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. |