Second Quarter Highlights:
- Net income of $4.1 million, EPS of $0.32
- Net income on an adjusted basis of $4.4 million; EPS on an adjusted basis of $0.34
- Increased quarterly dividend to $0.14 per share from $0.125 per share
- Net interest and fee margin of 12.05% for the quarter
- Strong capital position, equity to assets ratio of 23.07%
- Total average finance receivables of $627 million, up 5% year-over-year
- Lease and loan production of $93.2 million, up 14% from the quarter ended March 31, 2015
- 98,394 shares repurchased at an average price of $18.96 per share in the second quarter of 2015 under the Company's stock repurchase program
- Hired W. Taylor Kamp as Senior Vice President and Chief Financial Officer
MOUNT LAUREL, N.J., Aug. 4, 2015 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (NASDAQ:MRLN) today announced the hiring of W. Taylor Kamp as Senior Vice President and Chief Financial Officer. Mr. Kamp brings more than 25 years of experience to Marlin, including extensive financial and corporate development experience. Mr. Kamp will report directly to Daniel P. Dyer, Co-founder and Chief Executive Officer of Marlin. Mr. Kamp was most recently Managing Director and Head of Corporate Development and Mergers & Acquisitions for CIT Group, Inc. where he managed world-wide activities related to the purchase and sale of businesses and portfolios. From 2000 until 2010, Mr. Kamp served in various managing director and senior corporate development roles within CIT. From 1987 until 2000, Mr. Kamp was with Citigroup Inc. where he served in various senior finance positions, including Chief Financial Officer of Citigroup's international commercial operations (1999 to 2000), consumer real estate services (1997 to 1999) and commercial operations and transport finance (1993 to 1996).
"Taylor is extremely well qualified to serve as our CFO," said Daniel P. Dyer, Co-founder and Chief Executive Officer. "His deep financial and corporate development experience will be a strong complement to our executive team and will be invaluable as we continue to drive our strategic and financial goals," said Dyer.
"I am very excited to join the Marlin executive team and to join a company with such strong growth prospects," said Kamp. "Marlin has a long track record of success in the lending and leasing space and is a respected market leader and innovator in serving their clients and partners."
The Company also today reported second quarter 2015 net income of $4.1 million, or $0.32 per diluted share, compared to $4.9 million and $0.38 per diluted share for second quarter 2014. During the second quarter 2015, the Company recorded one-time charges related to the resignation of its Chief Financial Officer of $0.2 million, net of tax. Second quarter 2015 net income adjusted for one-time charges is $4.4 million, or $0.34 per diluted share.
"We're delighted with the strong new asset growth this quarter," said Daniel P. Dyer, Co-founder and Chief Executive Officer.
"Business development opportunities remain robust and as a result we plan on adding more sales resources. We anticipate the sales force to grow 20% year-over-year and volume growth to accelerate in the second half of 2015," said Ed Siciliano, Executive Vice President and Chief Sales Officer.
"FundingStream.com, our new small business working capital loan portal, is operational and generating considerable customer interest. Going forward, we're excited about the growth prospects and market opportunity for loans and how it syncs with the needs of our small business customer base," said Dyer.
Second quarter 2015 lease and loan production is $93.2 million, up 14% compared to $81.6 million in the first quarter of 2015 and up 5% compared to $88.9 million in second quarter of 2014. Yields on new lease and loan originations were 11.16%, up 31 basis points compared to 10.85% for the first quarter of 2015 and 11.35% for the second quarter of 2014.
Net interest and fee margin as a percentage of average finance receivables is 12.05% for the second quarter 2015, 35 basis points lower from 12.40% in the first quarter of 2015 and 61 basis points lower from a year ago. The year-over-year decrease in margin percentage is a result of the competitively low interest rate environment and a slight increase in cost of funds. The Company's cost of funds was 85 basis points, unchanged from first quarter of 2015 and up 4 basis points from the second quarter of 2014.
The allowance for credit losses as a percentage of total finance receivables is 1.34% at June 30, 2015, and represents 296% of total 60+ day delinquencies.
