EXHIBIT 99.1
Marlin Business Services Corp. Reports Second Quarter 2017 Earnings and Declares a Cash Dividend of $0.14 Per Share
Second Quarter Summary:
- Total second quarter origination volume (inclusive of referral volume) of $167.8 million, up 34.3% year-over-year
- Investment in Leases and Loans (before deferred costs and loss allowance) of $858.7 million, up 4.1% from the prior quarter and 18.0% from a year ago
- ROE of 11.19% included $0.3 million of charges related to advisory fees in connection with previously announced regulatory matters concerning certain payment processing practices in effect prior to February 2016
- ROE on an adjusted basis of 11.80%, up 14 basis points from the second quarter last year
- Total new origination loan and lease yield of 12.21%, up 35 basis points from the prior quarter and up 43 basis points year-over-year
- Portfolio performance remained within expectations, with 30+ and 60+ day delinquencies at 92 basis points and 52 basis points, respectively, and annualized net charge-offs during the second quarter of 1.65%
- Strong capital position with equity to assets ratio of 16.67%
- Net income of $4.6 million included a charge of $0.3 million (net of tax) related to the aforementioned regulatory matter
- Net income on an adjusted basis of $4.8 million, or $0.38 per diluted share, up from $4.5 million, or $0.36 per share in the prior year period
- During the quarter, the Company announced that its Board of Directors authorized a stock repurchase program of up to $10 million of its outstanding shares of common stock
MOUNT LAUREL, N.J., July 27, 2017 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (NASDAQ:MRLN) (“Marlin” or the “Company”) today reported second quarter 2017 net income of $4.6 million, or $0.36 per diluted share. Before charges related to the aforementioned regulatory matter, second quarter 2017 net income was $4.8 million, or $0.38 per diluted share compared to $4.5 million, or $0.36 per diluted share, for the second quarter last year.
Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “Marlin continued to deliver strong performance in the second quarter. In addition to benefitting from robust customer demand, our results reflect solid execution of our Marlin 2.0 strategy that is leading to improvements in scale, enhanced operational efficiencies, sustained profitable growth and more attractive returns on equity. Total second quarter sourced origination volume of $167.8 million was up more than 34% from a year ago and was a record for the second quarter. This growth was broad-based and driven by the strength of our Equipment Finance business. Production from Horizon Keystone Financial, which was acquired earlier in the year, also continues to exceed our expectations. In addition, origination volume for Funding Stream, our working capital loan business, increased to $14.8 million, or 9% of total sourced originations in the quarter, up from $7.9 million, or 6%, of total sourced originations a year ago. Thanks to this strong origination activity, Investment in Leases and Loans increased to $858.7 million, up more than 4% compared to the previous quarter and up 18% from a year ago. Further, we achieved this strong growth while adhering to our strict underwriting standards, and the portfolio performance remained within our targeted range.”
Mr. Hilzinger concluded, “During the quarter, the Board of Directors authorized a stock repurchase program of up to $10 million of Marlin common stock. Given our strong balance sheet and operating momentum, we believe this, in combination with our regular stock dividend and our continued investment in the Marlin 2.0 strategy, are appropriate uses of the Company’s capital resources and underscores our confidence in our growth prospects.”
Results of Operations
Combined Equipment Finance, Funding Stream and referral origination volume for the second quarter of $167.8 million was up 34.3% from a year ago. Equipment Finance origination volume of $140.7 million in the second quarter was up 23.8% from $113.6 million in the second quarter of 2016. The Company also experienced solid Funding Stream origination volume in the second quarter of 2017 totaling $14.8 million, up from $7.9 million in the same period a year ago. Referral volume totaled $12.3 million, up from $3.5 million in the second quarter last year, and included significant contributions from Horizon Keystone Financial which was acquired in the first quarter of 2017.
