updated 5/5/2011 5:46:20 PM ET 2011-05-05T21:46:20

First Quarter 2011 Highlights:

  • New equipment lease originations doubled year-over-year
  • Increased sales force to 94 full time equivalents
  • Eight consecutive quarters of credit quality improvement
  • Strong capital position, consolidated equity to assets ratio of 34.02%
  • An additional $25 million of capital contributed to Marlin Business Bank; equity to assets ratio of 30.09%.

MOUNT LAUREL, N.J., May 5, 2011 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported first quarter 2011 net income of $754,000, or $0.06 per diluted share.

"We continue to move in a favorable direction, growing our business and providing access to credit to the small business customers we serve," says Daniel P. Dyer, Marlin's CEO. "All of our key sales metrics are accelerating with origination volume doubling compared to the first quarter of 2010. Supporting profitable growth, our 60+ day portfolio delinquencies and charge-offs this quarter are at a four year low while borrowing rates continue to improve, due to the greater use of lower cost deposit funding at Marlin Business Bank," says Dyer.

First quarter 2011 lease production was $47.0 million, based on initial equipment cost, up 10% from $42.9 million for the fourth quarter of 2010 and 99% higher than the first quarter of 2010. Average monthly originating sources reached 740 for the first quarter of 2011, up 2% from the fourth quarter of 2010 and a 53% increase over the first quarter of 2010. The sales force grew to 94 full-time equivalents from 87 in the fourth quarter of 2010 and 53 in the first quarter of 2010, a 77% increase over the prior year.

Net interest and fee margin grew to 12.30% for the first quarter of 2011, compared to 12.10% in the fourth quarter of 2010 and 11.12% a year ago. The margin gain was driven by an improvement in portfolio yield, as well as lower average cost of funds which was favorably impacted by the shift in the Company's funding mix from term funding to lower cost insured deposits at the Company's subsidiary, Marlin Business Bank.

Credit trends have returned to historic levels. Highlights for the first quarter of 2011 include:

  • Leases over 30 days delinquent were 1.67% of Marlin's lease portfolio, which is 30 basis points lower than the fourth quarter of 2010 and 133 basis points lower than the first quarter of 2010
  • Leases over 60 days delinquent were 0.75% of Marlin's lease portfolio, which is 14 basis points lower than the fourth quarter of 2010 and 62 basis points lower than the first quarter of 2010
  • Net leasing charge-offs were 2.30% of average net investment, which is 31 basis points lower than the fourth quarter of 2010 and 223 basis points lower than the first quarter of 2010.

The allowance for credit losses as a percentage of total finance receivables was 1.98% as of March 31, 2011 and 236% of total 60+ day delinquencies, compared to an allowance for credit losses of 2.19% as of December 31, 2010 and 220% of total 60+ day delinquencies.

The Company maintains strong capital ratios with a consolidated equity to assets ratio of 34.02% and ample liquidity to support growth through our insured depository, Marlin Business Bank. The Company also had $54 million in unused commitments through its revolver facilities.

In connection with the Company's discussions with the Federal Reserve Bank relating to the Company's allowance for credit losses (the "Allowance"), the Company received a letter dated April 28, 2011 from the Federal Reserve Bank of Philadelphia stating that the Company should continue to operate under its current methodology for determining the Allowance, and that the appropriateness and reasonableness of the overall level of the Allowance, as well as the adequacy of the documentation and controls maintained by the Company's management to support the appropriateness of the Allowance, will be reviewed again by the Federal Reserve Bank of San Francisco and the Utah Department of Financial Institutions during their next regularly scheduled commercial bank examination of Marlin Business Bank.

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 .

Conference Call and Webcast

We will host a conference call on Friday, May 6, 2011 at 9:00 a.m. ET to discuss the Company's first quarter 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 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    
  March 31, December 31,
  2011  2010 
     
  (Dollars in thousands, except per-share data)
  (Unaudited)
     
