updated 3/8/2011 7:18:50 PM ET 2011-03-09T00:18:50

Fourth Quarter and Full-Year Highlights:

  • Net income of $5.7 million for the full-year 2010, a 447% increase over 2009
  • New equipment lease originations growth of 51% year-over-year
  • Strong capital position, equity to assets leverage ratio of 34.2%
  • Total risk-based capital of 40.84%

MOUNT LAUREL, N.J., March 8, 2011 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported fourth quarter 2010 net income of $1.4 million, or $0.11 per diluted share. Net income for the full-year 2010 was $5.7 million, or $0.44 per diluted share.

"We're very excited with the momentum build of our business," says Daniel P. Dyer, Marlin's CEO. "This quarter we posted another solid gain in new lease asset origination and customer account growth. Asset quality remains very strong as demonstrated by the favorable charge-off and delinquency trends throughout 2010. Looking ahead to 2011, we are well positioned to serve the growing credit needs of small and mid-sized businesses led by a financially strong, well-capitalized balance sheet and the overall strength of our funding platform led by Marlin Business Bank. As an industry leader, our service oriented approach to serving customers will pave the way to continued profitable growth in the future," says Dyer.    

Fourth quarter 2010 lease production was $42.9 million, based on initial equipment cost, up 19.8% from $35.8 million for the third quarter of 2010. For the full-year 2010, lease equipment volume reached $134.0 million versus $88.9 million for the full-year 2009, representing an increase of 51%. Approval rates on lease originations were 54% for the fourth quarter of 2010 and 50% for the full-year 2010. The average implicit yield on new lease production was 13.98% in the fourth quarter of 2010. Net interest and fee margin was 12.10% for the fourth quarter of 2010 compared to 12.26% in the third quarter of 2010 and 10.28% a year ago.

Credit trends continue to improve and have returned to historic levels. Highlights for the fourth quarter of 2010 included:

  • Leases over 30 days delinquent were 1.97% of Marlin's lease portfolio, which is 38 basis points lower than the third quarter of 2010 and the lowest since the third quarter of 2006. On a dollar basis, 30+ day delinquencies have decreased 18% from the third quarter of 2010.
  • Leases over 60 days delinquent were 0.89% of Marlin's lease portfolio, which is 14 basis points lower than the third quarter of 2010 and the lowest since the second quarter of 2007. On a dollar basis, 60+ day delinquencies have decreased 16% from the third quarter of 2010.
  • Non-performing assets of $2.0 million were 17% lower than the third quarter of 2010.
  • Net lease charge-offs of $2.3 million were 16% lower than the third quarter of 2010 levels.  
  • Static pool credit losses and delinquency performance continue to be better than expectations for leases in the 2009 and 2010 vintages.
  • Reflecting improving credit trends, the allowance for credit losses as a percentage of total finance receivables stands at 2.19% as of December 31, 2010, compared to 2.31% as of September 30, 2010, and represents 220.3% of total 60+ day delinquencies.

At December 31, 2010, the Company had $78.1 million of available funding through its borrowing facilities with various national banks and certificates of deposits at Marlin Business Bank, the Company's wholly-owned bank subsidiary.

In conjunction with this release, the Company's 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 has restated its consolidated financial statements as of December 31, 2009 from amounts previously reported by increasing its deferred income tax assets and increasing retained earnings by $3.6 million to correct income tax overpayments and over-recognition of income tax expense accumulated during previous years. In addition, 2010 income tax expense was favorably impacted by $0.5 million.

In connection with ongoing discussions with the Federal Reserve Bank relating to the Company's allowance for credit losses (the "Allowance"), Marlin Business Bank received a written determination from the Federal Reserve Bank of San Francisco and the Utah Department of Financial Institutions on October 27, 2010 (the "MBB Report"), and the Company received a written determination from the Federal Reserve Bank of Philadelphia on December 22, 2010 (the "MBSC Report"). While we have not received any additional information from the Federal Reserve Bank of San Francisco or the Federal Reserve Bank of Philadelphia in connection with our implementation of the recommendations contained in the MBB Report and the MBSC Report, we believe that we have properly implemented the recommendations. If the Company receives additional information in connection with our implementation of the recommendations and if, as a result of its review of such additional information, management determines that such additional information requires adjustments or changes to the methodology used to determine the Allowance, such adjustments or changes could have an impact on the size of the Allowance.