Net interest and fee margin as a percentage of average finance receivables was 10.87% for the second quarter, down 4 basis points from the first quarter of 2017 and down 63 basis points from a year ago. The decrease in margin percentage was primarily a result of a decline in late fees and end-of-lease revenue based on certain updated servicing practices, growth in lower yielding Equipment Finance channels and an increase in the Company’s cost of funds partially offset by an increase of 43 basis points in new origination loan and lease yield over last year. The Company’s cost of funds, increased to 125 basis points, compared to 117 basis points for the previous quarter and 105 basis points for the second quarter of 2016.
On an absolute basis, net interest and fee income was $22.7 million for the quarter ended June 30, 2017, compared to $21.7 million for the prior quarter and $20.3 million for the second quarter last year.
Other income was $4.1 million for the second quarter of 2017, compared to $3.8 million in the prior quarter and $2.1 million in the second quarter last year. The increase in other income compared to the second quarter last year was mostly due to a $1.3 million increase in gains-on-sale from the Company’s capital markets activities, referral fee income and servicing fee income related to previous asset sales.
Other expenses were $15.2 million for the second quarter of 2017, compared to $19.6 million in the prior quarter and $12.5 million in the second quarter last year. The decrease from the prior quarter was primarily due to a $4.4 million charge the Company incurred in the first quarter related to the previously disclosed regulatory matter. The year-over-year increase was primarily due to an increase in the Company’s compensation related expenses including salaries, commissions, and stock-based compensation primarily related to the Company’s acquisition of Horizon Keystone Financial and investments in the Company’s direct lending initiative. Additionally, higher legal costs and professional service fees related to the regulatory matter contributed to the year-over-year increase.
The Company’s efficiency ratio for the second quarter was 56.69% compared to 76.79% for the prior quarter and 55.63% in the second quarter last year. Excluding the impact of the regulatory matter, the efficiency ratio on an adjusted basis in the second quarter of 2017 was 55.17%, compared with an adjusted ratio of 59.47% in the prior quarter.
Marlin recorded a provision for income taxes of $2.7 million for the second quarter of 2017, representing an effective tax rate of 37.5%, compared with $0.5 million or 24.1% for the preceding quarter and $2.8 million or 38.1% for the second quarter of 2016.
Portfolio Performance
Allowance for credit losses as a percentage of total finance receivables was 1.46% at June 30, 2017 versus 1.30% at June 30, 2016. Coverage of total 60+ day delinquencies was 245.9% at June 30, 2017 versus 265.8% at June 30, 2016.
Finance receivables over 30 days delinquent were 0.92% of the Company’s total finance receivables portfolio as of June 30, 2017, an increase of 21 basis points from June 30, 2016. Finance receivables over 60 days delinquent were 0.52% of the Company’s total finance receivables portfolio as of June 30, 2017, an increase of 9 basis point from June 30, 2016. Second quarter net charge-offs were 1.65% of average total finance receivables versus 1.38% a year ago. The increase in delinquencies and net charge-offs were largely driven by a return to a more normalized credit environment. Overall, portfolio performance remained within the Company’s expected ranges.
As of June 30, 2017 and 2016, the Company’s consolidated equity to assets ratio was 16.67% and 18.49%, respectively.
Corporate Developments
During the second quarter, the Company announced that its Board of Directors authorized a stock repurchase program of up to $10 million of its outstanding shares of common stock, replacing the stock repurchase program announced in July 2014. During the second quarter, the Company invested approximately $2.1 million to repurchase 82,404 shares at an average price of $25.22, with approximately $600,000 of the investment coming from the new repurchase authorization and approximately $1.5 million coming from the July 2014 repurchase authorization.
Also during the second quarter, the Company announced the hiring of an experienced direct sales team. Timothy L. Bonagura, Michael K. Stanley and Matthew D. Manning were hired as part of Marlin’s recent realignment of its origination resources into two teams focused on the Company’s direct and indirect origination channels, respectively. As part of the reorganization, the Company promoted Mark E. Scardigli to Senior Vice President and leader of the Indirect Team and Richard J. Henderson, Jr. to First Vice President and leader of the Franchise and Direct Teams. Additionally, the Company announced that it has promoted Daniel Castellini to Senior Vice President of Product Development.