ASSETS    
Cash and due from banks $ 982     $ 2,557 
Interest-earning deposits with banks  39,082  34,469 
Total cash and cash equivalents 40,064  37,026 
Restricted interest-earning deposits with banks (includes $46.3 million and $44.7 million     
at March 31, 2011 and December 31, 2010, respectively, related to consolidated variable    
interest entities ("VIEs")) 51,212  47,107 
Securities available for sale (amortized cost of $1.7 million and $1.5 million at     
March 31, 2011 and December 31, 2010, respectively) 1,682  1,534 
Net investment in leases and loans (includes $130.9 million and $154.1 million at March 31, 2011    
and December 31, 2010, respectively, related to consolidated VIEs) 348,019  351,569 
Property and equipment, net 2,261  2,180 
Property tax receivables 4,074  197 
Other assets 26,955  28,449 
Total assets $ 474,267  $ 468,062 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Long-term borrowings (includes $106.9 million and $128.2 million at March 31, 2011    
and December 31, 2010, respectively, related to consolidated VIEs) 178,323  178,650 
Deposits 95,731  92,919 
Other liabilities:    
Sales and property taxes payable 5,268  1,978 
Accounts payable and accrued expenses 8,128  8,019 
Net deferred income tax liability 25,449  26,493 
 Total liabilities 312,899  308,059 
     
     
     
Stockholders' equity:    
Common Stock, $0.01 par value; 75,000,000 shares authorized;    
13,021,761 and 12,864,665 shares issued and outstanding at March 31, 2011    
and December 31, 2010, respectively 130  129 
Additional paid-in capital 87,565  86,987 
Stock subscription receivable (2) (2)
Accumulated other comprehensive loss (100) (132)
Retained earnings 73,775  73,021 
 Total stockholders' equity 161,368  160,003 
Total liabilities and stockholders' equity $ 474,267  $ 468,062 
 
 
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
    Three Months Ended March 31,
    2011  2010
       
    (Dollars in thousands, except per-share data)
       
Interest income   $10,900  $ 12,829 
Fee income   3,132  3,816 
Interest and fee income   14,032  16,645 
Interest expense   3,292  4,658 
Net interest and fee income   10,740  11,987 
Provision for credit losses   1,179  3,123 
Net interest and fee income after provision for credit losses   9,561  8,864 
     
Other income:      
 Insurance income   977  1,158 
 Loss on derivatives    (5) (94)
 Other income    282  288 
 Other income    1,254  1,352 
Other expense:      
 Salaries and benefits   5,937  5,124 
 General and administrative   3,471  3,046 
 Financing related costs   189  147 
 Other expense   9,597  8,317 
 Income before income taxes   1,218  1,899 
Income tax expense    464  662 
 Net income    $ 754  $ 1,237 
       
Basic earnings per share   $ 0.06  $ 0.10 
Diluted earnings per share   $ 0.06  $ 0.10 
     
Weighted average shares used in computing basic earnings per share    12,927,477  12,778,463 
Weighted average shares used in computing diluted earnings per share    13,005,882  12,833,643 
         
SUPPLEMENTAL QUARTERLY DATA       
(Dollars in thousands, except share amounts)      
(Unaudited)      
       
       
Quarter Ended: 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011
           
New Asset Production:          
# of Sales Reps 53 69 84 87 94
# of Leases 2,476 3,009 3,253 3,669 3,984
Leased Equipment Volume $23,636 $31,729 $35,759 $42,906 $47,024
           
Approval Percentage  46% 49% 49% 54% 56%
           
Average Monthly Sources 484 581 625 725 740
           
Implicit Yield on New Leases 15.32% 14.56% 14.40% 13.98% 13.39%
           
Net Interest and Fee Margin:          
Interest Income Yield 11.90% 12.12% 12.28% 12.38% 12.48%
Fee Income Yield 3.54% 3.54% 3.84% 3.54% 3.59%
Interest and Fee Income Yield 15.44% 15.66% 16.12% 15.92% 16.07%
Cost of Funds 4.32% 4.00% 3.86% 3.82% 3.77%
Net Interest and Fee Margin 11.12% 11.66% 12.26% 12.10% 12.30%
           
Average Total Finance Receivables  $431,176 $395,906 $371,833 $357,089 $349,203
Average Net Investment in Leases $427,416 $393,248 $369,973 $355,863 $348,276
           
End of Period Net Investment in Leases $405,424 $378,559 $359,859 $350,528 $347,254
End of Period Loans $2,781 $2,101 $1,284 $1,041 $765
           
Portfolio Asset Quality:          
           
Leasing          
30+ Days Past Due Delinquencies 3.00% 2.64% 2.35% 1.97% 1.67%
30+ Days Past Due Delinquencies $13,470 $11,031 $9,359 $7,665 $6,475
           
60+ Days Past Due Delinquencies 1.37% 1.20% 1.03% 0.89% 0.75%
60+ Days Past Due Delinquencies $6,135 $5,015 $4,099 $3,460 $2,891
           
Total Finance Receivables          
30+ Days Past Due Delinquencies 3.06% 2.70% 2.38% 1.98% 1.68%
30+ Days Past Due Delinquencies $13,829 $11,358 $9,537 $7,726 $6,514
           
