EXHIBIT 99.1
Marlin Business Services Corp. Reports Third Quarter 2007 Diluted Earnings Per Share of $0.41
Third Quarter Net Income Increases 6.4% Compared to Third Quarter
of 2006
Lease and Loan Portfolio Grows 17.4% over Past Year
New Warehouse Financing Agreements, Securitization Support
Portfolio Growth Plans
MOUNT LAUREL, N.J., Nov. 6, 2007 (PRIME NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported net income of $5.0 million for the third quarter ended September 30, 2007, a 6.4% increase over $4.7 million for the same period in 2006. Diluted earnings per share was $0.41 compared with $0.39 for the same period in 2006.
For the nine months ended September 30, 2007, net income was $15.2 million and diluted earnings per share was $1.24, both up from $14.8 million and $1.22 per share, respectively, for the same period in 2006. Included in net income and diluted earnings per share for the nine-month period ended September 30, 2006 was an after-tax reduction of Hurricane Katrina related reserves of $545,000 or $0.045 per diluted share. Excluding this after-tax reduction, for the nine-month period ended September 30, 2006 net income was $14.2 million and diluted earnings per share was $1.17.
Daniel P. Dyer, Chairman and Chief Executive Officer of Marlin Business Services Corp., said, "Marlin's strong performance this quarter demonstrates the strength and resilience of our business model as we were able to quickly adjust to industry challenges. We made progress along all of our key operating metrics, including portfolio growth, margins, and funding, while also investing in our infrastructure to support our growth objectives. Our value proposition -- quick turnaround, simplified documentation and competitive terms -- is increasingly meeting the business financing needs of the small business market and creating value for shareholders."
Average net investment in leases and loans of $733.2 million for the quarter ended September 30, 2007 was up 17.4% compared to the third quarter of 2006. Third quarter 2007 lease production was $86.2 million, based on initial equipment cost. Lease production in the quarter reflects efforts to maintain credit quality and pricing discipline as well as temporary disruptions to end user demand, and deliberate reductions in our exposure to select industries. The Company also grew its new Business Capital Loan portfolio during the quarter.
Yields and margins both showed the effects of recently implemented improvement programs. For the quarter, the average implicit yield on new lease production rose to 13.06%, a sequential increase of 2 basis points from the previous quarter and a 33 basis point increase from a year ago. The ability to achieve price increases on new business contributed to a sequential flattening in the portfolio interest income yield, which was 12.34% of total average finance receivables for the third quarter. For the third quarter, the net interest and fee margin expanded 3 basis points to 10.66% of total average finance receivables compared to the second quarter of 2007, reflecting improvements in fee income offset by a higher cost of funds.
For the third quarter, the average cost of funds as a percentage of average total finance receivables was 4.78%, up 18 basis points from the second quarter of 2007 primarily due to the impact of rising short-term interest rates on the Company's variable rate borrowing facilities. During the quarter the Company both renewed and expanded its warehouse financing facilities to an aggregate $340 million. In addition, on October 24, Marlin completed a $440 million term securitization, its ninth securitization and fourth rated AAA. Consequently, the Company now has secured the funding capacity to support its growth plans.
Credit quality remained strong. For the third quarter, charge-offs were $3.4 million, or 1.85% of average total finance receivables on an annualized basis, a ratio that is essentially in line with both the preceding quarter and with the third quarter of 2006. Leases over 60 days delinquent rose 23 basis points on a sequential basis, primarily due to higher delinquencies in select industries and fewer processing days in September. As of September 30, 2007, the Company's allowance for credit losses was $9.4 million, or 1.27% of total finance receivables.
For the quarter, the Company's efficiency ratio was 41.06%. Total operating expenses for the quarter increased to $8.9 million, primarily as a result of costs associated with growth investments in sales hires and marketing initiatives.
Effective November, 2007, the Company is discontinuing the origination of new factoring agreements, and plans to withdraw from the factoring business that was in the pilot phase. At September 30, 2007, factoring-related financings totaled approximately $540,000, consisting of $95,000 of factoring receivables and a $445,000 term loan resulting from the refinance of a real estate related factoring receivable.
In conjunction with this release, static pool loss statistics have been updated as supplemental information on the investor relations section of our website at www.marlincorp.com.
Conference Call and Webcast
We will host a conference call on Wednesday, November 7, 2007 at 9:00 a.m. ET to discuss our third quarter 2007 results. If you wish to participate, please call 888-819-8038 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 Marlin Business Services Corp. website, www.marlincorp.com. An audio replay will also be available on the Investor Relations section of Marlin's website for approximately 90 days.
About Marlin Business Services Corp.