Subsequent to the end of the quarter, the Company announced that it has named Laura C. Anger as Senior Vice President and Chief Human Resources Officer.
The Board of Directors of Marlin Business Services Corp. today declared a $0.14 per share quarterly dividend. The dividend is payable August 17, 2017, to shareholders of record on August 7, 2017. Based on the closing stock price on July 26, 2017, the annualized dividend yield on the Company’s common stock is 2.2%.
Business Outlook
The Company is reiterating guidance for the full year ending December 31, 2017 as follows:
- Full year New Originations Funded (including both Funding Stream and Equipment Finance) is expected to finish at least 20% above 2016 levels.
- Portfolio performance is anticipated to remain within the Company’s targeted and historical range.
- Net interest margin, as a percentage, is expected to remain relatively constant for the remainder of 2017 with continued growth in lower yielding Equipment Finance channels and Franchise Finance, and updates to our servicing practices, offset by expected growth in the Company’s higher yielding Funding Stream business and increasing new business yields in certain Equipment Finance channels.
- ROE is expected to grow to the low teens on an adjusted basis by the end of the fourth quarter of 2017 as strategic initiatives gain traction and the Company continues to improve operating scale.
Conference Call and Webcast
Marlin will host a conference call on Friday, July 28, 2017 at 9:00 a.m. ET to discuss the Company’s second quarter 2017 results. If you wish to participate, please call 877-407-0792 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. 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 credit products and services to small businesses with a mission of helping small businesses achieve their American dream. Our products and services are offered directly to small businesses and through financing programs with equipment manufacturers, distributors, dealers and other intermediaries. Marlin and its wholly-owned operating subsidiary, Marlin Business Bank, are publicly traded (NASDAQ:MRLN). For more information about Marlin, visit www.marlinfinance.com or call toll free at (888) 479-9111.
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.
Regulation G – Non-GAAP Financial Measures
In this release the Company uses certain financial measures which are not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines net income on an adjusted basis as net income excluding an after-tax charge related to a reserve for restitution in connection with certain payment processing practices in effect prior to February 2016. The Company believes that net income on an adjusted basis is a useful performance metric for management, investors and lenders, because it means to evaluate period-to-period comparisons of the Company's financial performance without the effects of certain adjustments in accordance with GAAP that may not necessarily be indicative of current operating performance.