Conference Call and Webcast

We will host a conference call on Wednesday, March 9, 2011 at 9:00 a.m. ET to discuss the Company's fourth quarter and full-year 2010 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 , and 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 equipment leasing solutions primarily to small and mid-sized 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, 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)
     
  December 31,
  2010  2009 (1)
  (Dollars in thousands, except per-share

data)
     
ASSETS    
Cash and due from banks $2,557 $1,372
Interest-earning deposits with banks  34,469 35,685
Total cash and cash equivalents 37,026 37,057
Restricted interest-earning deposits with banks (includes $44.7 million

and $57.1 million, respectively, related to consolidated variable interest

entities ("VIEs"))
47,107 63,400
Securities available for sale (amortized cost of $1.5 million) 1,534
Net investment in leases and loans (includes $154.1 million and

$238.0 million, respectively, related to consolidated VIEs)
351,569 448,610
Property and equipment, net 2,180 2,431
Property tax receivables 197 1,135
Other assets 28,449 13,170
Total assets $468,062 $565,803
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Short-term borrowings $— $62,541
Long-term borrowings (includes $128.2 million and $226.7 million,

respectively, related to consolidated VIEs)
178,650 244,445
Deposits 92,919 80,288
Other liabilities:    
Fair value of derivatives 2,408
Sales and property taxes payable 1,978 4,197
Accounts payable and accrued expenses 8,019 7,649
Net deferred income tax liability 26,493 12,390
Total liabilities 308,059 413,918
     
Commitments and contingencies     
     
Stockholders' equity:    
Common Stock, $0.01 par value; 75,000,000 shares authorized;

12,864,665 and 12,778,935 shares issued and outstanding at

December 31, 2010 and 2009 respectively
129 128
Preferred Stock, $0.01 par value; 5,000,000 shares authorized;

none issued
Additional paid-in capital 86,987 84,674
Stock subscription receivable (2) (3)
Accumulated other comprehensive loss (132) (267)
Retained earnings 73,021 67,353
Total stockholders' equity 160,003 151,885
Total liabilities and stockholders' equity $468,062 $565,803
     
(1) Net deferred income tax liability has been decreased and retained earnings has been increased by

$3.6 million from amounts previously reported to reflect the correction of an error in previously filed

financial statements. 
 
MARLIN BUSINESS SERVICES CORP.  
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
         
  Three Months Ended December 31, Year Ended December 31,
  2010  2009  2010  2009 
  (Dollars in thousands, except per-share data)
         
Interest income  $11,052  $14,095  $47,296  $66,039
Fee income 3,157 3,703 14,041 17,405
Interest and fee income 14,209 17,798 61,337 83,444
Interest expense 3,410 5,614 15,613 27,338
Net interest and fee income 10,799 12,184 45,724 56,106
Provision for credit losses 1,738 5,697 9,438 27,189
Net interest and fee income after provision for credit losses 9,061 6,487 36,286 28,917
         
Other income:        
Insurance income 976 1,279 4,106 5,330
Gain (loss) on derivatives  12 (135) (116) (1,959)
Other income  347 322 1,295 1,525
Other income  1,335 1,466 5,285 4,896
Other expense:        
Salaries and benefits 5,307 4,078 19,966 19,071
General and administrative 3,487 3,092 12,762 12,854
Financing related costs 247 143 680 505
Other expense 9,041 7,313 33,408 32,430
Income before income taxes 1,355 640 8,163 1,383
Income tax expense (benefit) (91) 179 2,495 347
Net income $1,446 $461 $5,668 $1,036
         
Basic earnings per share $0.11 $0.04 $0.44 $0.08
Diluted earnings per share $0.11 $0.04 $0.44 $0.08
         
Weighted average shares used in computing basic earnings

per share
12,866,214 12,681,773 12,836,340 12,549,167
Weighted average shares used in computing diluted earnings

per share
12,942,524 12,724,998 12,902,151 12,579,806
 
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Net Income on an Adjusted Basis Reconciliation to GAAP Results
(Unaudited)
         
  Three Months Ended December 31, Year Ended December 31,
  2010 2009 2010 2009
   (Dollars in thousands)
         
Net income as reported $1,446 $461 $5,668 $1,036
         
Deduct:        
 Gain (loss) on derivatives  12 (135) (116) (1,959)
 Tax effect (5) 53 46 774
Gain (loss) on derivatives, net of tax 7 (82) (70) (1,185)
Net Income on an Adjusted Basis $1,439 $543 $5,738 $2,221
         
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: 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010
           
New Asset Production:          
# of Sales Reps 38 53 69 84 87
# of Leases 2,205 2,476 3,009 3,253 3,669
Leased Equipment Volume $20,031 $23,636 $31,729 $35,759 $42,906
           
Approval Percentage  44% 46% 49% 49% 54%
           
Average Monthly Sources 421 484 581 625 725
           
Implicit Yield on New Leases 15.32% 15.32% 14.56% 14.40% 13.98%
           
Net Interest and Fee Margin:          
Interest Income Yield 11.89% 11.90% 12.12% 12.28% 12.38%
Fee Income Yield 3.12% 3.54% 3.54% 3.84% 3.54%
Interest and Fee Income Yield 15.01% 15.44% 15.66% 16.12% 15.92%
Cost of Funds 4.73% 4.32% 4.00% 3.86% 3.82%
Net Interest and Fee Margin 10.28% 11.12% 11.66% 12.26% 12.10%
           
Average Total Finance Receivables  $474,326 $431,176 $395,906 $371,833 $357,089
Average Net Investment in Leases $469,040 $427,416 $393,248 $369,973 $355,863
           
End of Period Net Investment in Leases $444,583 $405,424 $378,559 $359,859 $350,528
End of Period Loans $4,027 $2,781 $2,101 $1,284 $1,041
           
Portfolio Asset Quality:          
           
