EXHIBIT 99.1
Marlin Business Services Corp. Reports Second Quarter 2008 Net Income Improvement of 25 Percent Over First Quarter
* Strong liquidity position, $179.3 million of undrawn capacity in
credit facilities
* Strong capital position, leverage of 4.3:1
* Pricing on new originations increased 86 basis points year over
year
* Lower 30+ day lease delinquencies compared to first quarter 2008.
MOUNT LAUREL, N.J., Aug. 4, 2008 (PRIME NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported second quarter 2008 net income of $1.7 million or $0.14 per diluted share.
"We continue to make strides on successfully navigating through this challenging period for the economy," says Daniel P. Dyer, Marlin's Chairman and CEO. "This quarter, I'm pleased to report improved profits, stable credit quality and a strengthening of the company's overall liquidity with the growth of our new depository, Marlin Business Bank."
For the second quarter of 2008, the average net investment in leases was $713.2 million, compared to $730.0 million for the first quarter of 2008 and $710.6 million for the second quarter of 2007. Second quarter 2008 lease production was $62.5 million, based on initial equipment cost, compared to $70.6 million for the first quarter of 2008 and $97.3 million for the second quarter of 2007. The lower lease production levels in the second quarter reflect the current economic environment along with our decision to adopt more restrictive credit standards.
Demonstrating our pricing discipline, the average implicit yield on new lease production was 13.90% in the quarter, an increase of 61 basis points from the first quarter of 2008, up 86 basis points from the second quarter of 2007 and the highest yield on new lease production since second quarter 2004.
Included in average total finance receivables is $17.1 million of the Company's Business Capital Loan product, an increase of $2.1 million compared to first quarter of 2008 and $10.4 million compared to second quarter 2007.
The net interest and fee margin for the quarter ended June 30, 2008 was 9.90%, up 8 basis points from 9.82% in the first quarter of 2008. The increase is primarily due to a decrease in interest expense partially offset by lower interest earned on free cash flow. Fee income improved slightly to 3.05% for the quarter ended June 30, 2008 from 3.00% in the first quarter of 2008 due to a higher number of late fee billings. Interest expense as a percentage of average total finance receivables declined 37 basis points to 5.13% in the second quarter of 2008 versus 5.50% in the first quarter of 2008. The decrease is primarily due to lower average borrowings outstanding as a percentage of average total finance receivables, resulting from the term securitization prefunding ending in first quarter of 2008.
Leases over 30 days delinquent were 3.04% as of June 30, 2008, flat compared to 3.05% as of March 31, 2008. On a dollar basis, leases in the 30+ delinquency category were $24.9 million at June 30, 2008, down from $25.8 million at March 31, 2008 and $29.1 million at December 31, 2007. Leases over 60 days delinquent were 1.12% as of June 30, 2008, a slight increase from 1.09% as of March 31, 2008. On a dollar basis, leases over 60 days delinquent were $9.2 million at June 30, 2008, flat compared to $9.2 million at March 31, 2008.
Net lease charge-offs in the second quarter were $5.4 million, or 3.06% of average net investment in leases on an annualized basis compared to $5.3 million or 2.90% of average net investment in leases on an annualized basis during first quarter 2008.
The Company increased its allowance for credit losses to $12.9 million as of June 30, 2008, raising the allowance as a percentage of total finance receivables to 1.79% from 1.63% at March 31, 2008.
Salaries and Benefits were $6.3 million for the second quarter ended June 30, 2008 compared to $5.9 million for the first quarter 2008. The increase over first quarter is primarily related to costs associated with a previously announced workforce reduction.
General and administrative expenses were $4.0 million for the second quarter ended June 30, 2008 compared to $4.3 million for the first quarter 2008. The decrease over the first quarter is primarily related to reduced marketing investment related to our working capital loan product.
During the second quarter the Company repurchased 68,000 shares under the stock repurchase program announced in November.
The Company opened its Utah Industrial Bank, Marlin Business Bank, on March 12, 2008. The Bank has funded $47 million of leases and loans through its initial capitalization of $12 million and its issuance of $43.6 million in certificates of deposits at an all in deposit rate of 4.12%. Quarterly average outstandings were $15.8 million at a weighted average interest rate of 4.17%.