Non-GAAP financial measures should not be considered as an alternative to GAAP financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.
| |
| MARLIN BUSINESS SERVICES CORP. |
| AND SUBSIDIARIES |
| Condensed Consolidated Balance Sheets |
| (Unaudited) |
| |
| | | | | June 30, | | December 31, |
| | | | | 2017 | | 2016 |
| | | | | | | | | |
| | | | | (Dollars in thousands, except per-share data) |
| | | | | | | | | |
| ASSETS | | | | | |
| Cash and due from banks | $ | 4,827 | | | $ | 4,055 | |
| Interest-earning deposits with banks | | 72,489 | | | | 57,702 | |
| Total cash and cash equivalents | | 77,316 | | | | 61,757 | |
| Time deposits with banks | | 8,360 | | | | 9,605 | |
| Securities available for sale (amortized cost of $10.2 million and $6.1 million at | | | | | |
| June 30, 2017 and December 31, 2016, respectively) | | 10,040 | | | | 5,880 | |
| Net investment in leases and loans: | | | | | |
| Net investment in leases and loans, excluding allowance for credit losses | | 875,262 | | | | 807,654 | |
| Allowance for credit losses | | (12,559 | ) | | | (10,937 | ) |
| Total net investment in leases and loans | | 862,703 | | | | 796,717 | |
| Intangible assets | | 1,234 | | | | — | |
| Goodwill | | 1,160 | | | | — | |
| Property and equipment, net | | 4,411 | | | | 3,495 | |
| Property tax receivables | | 10,251 | | | | 5,296 | |
| Other assets | | 9,607 | | | | 9,408 | |
| Total assets | $ | 985,082 | | | $ | 892,158 | |
| | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| Deposits | $ | 780,838 | | | $ | 697,357 | |
| Other liabilities: | | | | | |
| Sales and property taxes payable | | 7,151 | | | | 2,586 | |
| Accounts payable and accrued expenses | | 21,000 | | | | 14,809 | |
| Net deferred income tax liability | | 11,910 | | | | 15,117 | |
| Total liabilities | | 820,899 | | | | 729,869 | |
| | | | | | |
| | | | | | |
| Stockholders’ equity: | | | | | |
| Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued | | — | | | | — | |
| Common Stock, $0.01 par value; 75,000,000 shares authorized; | | | | | |
| 12,525,617 and 12,572,114 shares issued and outstanding at June 30, 2017 and | | 125 | | | | 126 | |
| December 31, 2016, respectively | | | | | |
| Additional paid-in capital | | 82,827 | | | | 83,505 | |
| Stock subscription receivable | | (2 | ) | | | (2 | ) |
| Accumulated other comprehensive loss | | (106 | ) | | | (138 | ) |
| Retained earnings | | 81,339 | | | | 78,798 | |
| Total stockholders’ equity | | 164,183 | | | | 162,289 | |
| Total liabilities and stockholders’ equity | $ | 985,082 | | | $ | 892,158 | |
| MARLIN BUSINESS SERVICES CORP. |
| AND SUBSIDIARIES |
| Condensed Consolidated Statements of Operations |
| (Unaudited) |
| |
| | | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | | | 2017 | | 2016 | | 2017 | | 2016 |
| | | | | | | | | | | | | | | |
| | | | | (Dollars in thousands, except per-share data) |
| | | | | | | | | | | | | | | |
| Interest income | $ | 21,567 | | $ | 18,187 | | $ | 42,098 | | $ | 35,718 |
| Fee income | | 3,745 | | | 3,969 | | | 7,275 | | | 7,803 |
