marlin has regional offices in or near Atlanta, Chicago, Denver, Philadelphia and Salt Lake City. For more information, visit http://www.marlincorp.com or call toll free at (888) 479-9111.
The Marlin Business Services Corp. logo is available at http://www.primenewswire.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
Consolidated Balance Sheets
(Dollars in thousands, except per-share data)
June 30, December 31,
2007 2006
---- ----
(Unaudited)
Assets
Cash and cash equivalents $ 8,060 $ 26,663
Restricted cash 64,660 57,705
Net investment in leases and loans 748,139 693,911
Property and equipment, net 3,366 3,430
Property tax receivables 6,483 257
Fair value of cash flow hedge derivatives 243 456
Other assets 11,251 13,030
-------- ---------
Total assets $842,202 $795,452
======== ========
Liabilities and Stockholders' Equity
Revolving and term secured borrowings $651,771 $616,322
Other liabilities:
Fair value of cash flow hedge derivatives 6 1,607
Sales and property taxes payable 11,216 8,034
Accounts payable and accrued expenses 10,451 12,269
Deferred income tax liability 21,107 22,931
-------- --------
Total liabilities 694,551 661,163
-------- --------
Commitments and Contingencies
Stockholders' equity:
Common Stock, $0.01 par value; 75,000,000
shares authorized; 12,279,967 and 12,030,259
shares issued and outstanding, respectively 123 120
Preferred Stock, $0.01 par value; 5,000,000
shares authorized; none issued -- --
Additional paid-in capital 84,934 81,850
Stock subscription receivable (11) (18)
Cumulative other comprehensive income 1,955 1,892
Retained earnings 60,650 50,445
-------- --------
Total stockholders' equity 147,651 134,289
-------- --------
Total liabilities and stockholders' equity $842,202 $795,452
======== ========
MARLIN BUSINESS SERVICES CORP
AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per-share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
---- ---- ---- ----
Income:
Interest income $22,151 $18,549 $43,588 $36,368
Fee income 5,186 5,097 10,801 10,004
------- ------- ------- -------
Interest and fee income 27,337 23,646 54,389 46,372
Interest expense 8,256 6,006 15,967 11,501
------- ------- ------- -------
Net interest and fee
income 19,081 17,640 38,422 34,871
Provision for credit
losses 3,468 1,599 6,860 4,014
------- ------- ------- -------
Net interest and fee
income after provision
for credit
losses 15,613 16,041 31,562 30,857
Insurance and other
income 1,553 1,229 3,228 2,584
------- ------- ------- -------
Operating income 17,166 17,270 34,790 33,441
------- ------- ------- -------
Non-interest expense:
Salaries and benefits 5,113 5,254 10,830 10,399
General and
administrative 3,281 3,078 6,633 5,824
Financing related costs 213 198 459 653
------- ------- ------- -------
Non-interest expense 8,607 8,530 17,922 16,876
------- ------- ------- -------
Income before income
taxes 8,559 8,740 16,868 16,565
Income taxes 3,381 3,452 6,663 6,543
------- ------- ------- -------
Net income $ 5,178 $ 5,288 $10,205 $10,022
======= ======= ======= =======
Basic earnings per share $ 0.43 $ 0.45 $ 0.85 $ 0.85
Diluted earnings per
share $ 0.42 $ 0.44 $ 0.83 $ 0.83
Shares used in computing
basic earnings per
share 12,106,482 11,780,018 12,030,155 11,740,989
Shares used in computing
diluted earnings
per share 12,341,182 12,092,752 12,297,097 12,074,066
SUPPLEMENTAL QUARTERLY DATA
(Dollars in thousands, except share amounts)
(unaudited)
Quarter
Ended: 6/30/2006 9/30/2006 12/31/2006 3/31/2007 6/30/2007
------- --------- --------- ---------- --------- ---------
New Asset
Production:
# of Sales
Reps 103 100 100 96 97
# of Leases 8,553 8,824 8,985 8,639 8,423
Leased
Equipment
Volume $ 97,871 $100,950 $105,639 $102,652 $ 97,260
Average
monthly
sources 1,333 1,321 1,309 1,337 1,279
Implicit
Yield on
New Leases 12.68% 12.73% 12.67% 12.80% 13.04%
Net interest
and fee margin
Interest
Income
Yield 12.54% 12.57% 13.11% 12.40% 12.34%
Fee Income
Yield 3.44% 3.35% 3.07% 3.25% 2.89%
Interest and
Fee Income
Yield 15.98% 15.92% 16.18% 15.65% 15.23%
Cost of