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 Tuesday, August 5, 2008 at 10:00 a.m. EDT to discuss our second quarter 2008 results. If you wish to participate, please call (877) 419-6600 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 actual results to differ materially from those described in the forward-looking stateme nts. 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
June 30, December 31,
2008 2007
----------- -----------
(Dollars in thousands,
except per-share data)
(Unaudited)
ASSETS
Cash and cash equivalents $ 36,798 $ 34,347
Restricted cash 65,136 141,070
Net investment in leases and loans 731,427 765,938
Property and equipment, net 3,173 3,266
Property tax receivables 1,532 539
Fair value of cash flow hedge derivatives 880 4
Other assets 16,631 14,490
----------- -----------
Total assets $ 855,577 $ 959,654
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving and term secured borrowings $ 618,330 $ 773,085
Deposits 43,618 --
Other liabilities:
Fair value of cash flow hedge derivatives 5,041 4,760
Sales and property taxes payable 11,611 5,756
Accounts payable and accrued expenses 10,069 10,226
Deferred income tax liability 14,513 15,682
----------- -----------
Total liabilities 703,182 809,509
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common Stock, $0.01 par value; 75,000,000
shares authorized; 12,193,777 and
12,201,304 shares issued and outstanding,
respectively 122 122
Preferred Stock, $0.01 par value; 5,000,000
shares authorized; none issued -- --
Additional paid-in capital 83,324 84,429
Stock subscription receivable (5) (7)
Accumulated other comprehensive loss (2,836) (3,130)
Retained earnings 71,790 68,731
----------- -----------
Total stockholders' equity 152,395 150,145
----------- -----------
Total liabilities and stockholders'
equity $ 855,577 $ 959,654
=========== ===========
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
---- ---- ---- ----
(Dollars in thousands, except per-share data)
(Unaudited)
Income:
Interest income $ 21,870 $ 22,151 $ 44,823 $ 43,588
Fee income 5,565 5,186 11,159 10,801
---------- ---------- ---------- ----------
Interest and fee
income 27,435 27,337 55,982 54,389
Interest expense 9,359 8,256 19,606 15,967
---------- ---------- ---------- ----------
Net interest and fee
income 18,076 19,081 36,376 38,422
Provision for credit
losses 6,530 3,468 13,536 6,860
---------- ---------- ---------- ----------
Net interest and fee
income after
provision for credit
losses 11,546 15,613 22,840 31,562
Insurance and other
income 1,708 1,553 3,469 3,228
---------- ---------- ---------- ----------
Net interest and
other revenue after
provision for
credit losses 13,254 17,166 26,309 34,790
---------- ---------- ---------- ----------
Non-interest expense
Salaries and benefits 6,344 5,113 12,215 10,830
General and
administrative 3,994 3,281 8,296 6,633
Financing related
costs 231 213 597 459
---------- ---------- ---------- ----------
Non-interest expense 10,569 8,607 21,108 17,922
---------- ---------- ---------- ----------
Income before income
taxes 2,685 8,559 5,201 16,868
Income taxes 985 3,381 2,142 6,663
---------- ---------- ---------- ----------
Net income $ 1,700 $ 5,178 $ 3,059 $ 10,205
========== ========== ========== ==========
Basic earnings per
share $ 0.14 $ 0.43 $ 0.25 $ 0.85
Diluted earnings per
share $ 0.14 $ 0.42 $ 0.25 $ 0.83
Weighted average shares
used in computing
basic earnings per
share 11,987,220 12,106,482 12,008,544 12,030,155
Weighted average shares
used in computing
diluted earnings per
share 12,061,843 12,341,182 12,107,198 12,297,097
SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except share amounts)
(unaudited)
Quarter Ended: 6/30/2007 9/30/2007 12/31/2007 3/31/2008 6/30/2008
-------------- --------- --------- ---------- --------- ---------
New Asset
Production:
# of Sales Reps 97 105 118 108 92
# of Leases 8,423 7,609 7,615 6,836 6,276
Leased
Equipment
Volume $97,260 $86,167 $87,670 $70,550 $62,467
Approval
Percentage 58% 60% 56% 50% 49%
Average Monthly
Sources 1,279 1,180 1,186 1,091 1,047
Implicit Yield
on New Leases 13.04% 13.06% 12.98% 13.29% 13.90%
Net Interest
and Fee
Margin:
Interest Income
Yield 12.34% 12.34% 12.89% 12.32% 11.98%
Fee Income
Yield 2.89% 3.10% 2.96% 3.00% 3.05%
Interest and
Fee Income
Yield 15.23% 15.44% 15.85% 15.32% 15.03%
Cost of Funds 4.60% 4.78% 5.68% 5.50% 5.13%
Net Interest