| Interest and fee income | | 25,312 | | | 22,156 | | | 49,373 | | | 43,521 |
| Interest expense | | 2,612 | | | 1,857 | | | 4,952 | | | 3,549 |
| Net interest and fee income | | 22,700 | | | 20,299 | | | 44,421 | | | 39,972 |
| Provision for credit losses | | 4,314 | | | 2,668 | | | 8,198 | | | 5,743 |
| Net interest and fee income after provision for credit losses | | 18,386 | | | 17,631 | | | 36,223 | | | 34,229 |
| | | | | | | | | | | | |
| Other income: | | | | | | | | | | | |
| Insurance premiums written and earned | | 1,751 | | | 1,570 | | | 3,457 | | | 3,192 |
| Other income | | 2,328 | | | 493 | | | 4,375 | | | 948 |
| Other income | | 4,079 | | | 2,063 | | | 7,832 | | | 4,140 |
| Other expense: | | | | | | | | | | | |
| Salaries and benefits | | 9,070 | | | 7,812 | | | 18,461 | | | 16,012 |
| General and administrative | | 6,110 | | | 4,628 | | | 16,280 | | | 9,093 |
| Financing related costs | | — | | | 34 | | | — | | | 68 |
| Other expenses | | 15,180 | | | 12,474 | | | 34,741 | | | 25,173 |
| Income before income taxes | | 7,285 | | | 7,220 | | | 9,314 | | | 13,196 |
| Income tax expense | | 2,732 | | | 2,752 | | | 3,221 | | | 5,077 |
| Net income | $ | 4,553 | | $ | 4,468 | | $ | 6,093 | | $ | 8,119 |
| | | | | | | | | | | | |
| Basic earnings per share | $ | 0.36 | | $ | 0.36 | | $ | 0.49 | | $ | 0.65 |
| Diluted earnings per share | $ | 0.36 | | $ | 0.36 | | $ | 0.48 | | $ | 0.65 |
| | | | | | | | | | | | | | | |
| Cash dividends declared per share | $ | 0.14 | | $ | 0.14 | | $ | 0.28 | | $ | 0.28 |
| MARLIN BUSINESS SERVICES CORP. |
| AND SUBSIDIARIES |
| Net Income on an Adjusted Basis Reconciliation to GAAP Results |
| (Unaudited) |
| | |
| | Three Months Ended June 30, | | Six Months Ended June 30, | |
| | 2017 | | 2016 | | 2017 | | 2016 | |
| | | | | | | | | | | | | | | | | | | | | |
| | (Dollars in thousands, except per-share data) | |
| | | | | | | | | | | | | |
| Net income as reported | $ | | 4,553 | | | $ | | 4,468 | | | $ | | 6,093 | | | $ | | 8,119 | | |
| | | | | | | | | | | | | |
| Deduct: | | | | | | | | | | | | |
| Charge in connection with regulatory matters | | | (405 | ) | | | | — | | | | | (4,816 | ) | | | | — | | |
| Tax effect | | | 155 | | | | | — | | | | | 1,849 | | | | | — | | |
| Charge in connection with regulatory matters, net of tax | | | (250 | ) | | | | — | | | | | (2,967 | ) | | | | — | | |
| Net Income on an Adjusted Basis | $ | $ | 4,803 | | | $ | $ | 4,468 | | | $ | $ | 9,060 | | | $ | $ | 8,119 | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Diluted earnings per share as reported | | $ | 0.36 | | | | $ | 0.36 | | | | $ | 0.48 | | | | $ | 0.65 | | |
| Diluted earnings per share on an adjusted basis | | $ | 0.38 | | | | $ | 0.36 | | | | $ | 0.72 | | | | $ | 0.65 | | |
| | | | | | | | |
| Return on Average Assets as reported | | | 1.90 | % | | | | 2.19 | % | | | | 1.30 | % | | | | 2.63 | % | |
| Return on Average Assets on an adjusted basis | | | 2.01 | % | | | | 2.19 | % | | | | 1.94 | % | | | | 2.63 | % | |
| | | | | | | | |