Funds 4.06% 4.41% 4.95% 4.46% 4.60%
Net interest
and Fee
Margin 11.92% 11.51% 11.23% 11.19% 10.63%
Average Total
Finance
Receiv-
ables $591,905 $624,711 $660,529 $691,253 $717,893
Average Net
Investment
in Leases $591,905 $623,999 $658,120 $687,442 $710,587
End of
period Net
Investment
in Leases $622,815 $655,871 $691,932 $717,882 $740,021
End of
period
Loans $ 0 $ 971 $ 1,979 $ 5,175 $ 8,118
End of
period
Factoring
Receiv-
ables $ 0 $ 296 $ 1,760 $ 386 $ 182
Total loan
and lease
sales
personnel 103 102 103 100 101
Portfolio
Asset
Quality:
Total
Finance
Receivables
60+ Days
Past Due
Delinquen-
cies 0.54% 0.58% 0.71% 0.76% 0.68%
60+ Days
Past Due
Delinquen-
cies $ 3,867 $ 4,411 $ 5,715 $ 6,329 $ 5,824
Leasing
60+ Days
Past Due
Delinquen-
cies 0.54% 0.58% 0.71% 0.76% 0.68%
60+ Days
Past Due
Delinquen-
cies $ 3,867 $ 4,411 $ 5,676 $ 6,288 $ 5,798
Loans
60+ Days
Past Due
Delinquen-
cies 0.00% 0.00% 0.00% 0.28% 0.32%
60+ Days
Past Due
Delinquen-
cies $ 0 $ 0 $ 0 $ 15 $ 26
Factoring
Receivables
60+ Days
Past Due
Delinquen-
cies 0.00% 0.00% 2.20% 6.57% 0.00%
60+ Days
Past Due
Delinquen-
cies $ 0 $ 0 $ 39 $ 26 $ 0
Net
Charge-offs
- Leasing $ 2,132 $ 2,685 $ 2,405 $ 2,907 $ 3,176
% on Average
Net
Investment
in Leases
Annualized 1.44% 1.72% 1.46% 1.69% 1.79%
Net
Charge-offs
- Other
Finance
Receiv-
ables $ 0 $ 0 $ 0 $ 118 $ 31
% on Average
Other
Finance
Receivables
Annualized 0.00% 0.00% 0.00% 12.38% 1.70%
Allowance
for Credit
Losses $ 7,370 $ 7,767 $ 8,201 $ 8,568 $ 8,829
% of 60+
Delinquen-
cies 190.59% 176.08% 143.50% 135.38% 151.60%
90+ Day
Delinquen-
cies (Non-
earning) $ 1,648 $ 1,876 $ 2,250 $ 2,976 $ 2,449
Balance
Sheet:
Assets
Investment
in Leases
and Loans $609,359 $642,113 $677,848 $705,739 $730,316
Initial
Direct
Costs and
Fees 20,826 22,496 24,264 25,886 26,652
Reserve for
Credit
Losses (7,370) (7,767) (8,201) (8,568) (8,829)
Net
Investment
in Leases
and Loans $622,815 $656,842 $693,911 $723,057 $748,139
Cash and
Cash
Equivalents 3,168 34,159 26,663 7,429 8,060
Restricted
Cash 54,457 179,964 57,705 63,640 64,660
Other
Assets 17,667 15,954 17,173 23,277 21,343
Total
Assets $698,107 $886,919 $795,452 $817,403 $842,202
Liabilities
Total Debt $526,286 $712,355 $616,322 $632,197 $651,771
Other
Liabili-
ties 45,580 44,963 44,841 44,303 42,780
Total
Liabili-
ties $571,866 $757,318 $661,163 $676,500 $694,551
Stockholders'
Equity
Common
Stock $ 120 $ 120 $ 120 $ 123 $ 123
Paid-in
Capital,
net 79,583 80,548 81,832 84,381 84,923
Other
Comprehensive
Income 4,705 2,370 1,892 927 1,955
Retained
Earnings 41,833 46,563 50,445 55,472 60,650
Total
Stockholders'
Equity $126,241 $129,601 $134,289 $140,903 $147,651
Total
Liabilities
and
Stockholders'
Equity $698,107 $886,919 $795,452 $817,403 $842,202
Capital and
Leverage:
Tangible
Equity $126,241 $129,601 $134,289 $140,903 $147,651
Debt to
Tangible
Equity 4.17 5.50 4.59 4.49 4.41
Expense
Ratios:
Salaries and
Benefits
Expense $ 5,254 $ 5,171 $ 6,898 $ 5,716 $ 5,113
Salaries and
Benefits
Expense
annualized
% of Avg
Fin. Recbl 3.55% 3.31% 4.18% 3.31% 2.85%
Total
personnel
end of
quarter 319 310 314 311 324
General and
Administrative
Expense $ 3,078 $ 2,868 $ 3,264 $ 3,352 $ 3,281
General and
Administrative
Expense
annualized
% of Avg
Fin. Recbl 2.08% 1.84% 1.98% 1.94% 1.83%
Efficiency
Ratio 44.16% 41.55% 50.58% 43.15% 40.68%
Net Income:
Net Income $ 5,288 $ 4,730 $ 3,882 $ 5,027 $ 5,178
Annualized
Performance
Measures:
Return on
Average
Assets 3.09% 2.55% 1.86% 2.52% 2.49%
Return on
Average
Stockholders'
Equity 17.24% 14.79% 11.77% 14.61% 14.36%
Per Share
Data:
Number of
Shares -
Basic 11,780,018 11,838,677 11,889,262 11,957,024 12,106,482
EPS- Basic $ 0.45 $ 0.40 $ 0.33 $ 0.42 $ 0.43
Number of
Shares -
Diluted 12,092,752 12,154,889 12,231,808 12,257,484 12,341,182
EPS-
Diluted $ 0.44 $ 0.39 $ 0.32 $ 0.41 $ 0.42
* Net investment in total finance receivables includes net
investment in direct financing leases, loans, and factoring
receivables
CONTACT: Marlin Business Services Corp.
Lynne Wilson, CFO
888-479-9111, ext. 4108
http://www.marlinleasing.com