Leasing          
30+ Days Past Due Delinquencies 3.38% 3.00% 2.64% 2.35% 1.97%
30+ Days Past Due Delinquencies $16,790 $13,470 $11,031 $9,359 $7,665
           
60+ Days Past Due Delinquencies 1.63% 1.37% 1.20% 1.03% 0.89%
60+ Days Past Due Delinquencies $8,101 $6,135 $5,015 $4,099 $3,460
           
Total Finance Receivables          
30+ Days Past Due Delinquencies 3.46% 3.06% 2.70% 2.38% 1.98%
30+ Days Past Due Delinquencies $17,297 $13,829 $11,358 $9,537 $7,726
           
60+ Days Past Due Delinquencies 1.67% 1.39% 1.24% 1.05% 0.90%
60+ Days Past Due Delinquencies $8,334 $6,288 $5,202 $4,213 $3,504
           
           
Net Charge-offs - Leasing $5,469 $4,843 $3,489 $2,778 $2,324
% on Average Net Investment in Leases Annualized 4.66% 4.53% 3.55% 3.00% 2.61%
           
Net Charge-offs - Total Finance Receivables $5,796 $5,063 $3,596 $2,879 $2,375
% on Average Total Finance Receivables Annualized 4.89% 4.70% 3.63% 3.10% 2.66%
           
Allowance for Credit Losses $12,193 $10,253 $9,151 $8,355 $7,718
% of 60+ Day Delinquencies 146.30% 163.06% 175.91% 198.31% 220.26%
           
90+ Day Delinquencies (Non-earning total finance

receivables)
$4,557 $3,399 $2,819 $2,398 $1,996
Balance Sheet:          
Assets          
Investment in Leases and Loans $450,595 $409,637 $381,978 $362,328 $352,527
Initial Direct Costs and Fees 10,208 8,821 7,833 7,170 6,760
Reserve for Credit Losses (12,193) (10,253) (9,151) (8,355) (7,718)
Net Investment in Leases and Loans $448,610 $408,205 $380,660 $361,143 $351,569
Cash and Cash Equivalents 37,057 44,334 35,178 44,100 37,026
Restricted Cash 63,400 65,521 66,546 47,384 47,107
Other Assets 16,736 16,461 12,611 13,678 32,360
Total Assets $565,803 $534,521 $494,995 $466,305 $468,062
           
Liabilities          
Total Debt $306,986 $268,434 $218,987 $191,858 $178,650
Deposits  80,288  85,135  96,852  95,358  92,919
Other Liabilities 26,644 26,787 22,887 20,932 36,490
Total Liabilities $413,918 $380,356 $338,726 $308,148 $308,059
           
Stockholders' Equity          
Common Stock $128 $128 $129 $129 $129
Paid-in Capital, net 84,671 85,689 86,204 86,606 86,985
Other Comprehensive Income (267) (242) (205) (153) (132)
Retained Earnings 67,353 68,590 70,141 71,575 73,021
Total Stockholders' Equity $151,885 $154,165 $156,269 $158,157 $160,003
Total Liabilities and Stockholders' Equity $565,803 $534,521 $494,995 $466,305 $468,062
           
Capital and Leverage:          
Equity $151,885 $154,165 $156,269 $158,157 $160,003
Debt to Equity 2.55 2.29 2.02 1.82 1.70
Equity to Assets 26.84% 28.84% 31.57% 33.92% 34.18%
           
Regulatory Capital Ratios:          
Tier 1 Leverage Capital 24.89% 28.36% 30.13% 32.67% 35.87%
Tier 1 Risk-based Capital 30.19% 34.15% 37.48% 39.90% 39.58%
Total Risk-based Capital 31.45% 35.42% 38.74% 41.16% 40.84%
           
Expense Ratios:          
Salaries and Benefits Expense $4,078 $5,124 $4,588 $4,947 $5,307
Salaries and Benefits Expense

Annualized % of Avg. Fin. Recbl.
3.44% 4.75% 4.64% 5.32% 5.94%
           
Total personnel end of quarter 181 196 211 229 234
           
General and Administrative Expense $3,092 $3,046 $3,073 $3,156 $3,487
General and Administrative Expense 

Annualized % of Avg. Fin. Recbl.
2.61% 2.83% 3.10% 3.40% 3.91%
           
Efficiency Ratio 52.01% 60.82% 59.70% 63.62% 72.55%
           
Net Income:          
Net Income $461 $1,237 $1,551 $1,434 $1,446
           
Annualized Performance Measures:          
Return on Average Assets 0.31% 0.90% 1.20% 1.19% 1.28%
Return on Average Stockholders' Equity 1.25% 3.31% 4.09% 3.73% 3.72%
           
Per Share Data:          
Number of Shares - Basic 12,681,773 12,778,463 12,832,792 12,872,123 12,866,214
Basic Earnings per Share $0.04 $0.10 $0.12 $0.11 $0.11
           
Number of Shares - Diluted 12,724,998 12,833,643 12,904,163 12,933,439 12,942,524
Diluted Earnings per Share $0.04 $0.10 $0.12 $0.11 $0.11
           
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

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