| Return on Average Equity as reported | | | 11.19 | % | | | | 11.66 | % | | | | 7.48 | % | | | | 10.70 | % | |
| Return on Average Equity on an adjusted basis | | | 11.80 | % | | | | 11.66 | % | | | | 11.12 | % | | | | 10.70 | % | |
| | | | | | | | |
| Efficiency Ratio as reported | | | 56.69 | % | | | | 55.63 | % | | | | 66.49 | % | | | | 56.91 | % | |
| Efficiency Ratio on an adjusted basis | | | 55.17 | % | | | | 55.63 | % | | | | 57.27 | % | | | | 56.91 | % | |
| | | | | | | | | | | | | |
| | |
| Net Income on an Adjusted Basis is defined as net income excluding a first quarter 2017 $4.2 million charge associated with recent regulatory matters and charges for associated legal and consulting fees in the amounts of $0.3 million and $0.4 million for the first quarter and second quarter 2017, respectively. |
| SUPPLEMENTAL QUARTERLY DATA | | | | | |
| (Dollars in thousands, except share amounts) | | | | | |
| (Unaudited) | | | | | |
| | | | | | |
| | | | | | |
| Quarter Ended: | 6/30/2016 | 9/30/2016 | 12/31/2016 | 3/31/2017 | 6/30/2017 |
| | | | | | |
| Net Income: | | | | | |
| Net Income | $ | 4,468 | | $ | 4,345 | | $ | 4,815 | | $ | 1,540 | | $ | 4,553 | |
| | | | | | |
| Annualized Performance Measures: | | | | | |
| Return on Average Assets | | 2.19 | % | | 2.05 | % | | 2.20 | % | | 0.67 | % | | 1.90 | % |
| Return on Average Stockholders' Equity | | 11.66 | % | | 11.10 | % | | 12.06 | % | | 3.78 | % | | 11.19 | % |
| | | | | | |
| | | | | | |
| EPS Data: | | | | | |
| Net Income Allocated to Common Stock | $ | 4,339 | | $ | 4,209 | | $ | 4,663 | | $ | 1,495 | | $ | 4,444 | |
| Number of Shares - Basic | | 12,136,660 | | | 12,146,727 | | | 12,161,782 | | | 12,213,464 | | | 12,242,805 | |
| Basic Earnings per Share | $ | 0.36 | | $ | 0.35 | | $ | 0.38 | | $ | 0.12 | | $ | 0.36 | |
| | | | | | |
| Number of Shares - Diluted | | 12,143,181 | | | 12,157,356 | | | 12,173,010 | | | 12,223,333 | | | 12,249,530 | |
| Diluted Earnings per Share | $ | 0.36 | | $ | 0.35 | | $ | 0.38 | | $ | 0.12 | | $ | 0.36 | |
| | | | | | |
| Cash Dividends Declared per share | $ | 0.14 | | $ | 0.14 | | $ | 0.14 | | $ | 0.14 | | $ | 0.14 | |
| | | | | | |
| New Asset Production: | | | | | |
| Equipment Finance | $ | 113,615 | | $ | 117,945 | | $ | 134,853 | | $ | 132,691 | | $ | 140,656 | |
| Funding Stream Loans | $ | 7,873 | | $ | 10,316 | | $ | 11,287 | | $ | 13,795 | | $ | 14,804 | |
| Total New Originations Funded | $ | 121,488 | | $ | 128,261 | | $ | 146,140 | | $ | 146,486 | | $ | 155,460 | |
| | | | | | |
| Referral Volume | $ | 3,478 | | $ | 4,197 | | $ | 5,449 | | $ | 22,296 | | $ | 12,324 | |
| | | | | | |
| Total Sourced Originations | $ | 124,966 | | $ | 132,458 | | $ | 151,589 | | $ | 168,782 | | $ | 167,784 | |
| | | | | | |
| Assets sold in the period | $ | 2,707 | | $ | 3,871 | | $ | 11,554 | | $ | 8,694 | | $ | 12,364 | |
| | | | | | |
| Implicit Yield on Equipment Finance Originations | | 10.20 | % | | 9.78 | % | | 9.68 | % | | 9.67 | % | | 9.96 | % |