30+ day delinquencies were 0.70% of total finance receivables as of June 30, 2015, 17 basis points lower than the first quarter of 2015 and 9 basis points lower than the second quarter of 2014. 60+ day delinquencies were 0.40% of total finance receivables as of June 30, 2015, down 17 basis points from 0.57% at March 30, 2015 and down 11 basis points from June 30, 2014. Second quarter net charge-offs were 1.84% of average total finance receivables versus 1.70% for the first quarter ended March 30, 2015 and 1.71% a year ago.
Total salaries, benefits and general and administrative costs ("SG&A") was $11.6 million for the second quarter 2015, up from $11.1 million from the first quarter 2015 and $10.4 million from the second quarter 2014. Included in the second quarter 2015 SG&A expense is $0.3 million of severance expense associated with the resignation of Marlin's Chief Financial Officer and $0.3 million of expense related to investments in the Company's Capital Loan and Franchise Lending initiatives.
The Company's efficiency ratio was 56% for the quarter ended June 30, 2015 compared to 50% a year ago. The Company's efficiency ratio adjusted for severance costs and Capital Loan and Franchise Lending initiatives was 53% for the quarter ended June 30, 2015.
The Company's consolidated equity to assets ratio is 23.07%. Our risk based capital ratio 26.97%.
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.
In the second quarter of 2015, under its stock repurchase program, the Company purchased 98,394 shares of common stock at an average price paid per share of $18.96.
The Board of Directors of Marlin Business Services Corp. today declared a $0.14 per share quarterly dividend. The dividend is payable August 24, 2015, to shareholders of record on August 14, 2015. Based on the closing stock price on August 3, 2015, the annualized dividend yield on the Company's common stock is 3.60%.
Conference Call and Webcast
We will host a conference call on Wednesday, August 5, 2015 at 9:00 a.m. ET to discuss the Company's second quarter 2015 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 commercial lending solutions for small and mid-size businesses. Through its wholly-owned operating subsidiary, Marlin Business Bank, Marlin provides innovative commercial financing programs. Our equipment financing and loan products are offered directly to businesses, and through third party vendor programs, which includes manufacturers, distributors, independent dealers and brokers. Since its inception in 1997, Marlin has extended credit to over a quarter of a million business customers. Our mission is to offer convenient financing products while providing the highest level of personalized customer service. Marlin is publicly traded (NASDAQ:MRLN). For more information about Marlin, 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, | |
| 2015 | 2014 | |
| (Dollars in thousands, except per-share data) | ||
| ASSETS | ||
| Cash and due from banks | $5,246 | $2,437 |
| Interest-earning deposits with banks | 85,494 | 108,219 |
| Total cash and cash equivalents | 90,740 | 110,656 |
| Time deposits with banks | 7,368 | — |
| Restricted interest-earning deposits with banks | 543 | 711 |
| Securities available for sale (amortized cost of $6.4 million and $5.8 million at June 30, 2015 and December 31, 2014, respectively) | 6,258 | 5,722 |
