EXHIBIT 99.1
Marlin Business Services Corp. Reports Second Quarter 2009 Results
* Net income of $946,000 * Net Income on an Adjusted Basis of $555,000, which excludes the impact of derivatives * Strong capital position, equity to assets leverage ratio of 21.24% * Total risk-based capital of 25.63% * Pricing on new originations improved 193 basis points year over year * Lower 30+ lease delinquencies and charge-offs quarter-over-quarter reflect the Company's credit discipline
MOUNT LAUREL, N.J., Aug. 6, 2009 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported a second quarter 2009 GAAP net income of $946,000 or $0.08 per diluted share and net income on an adjusted basis of $555,000 or $0.04 per share.
Included in net income and net income on an adjusted basis is an after-tax severance charge of $424,000 related to a previously announced workforce reduction.
"Despite the economy's poor fundamentals, I am encouraged with the positive strides taken to strengthen our business franchise and position Marlin to capitalize on growth once the economy and capital markets return to a more normal state," says Daniel P. Dyer, Marlin's CEO. "Our disciplined operating approach along with the decision to tighten credit standards early in the credit cycle is working, evidenced by lower delinquencies and charge-offs and positive financial results posted this quarter."
Second quarter 2009 lease production was $15.8 million, based on initial equipment cost, compared to $36.3 million for the first quarter of 2009 and $62.5 million for the second quarter of 2008. The company's conservative underwriting standards are reflected in lease approval rates which were 36% for the second quarter of 2009, versus 41% for the first quarter of 2009 and 49% for the second quarter a year ago.
The reduction in approval rates and leasing volumes reflects management's actions to maintain tighter underwriting standards and disciplined pricing practices in this current period of limited funding visibility and uncertain economic conditions. Weaker demand for equipment was also a contributor to the volume reduction.
The average implicit yield on new lease production continues to improve and was 15.83% for the second quarter of 2009, up 143 basis points from the first quarter of 2009 and up 193 basis points from the second quarter of 2008.
The net interest and fee margin for the quarter ended June 30, 2009 was 9.69%, down 39 basis points from the first quarter of 2009 and down 4 basis points from 9.73% for the quarter ended June 30, 2008. The reduction from first quarter 2009 was driven by fee income and interest expense. Fee income as a percentage of average total finance receivables was 2.99% for the quarter ended June 30, 2009, down 13 basis points from the first quarter of 2009 due to lower late fee billings and up 11 basis points from 2.88% for the quarter ended June 30, 2008. Interest expense as a percentage of average total finance receivables was 5.08% for the second quarter of 2009 versus 4.86% for the first quarter of 2009 and 5.13% for the quarter ended June 30, 2008. The increase from first quarter 2009 was primarily due to higher conduit pricing, partially offset by a shift in mix between long term fixed-rate term securitizations and shorter term variable-rate facilities.
30+ day delinquencies demonstrated improvement in the second quarter of 2009. Leases over 30 days delinquent were 4.41% as of June 30, 2009, a decrease compared to 4.87% at March 31, 2009 and an increase compared to 3.04% at June 30, 2008. On a dollar basis, leases in the 30+ delinquency category totaled $27.4 million at June 30, 2009, down from $33.9 million at March 31, 2009 and up from $24.9 million at June 30, 2008. Leases over 60 days delinquent were 2.26% as of June 30, 2009, a decrease from 2.34% as of March 31, 2009 and an increase from 1.12% at June 30, 2008. On a dollar basis, leases over 60 days delinquent totaled $14.1 million at June 30, 2009, a decrease compared to $16.3 million at March 31, 2009 and an increase compared to $9.2 million at June 30, 2008.
Net lease charge-offs in the second quarter of 2009 were $7.6 million, or 5.26% of average net investment in leases on an annualized basis, compared to $8.0 million or 5.03% of average net investment in leases on an annualized basis during first quarter 2009.
The provision for credit losses was $6.8 million for the quarter ended June 30, 2009, down from $8.7 million for the first quarter of 2009, due to improvements in the credit migration of the lease portfolio and the declining portfolio. The allowance as a percentage of total finance receivables, which reflects management's estimate of future losses inherent in the portfolio, was strengthened to 2.52% at June 30, 2009 versus 2.47% at March 31, 2009 and 1.79% at June 30, 2008.