| Implicit Yield on Funding Stream Loan Originations | | 34.72 | % | | 33.50 | % | | 33.28 | % | | 32.95 | % | | 33.62 | % |
| Total Implicit Yield on New Originations Funded | | 11.78 | % | | 11.69 | % | | 11.50 | % | | 11.86 | % | | 12.21 | % |
| | | | | | |
| # of Leases / Loans Equipment Finance | | 6,681 | | | 6,606 | | | 7,029 | | | 7,185 | | | 7,704 | |
| Equipment Finance Approval Percentage | | 58 | % | | 56 | % | | 57 | % | | 56 | % | | 55 | % |
| Average Monthly Equipment Finance Sources | | 1,138 | | | 1,118 | | | 1,134 | | | 1,114 | | | 1,247 | |
| | | | | | |
| Net Interest and Fee Margin: | | | | | |
| Interest Income Equipment Finance | $ | 17,152 | | $ | 17,368 | | $ | 18,575 | | $ | 18,611 | | $ | 19,338 | |
| Interest Income Funding Stream Loans | $ | 930 | | $ | 1,254 | | $ | 1,499 | | $ | 1,781 | | $ | 2,039 | |
| | | | | | |
| Interest Income Yield | | 10.30 | % | | 10.27 | % | | 10.59 | % | | 10.31 | % | | 10.33 | % |
| Fee Income Yield | | 2.25 | % | | 2.15 | % | | 1.99 | % | | 1.77 | % | | 1.79 | % |
| Interest and Fee Income Yield | | 12.55 | % | | 12.42 | % | | 12.58 | % | | 12.08 | % | | 12.12 | % |
| Cost of Funds | | 1.05 | % | | 1.12 | % | | 1.14 | % | | 1.17 | % | | 1.25 | % |
| Net Interest and Fee Margin | | 11.50 | % | | 11.30 | % | | 11.44 | % | | 10.91 | % | | 10.87 | % |
| | | | | | |
| Average Total Finance Receivables | $ | 706,039 | | $ | 732,346 | | $ | 762,604 | | $ | 796,920 | | $ | 835,516 | |
| Average Net Investment Equipment Finance | $ | 695,683 | | $ | 718,601 | | $ | 745,075 | | $ | 775,551 | | $ | 810,961 | |
| Average Funding Stream Loans | $ | 10,356 | | $ | 13,745 | | $ | 17,529 | | $ | 21,369 | | $ | 24,555 | |
| | | | | | |
| End of Period Net Investment Equipment Finance | $ | 718,631 | | $ | 743,914 | | $ | 777,607 | | $ | 806,330 | | $ | 837,520 | |
| End of Period Funding Stream Loans | $ | 12,119 | | $ | 15,508 | | $ | 19,110 | | $ | 22,510 | | $ | 25,183 | |
| Total Owned Net Investment in Leases and Loans | $ | 730,750 | | $ | 759,422 | | $ | 796,717 | | $ | 828,840 | | $ | 862,703 | |
| | | | | | |
| Total Assets Serviced for Others | $ | 5,298 | | $ | 8,680 | | $ | 19,203 | | $ | 26,422 | | $ | 36,482 | |
| | | | | | |
| Total Managed Assets | $ | 736,048 | | $ | 768,102 | | $ | 815,920 | | $ | 855,262 | | $ | 899,185 | |
| | | | | | |
| Portfolio Asset Quality: | | | | | |
| | | | | | |
| Total Finance Receivables | | | | | |
| 30+ Days Past Due Delinquencies | | 0.71 | % | | 0.78 | % | | 0.80 | % | | 0.88 | % | | 0.92 | % |
| 30+ Days Past Due Delinquencies | $ | 5,850 | | $ | 6,751 | | $ | 7,226 | | $ | 8,208 | | $ | 8,978 | |
| | | | | | |
| 60+ Days Past Due Delinquencies | | 0.43 | % | | 0.45 | % | | 0.46 | % | | 0.51 | % | | 0.52 | % |
| 60+ Days Past Due Delinquencies | $ | 3,548 | | $ | 3,885 | | $ | 4,137 | | $ | 4,729 | | $ | 5,108 | |
| | | | | | |
| Equipment Finance | | | | | |
| 30+ Days Past Due Delinquencies | | 0.72 | % | | 0.80 | % | | 0.82 | % | | 0.90 | % | | 0.94 | % |
| 30+ Days Past Due Delinquencies | $ | 5,850 | | $ | 6,751 | | $ | 7,226 | | $ | 8,206 | | $ | 8,887 | |