| Net investment in leases and loans | 641,082 | 629,507 |
| Property and equipment, net | 3,993 | 2,846 |
| Property tax receivables | 5,977 | 690 |
| Other assets | 9,011 | 8,317 |
| Total assets | $764,972 | $758,449 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Deposits | $554,190 | $550,119 |
| Other liabilities: | ||
| Sales and property taxes payable | 6,335 | 2,739 |
| Accounts payable and accrued expenses | 12,066 | 14,406 |
| Net deferred income tax liability | 15,891 | 17,221 |
| Total liabilities | 588,482 | 584,485 |
| Stockholders' equity: | ||
| Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,785,066 and 12,838,449 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | 128 | 128 |
| Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued | — | — |
| Additional paid-in capital | 86,725 | 89,130 |
| Stock subscription receivable | (2) | (2) |
| Accumulated other comprehensive loss | (75) | (17) |
| Retained earnings | 89,714 | 84,725 |
| Total stockholders' equity | 176,490 | 173,964 |
| Total liabilities and stockholders' equity | $764,972 | $758,449 |
| MARLIN BUSINESS SERVICES CORP. | ||||
|
AND SUBSIDIARIES Condensed Consolidated Statements of Operations |
||||
| (Unaudited) | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||
| 2015 | 2014 | 2015 | 2014 | |
| (Dollars in thousands, except per-share data) | ||||
| Interest income | $16,488 | $16,740 | $32,975 | $33,477 |
| Fee income | 3,727 | 3,450 | 7,847 | 7,135 |
| Interest and fee income | 20,215 | 20,190 | 40,822 | 40,612 |
| Interest expense | 1,336 | 1,216 | 2,654 | 2,397 |
| Net interest and fee income | 18,879 | 18,974 | 38,168 | 38,215 |
| Provision for credit losses | 2,216 | 2,124 | 5,556 | 3,856 |
| Net interest and fee income after provision for credit losses | 16,663 | 16,850 | 32,612 | 34,359 |
| Other income: | ||||
| Insurance income | 1,358 | 1,338 | 2,824 | 2,655 |
| Other income | 399 | 394 | 764 | 776 |
| Other income | 1,757 | 1,732 | 3,588 | 3,431 |
| Other expense: | ||||
| Salaries and benefits | 7,265 | 6,463 | 14,232 | 13,649 |
| General and administrative | 4,330 | 3,969 | 8,423 | 8,158 |
| Financing related costs | 42 | 293 | 150 | 583 |
| Other expense | 11,637 | 10,725 | 22,805 | 22,390 |
| Income before income taxes | 6,783 | 7,857 | 13,395 | 15,400 |
| Income tax expense | 2,634 | 2,921 | 5,191 | 5,821 |
| Net income | $4,149 | $4,936 | $8,204 | $9,579 |
| Basic earnings per share | $0.32 | $0.38 | $0.64 | $0.74 |
| Diluted earnings per share | $0.32 | $0.38 | $0.64 | $0.74 |
| Cash dividends declared and paid per share | $0.125 | $0.11 | $0.25 | $0.22 |
| MARLIN BUSINESS SERVICES CORP. | ||||||
| AND SUBSIDIARIES | ||||||
| Net Income on an Adjusted Basis Reconciliation to GAAP Results | ||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||
| 2015 | 2014 | 2015 | 2014 | |||
| (Dollars in thousands) | (Dollars in thousands) | |||||
| (Unaudited) | (Unaudited) | |||||
| Net income as reported | $4,149 | $4,936 | $8,204 | $9,579 | ||
| Deduct: | ||||||
| One time charge | (381) | — | (381) | — | ||
| Tax effect | 149 | — | 149 | — | ||
| One time charge, net of tax | (232) | — | (232) | — | ||
| Net Income on an Adjusted Basis | $4,381 | $4,936 | $8,436 | $9,579 | ||