and Fee Margin 10.63% 10.66% 10.17% 9.82% 9.90%
Average Total
Finance
Receivables $717,893 $733,304 $745,150 $745,175 $730,267
Average Net
Investment in
Leases $710,587 $724,933 $733,461 $729,951 $713,171
End of Period
Net Investment
in Leases $740,021 $746,889 $752,562 $737,301 $715,677
End of Period
Loans $8,118 $9,038 $13,376 $16,234 $15,750
End of Period
Factoring
Receivables $182 $95 $26 $0 $0
Total Loan and
Lease Sales
Personnel 101 114 124 117 95
Portfolio Asset
Quality:
Total Finance
Receivables
30+ Days Past
Due
Delinquencies 2.59% 3.08% 3.36% 3.07% 3.13%
30+ Days Past
Due
Delinquencies $22,292 $26,770 $29,548 $26,535 $26,195
60+ Days Past
Due
Delinquencies 0.68% 0.91% 0.95% 1.10% 1.16%
60+ Days Past
Due
Delinquencies $5,824 $7,951 $8,377 $9,527 $9,687
Leasing
30+ Days Past
Due
Delinquencies 2.60% 3.03% 3.37% 3.05% 3.04%
30+ Days Past
Due
Delinquencies $22,211 $26,054 $29,101 $25,831 $24,930
60+ Days Past
Due
Delinquencies 0.68% 0.91% 0.95% 1.09% 1.12%
60+ Days Past
Due
Delinquencies $5,798 $7,795 $8,195 $9,230 $9,156
Loans
30+ Days Past
Due
Delinquencies 0.99% 7.74% 3.03% 4.24% 7.62%
30+ Days Past
Due
Delinquencies $81 $715 $426 $704 $1,265
60+ Days Past
Due
Delinquencies 0.32% 1.69% 1.23% 1.79% 3.20%
60+ Days Past
Due
Delinquencies $26 $156 $173 $297 $531
Factoring
Receivables
30+ Days Past
Due
Delinquencies 0.00% 1.01% 70.00% 0.00% 0.00%
30+ Days Past
Due
Delinquencies $0 $1 $21 $0 $0
60+ Days Past
Due
Delinquencies 0.00% 0.00% 30.00% 0.00% 0.00%
60+ Days Past
Due
Delinquencies $0 $0 $9 $0 $0
Net Charge-offs
- Leasing $3,176 $3,351 $4,680 $5,289 $5,448
% on Average
Net Investment
in Leases
Annualized 1.79% 1.85% 2.55% 2.90% 3.06%
Net Charge-offs
- Other
Finance
Receivables $31 $49 $122 $631 $283
% on Average
Other Finance
Receivables
Annualized 1.70% 2.34% 4.17% 16.58% 6.62%
Allowance for
Credit Losses $8,829 $9,395 $10,988 $12,074 $12,873
% of 60+
Delinquencies 151.60% 118.16% 131.17% 126.73% 132.89%
90+ Day
Delinquencies
(Non-earning
total finance
receivables) $2,449 $3,438 $3,695 $3,940 $4,704
Balance Sheet:
Assets
Investment in
Leases and
Loans $730,316 $738,275 $749,543 $739,393 $719,873
Initial Direct
Costs and Fees 26,652 27,048 27,383 26,216 24,517
Reserve for
Credit Losses (8,829) (9,395) (10,988) (12,074) (12,873)
Net Investment
in Leases and
Loans $748,139 $755,928 $765,938 $753,535 $731,427
Cash and Cash
Equivalents 8,060 10,964 34,347 24,089 36,798
Restricted Cash 64,660 68,634 141,070 64,894 65,136
Other Assets 21,343 16,031 18,299 30,315 22,216
Total Assets $842,202 $851,557 $959,654 $872,833 $855,577
Liabilities
Total Debt $651,771 $659,561 $773,085 $680,256 $618,330
Deposits $0 $0 $0 $0 $43,618
Other
Liabilities 42,780 41,563 36,424 44,975 41,234
Total
Liabilities $694,551 $701,124 $809,509 $725,231 $703,182
Stockholders'
Equity
Common Stock $123 $123 $122 $122 $122
Paid-in
Capital, net 84,923 85,638 84,422 83,792 83,319
Other
Comprehensive
Income 1,955 (1,006) (3,130) (6,402) (2,836)
Retained
Earnings 60,650 65,678 68,731 70,090 71,790
Total
Stockholders'
Equity $147,651 $150,433 $150,145 $147,602 $152,395
Total
Liabilities
and
Stockholders'
Equity $842,202 $851,557 $959,654 $872,833 $855,577
Capital and
Leverage:
Tangible Equity $147,651 $150,433 $150,145 $147,602 $152,395
Debt to
Tangible
Equity 4.41 4.38 5.15 4.61 4.34
Expense Ratios:
Salaries and
Benefits
Expense $5,113 $5,257 $5,243 $5,870 $6,344
Salaries and
Benefits
Expense
Annualized %
of Avg. Fin
Recbl 2.85% 2.87% 2.81% 3.15% 3.47%
Total personnel
end of quarter 324 331 357 354 291
General and
Administrative
Expense $3,281 $3,447 $3,553 $4,303 $3,994
General and
Administrative
Expense
Annualized %
of Avg. Fin
Recbl 1.83% 1.88% 1.91% 2.31% 2.19%
Efficiency
Ratio 40.68% 41.06% 42.41% 50.71% 52.25%
Net Income:
Net Income $5,178 $5,028 $3,053 $1,359 $1,700
Annualized
Performance
Measures:
Return on
Average Assets 2.49% 2.38% 1.25% 0.60% 0.79%
Return on
Average
Stockholders'
Equity 14.36% 13.49% 8.10% 3.66% 4.50%
Per Share Data:
Number of
Shares -
Basic 12,106,482 12,155,152 12,138,824 12,033,523 11,987,220
EPS- Basic $0.43 $0.41 $0.25 $0.11 $0.14
Number of
Shares -
Diluted 12,341,182 12,355,484 12,283,142 12,133,159 12,061,843
EPS- Diluted $0.42 $0.41 $0.25 $0.11 $0.14
Net investment in total finance receivables includes net investment
in direct financing leases, loans, and factoring receivables.
CONTACT: Marlin Business Services Corp.
Lynne Wilson
1-888-479-9111 ext. 4108