60+ Days Past Due Delinquencies 1.39% 1.24% 1.05% 0.90% 0.75%
60+ Days Past Due Delinquencies $6,288 $5,202 $4,213 $3,504 $2,914
           
           
Net Charge-offs - Leasing $4,843 $3,489 $2,778 $2,324 $2,002
% on Average Net Investment in          
 Leases Annualized 4.53% 3.55% 3.00% 2.61% 2.30%
           
Net Charge-offs - Total Finance Receivables $5,063 $3,596 $2,879 $2,375 $2,010
% on Average Total Finance Receivables          
 Annualized 4.70% 3.63% 3.10% 2.66% 2.30%
           
Allowance for Credit Losses $10,253 $9,151 $8,355 $7,718 $6,887
% of 60+ Delinquencies 163.06% 175.91% 198.31% 220.26% 236.34%
           
90+ Day Delinquencies (Non-earning total finance receivables) $3,399 $2,819 $2,398 $1,996 $1,407
           
Balance Sheet:          
           
Assets          
Investment in Leases and Loans $409,637 $381,978 $362,328 $352,527 $348,290
Initial Direct Costs and Fees 8,821 7,833 7,170 6,760 6,616
Reserve for Credit Losses (10,253) (9,151) (8,355) (7,718) (6,887)
Net Investment in Leases and Loans $408,205 $380,660 $361,143 $351,569 $348,019
Cash and Cash Equivalents 44,334 35,178 44,100 37,026 40,064
Restricted Cash 65,521 66,546 47,384 47,107 51,212
Other Assets 16,461 12,611 13,678 32,360 34,972
Total Assets $534,521 $494,995 $466,305 $468,062 $474,267
           
Liabilities          
Total Debt $268,434 $218,987 $191,858 $178,650 $178,323
Deposits  85,135  96,852  95,358  92,919  95,731
Other Liabilities 26,787 22,887 20,932 36,490 38,845
Total Liabilities $380,356 $338,726 $308,148 $308,059 $312,899
           
Stockholders' Equity          
Common Stock $128 $129 $129 $129 $130
Paid-in Capital, net 85,689 86,204 86,606 86,985 87,563
Other Comprehensive Income (242) (205) (153) (132) (100)
Retained Earnings 68,590 70,141 71,575 73,021 73,775
Total Stockholders' Equity $154,165 $156,269 $158,157 $160,003 $161,368
           
Total Liabilities and           
Stockholders' Equity $534,521 $494,995 $466,305 $468,062 $474,267
           
Capital and Leverage:          
Equity $154,165 $156,269 $158,157 $160,003 $161,368
Debt to Equity 2.29 2.02 1.82 1.70 1.70
Equity to Assets 28.84% 31.57% 33.92% 34.18% 34.02%
           
Regulatory Capital Ratios:          
Tier 1 Leverage Capital 28.36% 30.13% 32.67% 34.87% 34.30%
Tier 1 Risk-based Capital 34.15% 37.48% 39.90% 39.58% 39.88%
Total Risk-based Capital 35.42% 38.74% 41.16% 40.84% 41.14%
           
Expense Ratios:          
Salaries and Benefits Expense $5,124 $4,588 $4,947 $5,307 $5,937
Salaries and Benefits Expense          
 Annualized % of Avg. Fin. Recbl. 4.75% 4.64% 5.32% 5.94% 6.80%
           
Total personnel end of quarter 196 211 229 234 243
           
General and Administrative Expense $3,046 $3,073 $3,156 $3,487 $3,471
General and Administrative Expense           
Annualized % of Avg. Fin. Recbl. 2.83% 3.10% 3.40% 3.91% 3.98%
           
Efficiency Ratio 60.82% 59.70% 63.62% 72.55% 78.41%
           
Net Income:          
Net Income $1,237 $1,551 $1,434 $1,446 $754
           
Annualized Performance Measures:          
Return on Average Assets 0.90% 1.20% 1.19% 1.28% 0.65%
Return on Average Stockholders' Equity 3.31% 4.09% 3.73% 3.72% 1.88%
           
Per Share Data:          
Number of Shares - Basic 12,778,463 12,832,792 12,872,123 12,866,214 12,927,477
Basic Earnings per Share $0.10 $0.12 $0.11 $0.11 $0.06
           
Number of Shares - Diluted 12,833,643 12,904,163 12,933,439 12,942,524 13,005,882
Diluted Earnings per Share $0.10 $0.12 $0.11 $0.11 $0.06
           
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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