Marlin Business Services Corp. is a nationwide provider of equipment leasing and working capital solutions primarily to small businesses. The Company's principal operating subsidiary, Marlin Leasing Corporation, finances over 70 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. In addition to its executive offices in Mount Laurel, NJ, Marlin has regional offices in or near Atlanta, Chicago, Denver, Philadelphia and Salt Lake City. 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.primenewswire.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 and Section 21E of the Securities Exchange Act of 1934. 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 act ual 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 SEC, 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
Consolidated Balance Sheets
September 30, December 31,
------------- ------------
2007 2006
------------- ------------
(Dollars in thousands, except
per-share data)
(Unaudited)
ASSETS
Cash and cash equivalents $ 10,964 $ 26,663
Restricted cash 68,634 57,705
Net investment in leases and loans 755,928 693,911
Property and equipment, net 3,281 3,430
Property tax receivables 852 257
Fair value of cash flow hedge derivatives 43 456
Other assets 11,855 13,030
--------- ---------
Total assets $ 851,557 $ 795,452
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving and term secured borrowings $ 659,561 $ 616,322
Other liabilities:
Fair value of cash flow hedge derivatives 4,172 1,607
Sales and property taxes payable 9,804 8,034
Accounts payable and accrued expenses 9,974 12,269
Deferred income tax liability 17,613 22,931
--------- ---------
Total liabilities 701,124 661,163
--------- ---------
Commitments and contingencies
Stockholders' equity:
Common Stock, $0.01 par value; 75,000,000
shares authorized; 12,288,036 and
12,030,259 shares issued and outstanding,
respectively 123 120
Preferred Stock, $0.01 par value; 5,000,000
shares authorized; none issued -- --
Additional paid-in capital 85,645 81,850
Stock subscription receivable (7) (18)
Cumulative other comprehensive income (1,006) 1,892
Retained earnings 65,678 50,445
--------- ---------
Total stockholders' equity 150,433 134,289
--------- ---------
Total liabilities and stockholders'
equity $ 851,557 $ 795,452
========= =========
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2007 2006 2007 2006
---- ---- ---- ----
(Dollars in thousands, except per-share data)
(Unaudited)
Income:
Interest income $ 22,622 $ 19,629 $ 66,210 $ 55,996
Fee income 5,685 5,241 16,486 15,245
---------- ---------- ---------- ----------
Interest and fee
income 28,307 24,870 82,696 71,241
Interest expense 8,768 6,888 24,735 18,389
---------- ---------- ---------- ----------
Net interest and fee
income 19,539 17,982 57,961 52,852
Provision for credit
losses 3,966 3,082 10,826 7,096
---------- ---------- ---------- ----------
Net interest and fee
income after
provision for credit
losses 15,573 14,900 47,135 45,756
Insurance and other
income 1,659 1,365 4,888 3,949
---------- ---------- ---------- ----------
Operating income 17,232 16,265 52,023 49,705
---------- ---------- ---------- ----------
Non-interest expense
Salaries and benefits 5,257 5,171 16,087 15,570
General and
administrative 3,447 2,868 10,080 8,692
Financing related
costs 202 408 662 1,060
---------- ---------- ---------- ----------
Non-interest expense 8,906 8,447 26,829 25,322
---------- ---------- ---------- ----------
Income before income
taxes 8,326 7,818 25,194 24,383
Income taxes 3,298 3,088 9,961 9,631
---------- ---------- ---------- ----------
Net income $ 5,028 $ 4,730 $ 15,233 $ 14,752
========== ========== ========== ==========
Basic earnings per
share $ 0.41 $ 0.40 $ 1.26 $ 1.25
Diluted earnings per
share $ 0.41 $ 0.39 $ 1.24 $ 1.22
Weighted average shares
used in computing
basic earnings per
share 12,155,152 11,838,677 12,066,077 11,755,028
Weighted average shares
used in computing
diluted earnings per
share 12,355,484 12,154,889 12,310,198 12,114,655
SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except share amounts)
(unaudited)
Quarter Ended: 9/30/ 12/31/ 3/31/ 6/30/ 9/30/
-------------- 2006 2006 2007 2007 2007
-------- -------- -------- -------- --------
New Asset
Production:
# of Sales Reps 100 100 96 97 105
# of Leases 8,824 8,985 8,639 8,423 7,609
Leased Equipment
Volume $100,950 $105,639 $102,652 $97,260 $86,167
Average monthly
sources 1,321 1,309 1,337 1,279 1,180