| Diluted earnings per share as reported | $0.32 | $0.38 | $0.64 | $0.74 | ||
| Diluted earnings per share on an adjusted basis | $0.34 | $0.38 | $0.66 | $0.74 | ||
| Return on Average Assets as reported | 2.18% | 2.69% | 2.17% | 2.63% | ||
| Return on Average Assets on an adjusted basis | 2.30% | 2.69% | 2.23% | 2.63% | ||
| Return on Average Equity as reported | 9.47% | 11.88% | 9.40% | 11.59% | ||
| Return on Average Equity on an adjusted basis | 10.00% | 11.88% | 9.67% | 11.59% | ||
| Efficiency Ratio as reported | 56.2% | 50.4% | 54.3% | 52.4% | ||
| Efficiency Ratio on an adjusted basis | 54.3% | 50.4% | 53.3% | 52.4% | ||
| Net Income on an Adjusted Basis is defined as net income excluding one-time charges related to the resignation of the Chief Financial Officer. | ||||||
| SUPPLEMENTAL QUARTERLY DATA | |||||
| (Dollars in thousands, except share amounts) | |||||
| (Unaudited) | |||||
| Quarter Ended: | 6/30/2014 | 9/30/2014 | 12/31/2014 | 3/31/2015 | 6/30/2015 |
| Net Income: | |||||
| Net Income | $4,936 | $4,904 | $4,867 | $4,055 | $4,149 |
| Annualized Performance Measures: | |||||
| Return on Average Assets | 2.69% | 2.67% | 2.64% | 2.17% | 2.18% |
| Return on Average Stockholders' Equity | 11.88% | 11.50% | 11.21% | 9.33% | 9.47% |
| EPS Data: | |||||
| Net Income Allocated to Common Stock | $4,821 | $4,762 | $4,731 | $3,932 | $4,031 |
| Number of Shares - Basic | 12,582,313 | 12,487,968 | 12,466,264 | 12,487,241 | 12,450,283 |
| Basic Earnings per Share | $0.38 | $0.38 | $0.38 | $0.31 | $0.32 |
| Number of Shares - Diluted | 12,635,520 | 12,539,717 | 12,515,904 | 12,523,258 | 12,464,638 |
| Diluted Earnings per Share | $0.38 | $0.38 | $0.38 | $0.31 | $0.32 |
| Cash Dividends Declared per share | $0.11 | $0.125 | $0.125 | $0.125 | $0.125 |
| New Asset Production: | |||||
| Leased Equipment Volume | $88,928 | $82,459 | $89,362 | $80,084 | $92,103 |
| Capital Loan Origination Volume | $0 | $0 | $0 | $235 | $532 |
| New Originations | $88,928 | $82,459 | $89,362 | $80,319 | $92,635 |
| Syndication Volume | $0 | $0 | $91 | $1,272 | $606 |
| Total Asset Origination | $88,928 | $82,459 | $89,453 | $81,591 | $93,241 |
| Implicit Yield on New Originations | 11.35% | 11.06% | 10.89% | 10.85% | 11.16% |
| # of Sales Reps | 117 | 116 | 115 | 125 | 127 |
| # of Leases | 6,423 | 6,130 | 6,290 | 5,691 | 6,366 |
| Lease Approval Percentage | 67% | 65% | 66% | 63% | 64% |
| Average Monthly Lease Sources | 1,197 | 1,125 | 1,147 | 1,015 | 1,143 |
| Net Interest and Fee Margin: | |||||
| Interest Income Yield | 11.17% | 10.98% | 10.80% | 10.60% | 10.52% |
| Fee Income Yield | 2.30% | 2.55% | 2.54% | 2.65% | 2.38% |
| Interest and Fee Income Yield | 13.47% | 13.53% | 13.34% | 13.25% | 12.90% |
| Cost of Funds | 0.81% | 0.82% | 0.86% | 0.85% | 0.85% |
| Net Interest and Fee Margin | 12.66% | 12.71% | 12.48% | 12.40% | 12.05% |
| Average Total Finance Receivables | $599,413 | $608,290 | $614,068 | $622,120 | $627,079 |
| Average Net Investment in Leases | $598,143 | $607,055 | $612,910 | $620,937 | $625,347 |
| End of Period Net Investment in Leases | $613,856 | $617,518 | $628,384 | $626,617 | $639,065 |
| Portfolio Asset Quality: | |||||
| Total Finance Receivables | |||||
| 30+ Days Past Due Delinquencies | 0.79% | 0.81% | 0.85% | 0.87% | 0.70% |
| 30+ Days Past Due Delinquencies | $5,491 | $5,668 | $5,997 | $6,208 | $5,053 |