A $646,000 gain was reported on derivatives for the second quarter of 2009 due to a reclassification from accumulated other comprehensive income of $409,000 related to a change in a forecasted transaction and $237,000 representing a mark-to-market increase in the fair value of derivative contracts.
Salaries and benefits were $5.1 million for the second quarter ended June 30, 2009, down from $5.9 million for the first quarter of 2009. The decrease is primarily due to previously announced reductions in work force occurring in both the first and second quarters of 2009. In the second quarter ended June 30, 2009 the Company recorded a pre-tax severance adjustment of $700,000 versus a pretax severance adjustment of $500,000 in the first quarter of 2009.
General and administrative expenses were $3.3 million for the second quarter ended June 30, 2009, compared to $3.4 million for the first quarter 2009. The decrease from the first quarter is primarily related to continued reductions in discretionary spending.
At June 30, 2009, the Company has outstanding $89.3 million of leases and loans funded through its banking subsidiary, Marlin Business Bank, and has $77.3 million in FDIC insured deposits outstanding at an average borrowing rate of 3.41% with a weighted average term to maturity of 2.39 years. Second quarter 2009 average deposit outstandings were $74.4 million at a weighted average interest rate of 3.75%.
In conjunction with this release, static pool loss statistics and vintage delinquency analysis 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 Friday, August 7, 2009 at 9:00 a.m. ET to discuss our second quarter 2009 results. If you wish to participate, please call 888-208-1332 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 90 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 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 Condensed Consolidated Balance Sheets (Unaudited) Dec. 31, ------- 2008 June 30, (as ------- restated) 2009 (1) --------- --------- (Dollars in thousands, except per-share data) ASSETS Cash and due from banks $ 3,242 $ 1,604 Interest-earning deposits with banks 50,287 38,666 --------- --------- Total cash and cash equivalents 53,529 40,270 Restricted interest-earning deposits with banks 67,751 66,212 Net investment in leases and loans 555,082 669,109 Property and equipment, net 2,816 2,961 Property tax receivables 1,855 3,120 Other assets 9,613 12,759 --------- --------- Total assets $ 690,646 $ 794,431 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Short-term borrowings $ 98,132 $ 101,923 Long-term borrowings 328,071 441,385 Deposits 77,305 63,385 Other liabilities: Fair value of derivatives 9,693 11,528 Sales and property taxes payable 9,413 6,540 Accounts payable and accrued expenses 8,392 7,926 Net deferred income tax liability 12,979 15,119 --------- --------- Total liabilities 543,985 647,806 --------- --------- Commitments and contingencies Stockholders' equity: Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,595,437 and 12,246,405 shares issued and outstanding, respectively 126 122 Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued -- -- Additional paid-in capital 83,841 83,671 Stock subscription receivable (3) (5) Accumulated other comprehensive income (loss) (40) 167 Retained earnings 62,737 62,670 --------- --------- Total stockholders' equity 146,661 146,625 --------- --------- Total liabilities and stockholders' equity $ 690,646 $ 794,431 ========= ========= (1) Certain items have been restated from amounts previously reported, to reflect the impact of correcting an immaterial error in previously filed Consolidated Financial Statements. This adjustment is described in Note 15 to the Company's Consolidated Financial Statements to be