Second Quarter Highlights:
- Net income of $4.9 million, up 10% year-over-year
- Origination volume increased 20% over the first quarter of 2014
- Return on average equity of 11.88% for the second quarter compared to 9.98% for the second quarter of 2013
- Risk adjusted net interest and fee margin of 11.24% for the quarter
- $532 million of insured deposits, up 15% year-over-year
- Strong capital position, equity to assets ratio of 22.9%
MOUNT LAUREL, N.J., July 29, 2014 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported second quarter 2014 net income of $4.9 million, or $0.38 per diluted share, compared to $4.5 million and $0.34 per share for second quarter 2013.
"New asset originations were up 20% this quarter," said Daniel P. Dyer, Co-Founder and Chief Executive Officer. "Our focus and attentiveness to delivering value to our customers, along with our disciplined operating approach, remain core elements to our profitable growth strategy. Favorable operating results and our confident outlook for the future led to the announced dividend increase to $0.125 per share this quarter," says Dyer.
Origination volume was $88.9 million, compared to $74.0 million for the quarter ended March 31, 2014, representing an increase of 20% over the first quarter of 2014. The yield on new originations for the quarter was 11.35% an increase of 8 basis points over the first quarter of 2014.
Net interest and fee margin of 12.66% is down 39 basis points from the first quarter of 2014 and is down 70 basis points from the second quarter of 2013. The reduction from first quarter 2014 was driven by fee income and interest income. Fee income as a percentage of average total finance receivables is 2.30% for the quarter ended June 2014 compared to 2.50% in the first quarter of 2014 and 2.38% a year ago and is due to lower late fee billings. Interest income as a percentage of average finance receivables is 11.17% for the second quarter ended June 2014 compared to 11.35% in the first quarter of 2014 and 11.86% a year ago. The decrease in interest income is primarily due to the competitive low interest rate environment and its impact on origination yields in 2014.
The Company's cost of funds remained stable at 81 basis points, compared to 80 basis points for the first quarter of 2014, and improved 7 basis points from the second quarter of 2013. The improvement resulted from the Company's use of lower-cost insured deposits issued by the Company's subsidiary, Marlin Business Bank, its primary funding source.
The allowance for credit losses as a percentage of total finance receivables was 1.26% at June 30, 2014, and represents 218% of total 60+ day delinquencies.
Finance receivables over 30 days delinquent were 0.79% of the Company's lease portfolio as of June 30, 2014, 6 basis points lower than the first quarter of 2014 and 16 basis points lower than second quarter 2013. Finance receivables over 60 days delinquent were 0.51% of the Company's lease portfolio as of June 30, 2014, versus 0.50% at March 31, 2014.
Second quarter net charge-offs were 1.71% of total finance receivables up slightly from 1.38% of total finance receivables for the first quarter ended March 31, 2014 and 1.55% a year ago.
The Company's efficiency ratio was 50% for the quarter ended June 30, 2014 compared to 54% for the quarter ended March 31, 2014 and 53% for the quarter ended June 30, 2013.
The Company's consolidated equity to assets ratio is 22.9%. Our risk based capital ratio is 27.01%, 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. today declared a $0.125 per share quarterly dividend, a 13.6% increase over the prior quarter. The dividend is payable August 21, 2014, to shareholders of record on August 11, 2014. Based on the closing stock price on July 28, 2014, the annualized dividend yield on the Company's common stock is 2.70%.
Conference Call and Webcast
We will host a conference call on Wednesday, July 30, 2014 at 9:00 a.m. ET to discuss the Company's second quarter 2014 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.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.
| MARLIN BUSINESS SERVICES CORP. | ||
| AND SUBSIDIARIES | ||
| Condensed Consolidated Balance Sheets | ||
| (Unaudited) | ||
| June 30, | December 31, | |
| 2014 | 2013 | |