Implicit Yield on
New Leases 12.73% 12.67% 12.80% 13.04% 13.06%
Net interest and
fee margin:
Interest Income
Yield 12.57% 13.11% 12.40% 12.34% 12.34%
Fee Income Yield 3.35% 3.07% 3.25% 2.89% 3.10%
Interest and Fee
Income Yield 15.92% 16.18% 15.65% 15.23% 15.44%
Cost of Funds 4.41% 4.95% 4.46% 4.60% 4.78%
Net interest and
Fee Margin 11.51% 11.23% 11.19% 10.63% 10.66%
Average Total
Finance
Receivables $624,711 $660,529 $691,253 $717,893 $733,304
Average Net
Investment in
Leases $623,999 $658,120 $687,442 $710,587 $724,933
End of period
Net Investment
in Leases $655,871 $691,932 $717,882 $740,021 $746,889
End of period Loans $971 $1,979 $5,175 $8,118 $9,038
End of period
Factoring
Receivables $296 $1,760 $386 $182 $95
Total loan and
lease sales
personnel 102 103 100 101 114
Portfolio Asset
Quality:
Total Finance
Receivables
60+ Days Past Due
Delinquencies 0.58% 0.71% 0.76% 0.68% 0.91%
60+ Days Past Due
Delinquencies $4,411 $5,715 $6,329 $5,824 $7,951
Leasing
60+ Days Past Due
Delinquencies 0.58% 0.71% 0.76% 0.68% 0.91%
60+ Days Past Due
Delinquencies $4,411 $5,676 $6,288 $5,798 $7,795
Loans
60+ Days Past Due
Delinquencies 0.00% 0.00% 0.28% 0.32% 1.69%
60+ Days Past Due
Delinquencies $0 $0 $15 $26 $156
Factoring
Receivables
60+ Days Past Due
Delinquencies 0.00% 2.20% 6.57% 0.00% 0.00%
60+ Days Past Due
Delinquencies $0 $39 $26 $0 $0
Net Charge-offs -
Leasing $2,685 $2,405 $2,907 $3,176 $3,351
% on Average Net
Investment in
Leases Annualized 1.72% 1.46% 1.69% 1.79% 1.85%
Net Charge-offs -
Other Finance
Receivables $0 $0 $118 $31 $49
% on Average Other
Finance Receivables
Annualized 0.00% 0.00% 12.38% 1.70% 2.34%
Allowance for
Credit Losses $7,767 $8,201 $8,568 $8,829 $9,395
% of 60+
Delinquencies 176.08% 143.50% 135.38% 151.60% 118.16%
90+ Day
Delinquencies
(Non-earning) $1,876 $2,250 $2,976 $2,449 $3,438
SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except share amounts)
(unaudited)
Quarter
Ended: 9/30/2006 12/31/2006 3/31/2007 6/30/2007 9/30/2007
------- ---------- ---------- --------- ---------- ----------
Balance
Sheet:
Assets
Investment
in Leases
and Loans $642,113 $677,848 $705,739 $730,316 $738,275
Initial
Direct
Costs and
Fees 22,496 24,264 25,886 26,652 27,048
Reserve
for
Credit
Losses (7,767) (8,201) (8,568) (8,829) (9,395)
Net
Invest-
ment in
Leases
and Loans $656,842 $693,911 $723,057 $748,139 $755,928
Cash and
Cash
Equiva-
lents 34,159 26,663 7,429 8,060 10,964
Restricted
Cash 179,964 57,705 63,640 64,660 68,634
Other
Assets 15,954 17,173 23,277 21,343 16,031
Total
Assets $886,919 $795,452 $817,403 $842,202 $851,557
Liabili-
ties
Total
Debt $712,355 $616,322 $632,197 $651,771 $659,561
Other
Liabi-
lities 44,963 44,841 44,303 42,780 41,563
Total
Liabi-
lities $757,318 $661,163 $676,500 $694,551 $701,124
Stock-
holders'
Equity
Common
Stock $120 $120 $123 $123 $123
Paid-in
Capital,
net 80,548 81,832 84,381 84,923 85,638
Other
Compre-
hensive
Income 2,370 1,892 927 1,955 (1,006)
Retained
Earnings 46,563 50,445 55,472 60,650 65,678
Total
Stock-
holders'
Equity $129,601 $134,289 $140,903 $147,651 $150,433
Total
Liabi-
lities
and
Stock-
holders'
Equity $886,919 $795,452 $817,403 $842,202 $851,557
Capital
and
Leverage:
Tangible
Equity $129,601 $134,289 $140,903 $147,651 $150,433
Debt to
Tangible
Equity 5.50 4.59 4.49 4.41 4.38
Expense
Ratios:
Salaries
and
Benefits
Expense $5,171 $6,898 $5,716 $5,113 $5,257
Salaries
and
Benefits
Expense
annual-
ized % of
Avg. Fin
Recbl. 3.31% 4.18% 3.31% 2.85% 2.87%
Total
personnel
end
of
quarter 310 314 311 324 331
General
and
Admini-
strative
Expense $2,868 $3,264 $3,352 $3,281 $3,447
General
and
Admini-
strative
Expense
annual-
ized
% of
Avg. Fin
Recbl. 1.84% 1.98% 1.94% 1.83% 1.88%
Efficiency
Ratio 41.55% 50.58% 43.15% 40.68% 41.06%
Net Income:
Net Income $4,730 $3,882 $5,027 $5,178 $5,028
Annualized
Perfor-
mance
Measures:
Return on
Average
Assets 2.55% 1.86% 2.52% 2.49% 2.38%
Return on
Average
Stock-
holders'
Equity 14.79% 11.77% 14.61% 14.36% 13.49%
Per Share
Data:
Number of
Shares -
Basic 11,838,677 11,889,262 11,957,024 12,106,482 12,155,152
EPS- Basic $0.40 $0.33 $0.42 $0.43 $0.41
Number of
Shares -
Diluted 12,154,889 12,231,808 12,257,484 12,341,182 12,355,484
EPS-
Diluted $0.39 $0.32 $0.41 $0.42 $0.41
Net investment in total finance receivables
includes net investment in direct financing
leases, loans, and factoring receivables
CONTACT: Marlin Business Services Corp.
Lynne Wilson
(888) 479-9111 x4108