filed as part of its Form 10-Q for the quarterly period ended June 30, 2009. MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2009 2008 2009 2008 ---- ---- ---- ---- (Dollars in thousands, except per-share data) Interest income $ 17,281 $ 21,870 $ 36,353 $ 44,823 Fee income 4,380 5,252 9,414 10,487 ---------- ---------- ---------- ---------- Interest and fee income 21,661 27,122 45,767 55,310 Interest expense 7,444 9,359 15,276 19,606 ---------- ---------- ---------- ---------- Net interest and fee income 14,217 17,763 30,491 35,704 Provision for credit losses 6,793 6,530 15,542 13,536 ---------- ---------- ---------- ---------- Net interest and fee income after provision for credit losses 7,424 11,233 14,949 22,168 ---------- ---------- ---------- ---------- Other income: Insurance income 1,322 1,544 2,865 3,106 Gain (loss) on derivatives 646 -- (661) -- Other income 387 477 795 1,035 ---------- ---------- ---------- ---------- Other income 2,355 2,021 2,999 4,141 ---------- ---------- ---------- ---------- Other expense: Salaries and benefits 5,057 6,344 10,942 12,215 General and administrative 3,287 3,994 6,686 8,296 Financing related costs 55 231 310 597 ---------- ---------- ---------- ---------- Other expense 8,399 10,569 17,938 21,108 ---------- ---------- ---------- ---------- Income before income taxes 1,380 2,685 10 5,201 Income tax (benefit) expense 434 985 (57) 2,142 ---------- ---------- ---------- ---------- Net income $ 946 $ 1,700 $ 67 $ 3,059 ========== ========== ========== ========== Basic earnings per share $ 0.08 $ 0.14 $ 0.01 $ 0.25 Diluted earnings per share $ 0.08 $ 0.14 $ 0.01 $ 0.25 Weighted average shares used in computing basic earnings per share 12,593,514 12,185,532 12,456,874 12,192,844 Weighted average shares used in computing diluted earnings per share 12,603,305 12,239,736 12,465,312 12,258,264 MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES Net Income on an Adjusted Basis Reconciliation to GAAP Results Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- (Dollars in thousands) (Unaudited) Net income as reported $ 946 $1,700 $ 67 $3,059 ------ ------ ------ ------ Deduct: Gain (loss) on derivatives 646 -- (661) -- Tax effect (255) -- 261 -- ------ ------ ------ ------ Gain (loss) on derivatives, net of tax 391 -- (400) -- ------ ------ ------ ------ Net Income on an Adjusted Basis $ 555 $1,700 $ 467 $3,059 ====== ====== ====== ======
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: 6/30/2008 9/30/2008 12/31/2008 3/31/2009 6/30/2009 -------------- --------- --------- ---------- --------- --------- New Asset Production: # of Sales Reps 92 91 86 58 33 # of Leases 6,276 5,837 5,558 3,811 1,831 Leased Equipment Volume $62,467 $59,005 $58,098 $36,280 $15,811 Approval Percentage 49% 49% 47% 41% 36% Average Monthly Sources 1,047 981 936 692 374 Implicit Yield on New Leases 13.90% 13.87% 13.76% 14.40% 15.83% Net Interest and Fee Margin: Interest Income Yield 11.98% 11.92% 11.88% 11.82% 11.78% Fee Income Yield 2.88% 3.14% 3.13% 3.12% 2.99% -------- -------- -------- -------- -------- Interest and Fee Income Yield 14.86% 15.06% 15.01% 14.94% 14.77% Cost of Funds 5.13% 4.98% 4.99% 4.86% 5.08% -------- -------- -------- -------- -------- Net Interest and Fee Margin 9.73% 10.08% 10.02% 10.08% 9.69% Average Total Finance Receivables $730,267 $706,508 $680,645 $645,570 $586,608 Average Net Investment in Leases $713,171 $690,973 $667,232 $634,314 $577,493 End of Period Net Investment in Leases $714,292 $687,103 $657,657 $611,774 $547,892 End of Period Loans $15,750 $13,607 $11,452 $9,160 $7,190 Portfolio Asset Quality: Total Finance Receivables 30+ Days Past Due Delinquencies 3.13% 3.58% 3.81% 4.94% 4.53% 30+ Days Past Due Delinquencies $26,195 $28,734 $29,216 $34,910 $28,493 60+ Days Past Due Delinquencies 1.16% 1.41% 1.59% 2.38% 2.32% 60+ Days Past Due Delinquencies $9,687 $11,320 $12,203 $16,824 $14,579 Leasing 30+ Days Past Due Delinquencies 3.04% 3.52% 3.72% 4.87% 4.41% 30+ Days Past Due Delinquencies $24,930 $27,739 $28,113 $33,895 $27,399 60+ Days Past Due Delinquencies 1.12% 1.36% 1.53% 2.34% 2.26% 60+ Days Past Due Delinquencies $9,156 $10,735 $11,559 $16,281 $14,055 Loans 30+ Days Past Due Delinquencies 7.62% 6.87% 8.91% 10.04% 13.55% 30+ Days Past Due Delinquencies $1,265 $995 $1,103 $1,015 $1,094 60+ Days Past Due Delinquencies 3.20% 4.04% 5.20% 5.37% 6.49% 60+ Days Past Due Delinquencies $531 $585 $644 $543 $524 Net Charge-offs - Leasing $5,448 $6,653 $7,862 $7,973 $7,593 % on Average Net Investment in Leases Annualized 3.06% 3.85% 4.71% 5.03% 5.26% Net Charge-offs - Other Finance Receivables $283 $483 $550 $749 $531 % on Average Other Finance Receivables Annualized 6.62% 12.44% 16.40% 26.62% 23.30% Allowance for Credit Losses $12,873 $14,339 $15,283 $15,309 $13,978 % of 60+ Delinquencies 132.89% 126.67% 125.24% 91.00% 95.88% 90+ Day Delinquencies (Non-earning total finance receivables) $4,704 $5,370 $6,380 $8,263 $7,650 Balance Sheet: Assets Investment in Leases and Loans $719,924 $693,767 $664,902 $619,129 $554,712 Initial Direct Costs and Fees 22,991 21,282 19,490 17,114 14,348 Reserve for Credit Losses (12,873) (14,339) (15,283) (15,309) (13,978) Net Investment in Leases and Loans $730,042 $700,710 $669,109 $620,934 $555,082 Cash and Cash Equivalents 44,981 25,367 40,270 50,466 53,529 Restricted Cash 65,136 64,294 66,212 71,382 67,751 Other Assets 14,033 12,162 18,840 20,857 14,284 Total Assets $854,192 $802,533 $794,431 $763,639 $690,646 Liabilities Total Debt $618,330 $565,914 $543,308 $499,852 $426,203 Deposits $43,618 $47,172 $63,385 $74,853 $77,305 Other Liabilities 40,680 37,829 41,113 43,278 40,477 Total Liabilities $702,628 $650,915 $647,806 $617,983 $543,985 Stockholders' Equity Common Stock $122 $122 $122 $126 $126 Paid-in Capital, net 83,319 83,661 83,666 83,561 83,838 Other Comprehensive Income (2,836) (2,182) 167 178 (40) Retained Earnings 70,959 70,017 62,670 61,791 62,737 Total Stockholders' Equity $151,564 $151,618 $146,625 $145,656 $146,661 Total Liabilities and Stockholders' Equity $854,192 $802,533 $794,431 $763,639 $690,646 Capital and Leverage: Tangible Equity $151,564 $151,618 $146,625 $145,656 $146,661 Debt to Tangible Equity 4.37 4.04 4.14 3.95 3.43 Equity to Assets 17.74% 18.89% 18.46% 19.07% 21.24% Regulatory Capital Ratios: Tier 1 Leverage Capital n/a n/a n/a 19.19% 20.12% Tier 1 Risk-based Capital n/a n/a n/a 21.48% 24.36% Total Risk-based Capital n/a n/a n/a 22.74% 25.63% Expense Ratios: Salaries and Benefits Expense $6,344 $5,620 $5,082 $5,885 $5,057 Salaries and Benefits Expense Annualized % of Avg. Fin. Recbl. 3.47% 3.18% 2.99% 3.65% 3.45% Total personnel end of quarter 291 286 284 230 169 General and Administrative Expense $3,994 $3,333 $3,611 $3,399 $3,287 General and Administrative Expense Annualized % of Avg. Fin. Recbl. 2.19% 1.89% 2.12% 2.11% 2.24% Efficiency Ratio 52.25% 45.13% 45.67% 50.94% 52.39% Net Income: Net Income (Loss) $1,700 ($941) ($7,348) ($879) $946 Annualized Performance Measures: Return on Average Assets 0.79% -0.46% -3.71% -0.45% 0.52% Return on Average Stockholders' Equity 4.50% -2.47% -19.64% -2.39% 2.58% Per Share Data: Number of Shares - Basic 12,185,532 11,843,300 11,799,939 11,677,264 12,593,514 Basic Earnings (Loss) per Share $0.14 ($0.08) ($0.62) ($0.08) $0.08 Number of Shares - Diluted 12,239,736 11,843,300 11,799,939 11,677,264 12,603,305 Diluted Earnings (Loss) per Share $0.14 ($0.08) ($0.62) ($0.08) $0.08 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 lwilson@marlinleasing.com