| (Dollars in thousands, except per-share data) | ||
| ASSETS | ||
| Cash and due from banks | $ 3,382 | $ 3,534 |
| Interest-earning deposits with banks | 95,230 | 82,119 |
| Total cash and cash equivalents | 98,612 | 85,653 |
| Restricted interest-earning deposits with banks | 963 | 1,273 |
| Securities available for sale (amortized cost of $5.8 million and $5.8 million at June 30, 2014 and December 31, 2013, respectively) | 5,634 | 5,387 |
| Net investment in leases and loans | 615,132 | 597,075 |
| Property and equipment, net | 2,447 | 2,265 |
| Property tax receivables | 4,834 | 377 |
| Other assets | 8,623 | 10,177 |
| Total assets | $ 736,245 | $ 702,207 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Deposits | $ 531,930 | $ 503,038 |
| Other liabilities: | ||
| Sales and property taxes payable | 7,082 | 4,035 |
| Accounts payable and accrued expenses | 11,229 | 14,220 |
| Net deferred income tax liability | 17,702 | 17,876 |
| Total liabilities | 567,943 | 539,169 |
| Stockholders' equity: | ||
| Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,922,422 and 12,994,758 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 129 | 130 |
| Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued | — | — |
| Additional paid-in capital | 90,117 | 91,730 |
| Stock subscription receivable | (2) | (2) |
| Accumulated other comprehensive (loss) | (106) | (257) |
| Retained earnings | 78,164 | 71,437 |
| Total stockholders' equity | 168,302 | 163,038 |
| Total liabilities and stockholders' equity | $ 736,245 | $ 702,207 |
| MARLIN BUSINESS SERVICES CORP. | ||||
| AND SUBSIDIARIES | ||||
| Condensed Consolidated Statements of Operations | ||||
| (Unaudited) | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| (Dollars in thousands, except per-share data) | ||||
| Interest income | $ 16,740 | $ 15,732 | $ 33,477 | $ 30,789 |
| Fee income | 3,450 | 3,148 | 7,135 | 6,323 |
| Interest and fee income | 20,190 | 18,880 | 40,612 | 37,112 |
| Interest expense | 1,216 | 1,166 | 2,397 | 2,422 |
| Net interest and fee income | 18,974 | 17,714 | 38,215 | 34,690 |
| Provision for credit losses | 2,124 | 1,893 | 3,856 | 4,057 |
| Net interest and fee income after provision for credit losses | 16,850 | 15,821 | 34,359 | 30,633 |
| Other income: | ||||
| Insurance income | 1,338 | 1,246 | 2,655 | 2,386 |
| Loss on derivatives | — | (2) | — | (2) |
| Other income | 394 | 400 | 776 | 814 |
| Other income | 1,732 | 1,644 | 3,431 | 3,198 |
| Other expense: | ||||
| Salaries and benefits | 6,463 | 6,355 | 13,649 | 12,942 |
| General and administrative | 3,969 | 3,900 | 8,158 | 7,443 |
| Financing related costs | 293 | 274 | 583 | 513 |
| Other expense | 10,725 | 10,529 | 22,390 | 20,898 |
| Income before income taxes | 7,857 | 6,936 | 15,400 | 12,933 |
| Income tax expense | 2,921 | 2,469 | 5,821 | 4,815 |
| Net income | $ 4,936 | $ 4,467 | $ 9,579 | $ 8,118 |
| Basic earnings per share | $ 0.38 | $ 0.35 | $ 0.74 | $ 0.63 |
| Diluted earnings per share | $ 0.38 | $ 0.34 | $ 0.74 | $ 0.63 |
| Cash dividends declared and paid per share | $ 0.11 | $ 0.10 | $ 0.22 | $ 0.20 |
| SUPPLEMENTAL QUARTERLY DATA | |||||
| (Dollars in thousands, except share amounts) | |||||
| (Unaudited) | |||||
| Quarter Ended: | 6/30/2013 | 9/30/2013 | 12/31/2013 | 3/31/2014 | 6/30/2014 |
| Net Income: | |||||
| Net Income | $4,467 | $4,687 | $3,426 | $4,643 | $4,936 |
| Annualized Performance Measures: | |||||
| Return on Average Assets | 2.74% | 2.73% | 1.98% | 2.58% | 2.69% |
| Return on Average Stockholders' Equity | 9.98% | 10.32% | 8.46% | 11.31% | 11.88% |
| EPS Data: | |||||
| Net Income Allocated to Common Stock | $4,292 | $4,537 | $3,294 | $4,485 | $4,821 |
| Number of Shares - Basic | 12,365,622 | 12,429,065 | 12,493,370 | 12,546,680 | 12,582,313 |
| Basic Earnings per Share | $0.35 | $0.37 | $0.26 | $0.36 | $0.38 |
| Number of Shares - Diluted | 12,461,892 | 12,516,186 | 12,560,018 | 12,612,997 | 12,635,520 |
| Diluted Earnings per Share | $0.34 | $0.36 | $0.26 | $0.36 | $0.38 |
| Cash Dividends Declared per share | $0.10 | $2.11 | $0.11 | $0.11 | $0.11 |
| New Asset Production: | |||||
| # of Sales Reps | 121 | 115 | 124 | 117 | 117 |
| # of Leases | 6,931 | 6,223 | 6,265 | 5,385 | 6,423 |
| Leased Equipment Volume | $91,448 | $86,146 | $90,923 | $73,995 | $88,928 |