| 60+ Days Past Due Delinquencies | 0.51% | 0.47% | 0.51% | 0.57% | 0.40% |
| 60+ Days Past Due Delinquencies | $3,544 | $3,290 | $3,602 | $4,057 | $2,899 |
| Net Charge-offs - Total Finance Receivables | $2,558 | $2,060 | $2,388 | $2,646 | $2,880 |
| % on Average Total Finance Receivables Annualized | 1.71% | 1.36% | 1.56% | 1.70% | 1.84% |
| Allowance for Credit Losses | $7,725 | $8,371 | $8,537 | $9,231 | $8,567 |
| % of 60+ Delinquencies | 217.97% | 254.44% | 237.01% | 227.53% | 295.52% |
|
90+ Day Delinquencies (Non-earning total finance receivables) |
$1,903 | $1,903 | $1,742 | $1,975 | $1,433 |
| Expense Ratios: | |||||
| Salaries and Benefits Expense | $6,463 | $6,313 | $6,666 | $6,967 | $7,265 |
| Salaries and Benefits Expense Annualized % of Avg. Fin. Recbl. | 4.31% | 4.15% | 4.34% | 4.48% | 4.63% |
| Total personnel end of quarter | 279 | 279 | 285 | 296 | 302 |
| General and Administrative Expense | $3,969 | $3,818 | $3,630 | $4,093 | $4,330 |
| General and Administrative Expense Annualized % of Avg. Fin. Recbl. | 2.65% | 2.51% | 2.36% | 2.63% | 2.76% |
| Efficiency Ratio | 50.38% | 48.07% | 48.86% | 52.37% | 56.19% |
| Balance Sheet: | |||||
| Assets | |||||
| Investment in Leases and Loans | $612,722 | $616,916 | $627,922 | $627,167 | $639,333 |
| Initial Direct Costs and Fees | 10,135 | 10,146 | 10,122 | 10,083 | 10,316 |
| Reserve for Credit Losses | (7,725) | (8,371) | (8,537) | (9,231) | (8,567) |
| Net Investment in Leases and Loans | $615,132 | $618,691 | $629,507 | $628,019 | $641,082 |
| Cash and Cash Equivalents | 98,612 | 104,211 | 110,656 | 113,129 | 90,740 |
| Restricted Cash | 963 | 945 | 711 | 1,545 | 543 |
| Other Assets | 21,538 | 16,338 | 17,575 | 26,536 | 32,607 |
| Total Assets | $736,245 | $740,185 | $758,449 | $769,229 | $764,972 |
| Liabilities | |||||
| Deposits | 531,930 | 534,556 | 550,119 | 557,835 | 554,190 |
| Other Liabilities | 36,013 | 35,583 | 34,366 | 36,305 | 34,292 |
| Total Liabilities | $567,943 | $570,139 | $584,485 | $594,140 | $588,482 |
| Stockholders' Equity | |||||
| Common Stock | $129 | $128 | $128 | $128 | $128 |
| Paid-in Capital, net | 90,115 | 88,543 | 89,128 | 87,832 | 86,723 |
| Other Comprehensive Income (Loss) | (106) | (84) | (17) | (35) | (75) |
| Retained Earnings | 78,164 | 81,459 | 84,725 | 87,164 | 89,714 |
| Total Stockholders' Equity | $168,302 | $170,046 | $173,964 | $175,089 | $176,490 |
| Total Liabilities and | |||||
| Stockholders' Equity | $736,245 | $740,185 | $758,449 | $769,229 | $764,972 |
| Capital and Leverage: | |||||
| Equity | $168,302 | $170,046 | $173,964 | $175,089 | $176,490 |
| Debt to Equity | 3.16 | 3.14 | 3.16 | 3.19 | 3.14 |
| Equity to Assets | 22.86% | 22.97% | 22.94% | 22.76% | 23.07% |
| Regulatory Capital Ratios: | |||||
| Tier 1 Leverage Capital | 22.81% | 23.06% | 23.43% | 23.21% | 23.07% |
| Common Equity Tier 1 Risk-based Capital | 26.00% | 25.72% | |||
| Tier 1 Risk-based Capital | 25.83% | 26.11% | 26.14% | 26.00% | 25.72% |
| Total Risk-based Capital | 27.01% | 27.36% | 27.39% | 27.25% | 26.97% |
| Notes: | |||||
| Net investment in total finance receivables includes net investment in direct financing leases and loans. | |||||
| Common Equity Tier 1 Risk-based Capital became effective on January 1, 2015. | |||||