| Approval Percentage | 67% | 65% | 67% | 65% | 67% |
| Average Monthly Sources | 1,247 | 1,146 | 1,166 | 1,001 | 1,197 |
| Implicit Yield on New Leases | 12.34% | 11.86% | 11.65% | 11.27% | 11.35% |
| Net Interest and Fee Margin: | |||||
| Interest Income Yield | 11.86% | 11.73% | 11.57% | 11.35% | 11.17% |
| Fee Income Yield | 2.38% | 2.46% | 2.55% | 2.50% | 2.30% |
| Interest and Fee Income Yield | 14.24% | 14.19% | 14.12% | 13.85% | 13.47% |
| Cost of Funds | 0.88% | 0.75% | 0.76% | 0.80% | 0.81% |
| Net Interest and Fee Margin | 13.36% | 13.44% | 13.36% | 13.05% | 12.66% |
| Average Total Finance Receivables | $530,463 | $555,422 | $574,132 | $589,922 | $599,413 |
| Average Net Investment in Leases | $529,910 | $554,783 | $573,334 | $588,729 | $598,143 |
| End of Period Net Investment in Leases | $555,701 | $575,718 | $596,121 | $599,307 | $613,856 |
| Portfolio Asset Quality: | |||||
| Total Finance Receivables | |||||
| 30+ Days Past Due Delinquencies | 0.95% | 0.83% | 1.08% | 0.85% | 0.79% |
| 30+ Days Past Due Delinquencies | $6,033 | $5,472 | $7,411 | $5,815 | $5,491 |
| 60+ Days Past Due Delinquencies | 0.50% | 0.45% | 0.47% | 0.50% | 0.51% |
| 60+ Days Past Due Delinquencies | $3,179 | $2,941 | $3,204 | $3,404 | $3,544 |
| Net Charge-offs - Total Finance Receivables | $2,058 | $2,147 | $1,865 | $2,040 | $2,558 |
| % on Average Total Finance Receivables | |||||
| Annualized | 1.55% | 1.55% | 1.30% | 1.38% | 1.71% |
| Allowance for Credit Losses | $6,919 | $7,075 | $8,467 | $8,159 | $7,725 |
| % of 60+ Delinquencies | 217.65% | 240.56% | 264.26% | 239.69% | 217.97% |
| 90+ Day Delinquencies (Non-earning total finance receivables) | $1,610 | $1,697 | $1,665 | $1,686 | $1,903 |
| Expense Ratios: | |||||
| Salaries and Benefits Expense | $6,355 | $6,601 | $8,137 | $7,186 | $6,463 |
| Salaries and Benefits Expense | |||||
| Annualized % of Avg. Fin. Recbl. | 4.79% | 4.75% | 5.67% | 4.87% | 4.31% |
| Total personnel end of quarter | 281 | 275 | 285 | 283 | 279 |
| General and Administrative Expense | $3,900 | $3,475 | $3,807 | $4,189 | $3,969 |
| General and Administrative Expense | |||||
| Annualized % of Avg. Fin. Recbl. | 2.94% | 2.50% | 2.65% | 2.84% | 2.65% |
| Efficiency Ratio | 52.97% | 49.80% | 56.85% | 54.32% | 50.38% |
| Balance Sheet: | |||||
| Assets | |||||
| Investment in Leases and Loans | $553,296 | $573,325 | $595,253 | $598,590 | $612,722 |
| Initial Direct Costs and Fees | 9,932 | 10,127 | 10,289 | 10,085 | 10,135 |
| Reserve for Credit Losses | (6,919) | (7,075) | (8,467) | (8,159) | (7,725) |
| Net Investment in Leases and Loans | $556,309 | $576,377 | $597,075 | $600,516 | $615,132 |
| Cash and Cash Equivalents | 85,830 | 75,817 | 85,653 | 118,595 | 98,612 |
| Restricted Cash | 1,786 | 1,600 | 1,273 | 1,190 | 963 |
| Other Assets | 35,614 | 19,357 | 18,206 | 20,735 | 21,538 |
| Total Assets | $679,539 | $673,151 | $702,207 | $741,036 | $736,245 |
| Liabilities | |||||
| Deposits | 461,516 | 477,423 | 503,038 | 538,209 | 531,930 |
| Total Debt | $1,021 | $0 | $0 | $0 | $0 |
| Other Liabilities | 35,727 | 35,749 | 36,131 | 36,676 | 36,013 |
| Total Liabilities | $498,264 | $513,172 | $539,169 | $574,885 | $567,943 |
| Stockholders' Equity | |||||
| Common Stock | $129 | $130 | $130 | $129 | $129 |
| Paid-in Capital, net | 89,161 | 90,608 | 91,728 | 91,567 | 90,115 |
| Other Comprehensive Income (Loss) | (152) | (198) | (257) | (191) | (106) |
| Retained Earnings | 92,137 | 69,439 | 71,437 | 74,646 | 78,164 |
| Total Stockholders' Equity | $181,275 | $159,979 | $163,038 | $166,151 | $168,302 |
| Total Liabilities and Stockholders' Equity | $679,539 | $673,151 | $702,207 | $741,036 | $736,245 |
| Capital and Leverage: | |||||
| Equity | $181,275 | $159,979 | $163,038 | $166,151 | $168,302 |
| Debt to Equity | 2.55 | 2.98 | 3.09 | 3.24 | 3.16 |
| Equity to Assets | 26.68% | 23.77% | 23.22% | 22.42% | 22.86% |
| Regulatory Capital Ratios: | |||||
| Tier 1 Leverage Capital | 27.67% | 23.20% | 23.46% | 22.94% | 22.81% |
| Tier 1 Risk-based Capital | 29.73% | 26.27% | 25.90% | 26.07% | 25.83% |
| Total Risk-based Capital | 30.86% | 27.43% | 27.15% | 27.32% | 27.01% |
| Notes: | |||||
| Net investment in total finance receivables includes net investment in direct financing leases and loans. | |||||