| | | | | | |
| 60+ Days Past Due Delinquencies | | 0.44 | % | | 0.46 | % | | 0.47 | % | | 0.52 | % | | 0.54 | % |
| 60+ Days Past Due Delinquencies | $ | 3,548 | | $ | 3,885 | | $ | 4,137 | | $ | 4,729 | | $ | 5,108 | |
| | | | | | |
| Funding Stream Loans | | | | | |
| 15+ Days Past Due Delinquencies | | 0.00 | % | | 0.27 | % | | 0.50 | % | | 0.43 | % | | 0.89 | % |
| 15+ Days Past Due Delinquencies | $ | 0 | | $ | 44 | | $ | 98 | | $ | 99 | | $ | 230 | |
| | | | | | |
| 30+ Days Past Due Delinquencies | | 0.00 | % | | 0.00 | % | | 0.00 | % | | 0.01 | % | | 0.35 | % |
| 30+ Days Past Due Delinquencies | $ | 0 | | $ | 0 | | $ | 0 | | $ | 2 | | $ | 91 | |
| | | | | | |
| | | | | | |
| Net Charge-offs - Total Finance Receivables | $ | 2,429 | | $ | 2,494 | | $ | 2,670 | | $ | 3,134 | | $ | 3,442 | |
| % on Average Total Finance Receivables | | | | | |
| Annualized | | 1.38 | % | | 1.36 | % | | 1.40 | % | | 1.57 | % | | 1.65 | % |
| | | | | | |
| Net Charge-offs - Equipment Finance | $ | 2,331 | | $ | 2,456 | | $ | 2,521 | | $ | 2,840 | | $ | 3,062 | |
| % on Average Net Investment in Equipment Finance | | | | | |
| Annualized | | 1.34 | % | | 1.37 | % | | 1.35 | % | | 1.46 | % | | 1.51 | % |
| | | | | | |
| Net Charge-offs - Funding Stream Loans | $ | 98 | | $ | 38 | | $ | 149 | | $ | 294 | | $ | 380 | |
| % of Average Funding Stream Loans | | | | | |
| Annualized | | 3.77 | % | | 1.11 | % | | 3.40 | % | | 5.51 | % | | 6.19 | % |
| | | | | | |
| | | | | | |
| Total Allowance for Credit Losses | $ | 9,430 | | $ | 10,073 | | $ | 10,937 | | $ | 11,687 | | $ | 12,559 | |
| % of Total Finance Receivables | | 1.30 | % | | 1.33 | % | | 1.38 | % | | 1.42 | % | | 1.46 | % |
| % of 60+ Delinquencies | | 265.78 | % | | 259.28 | % | | 264.37 | % | | 247.13 | % | | 245.87 | % |
| | | | | | |
| Allowance for Credit Losses - Equipment Finance | $ | 8,926 | | $ | 9,328 | | $ | 10,177 | | $ | 10,769 | | $ | 11,514 | |
| % of Net Investment Equipment Finance | | 1.25 | % | | 1.26 | % | | 1.32 | % | | 1.34 | % | | 1.38 | % |
| % of 60+ Delinquencies | | 251.58 | % | | 240.10 | % | | 245.98 | % | | 227.72 | % | | 225.40 | % |
| | | | | | |
| Allowance for Credit Losses - Funding Stream Loans | $ | 503 | | $ | 745 | | $ | 760 | | $ | 918 | | $ | 1,045 | |
| % of Total Funding Stream Loans | | 4.03 | % | | 4.63 | % | | 3.86 | % | | 3.96 | % | | 4.04 | % |
| % of 60+ Delinquencies | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | |
| | | | | | |
| | | | | | |
| Non-accrual - Equipment Finance | $ | 1,771 | | $ | 1,869 | | $ | 2,176 | | $ | 2,282 | | $ | 2,560 | |
| Non-accrual - Equipment Finance | | 0.22 | % | | 0.22 | % | | 0.25 | % | | 0.25 | % | | 0.27 | % |
| | | | | | |
| Non-accrual - Funding Stream Loans | $ | 0 | | $ | 153 | | $ | 66 | | $ | 53 | | $ | 61 | |
| Non-accrual - Funding Stream Loans | | 0.00 | % | | 0.95 | % | | 0.34 | % | | 0.23 | % | | 0.24 | % |
| | | | | | |
| Non-accrual - Total Finance Receivables | $ | 1,771 | | $ | 2,022 | | $ | 2,242 | | $ | 2,335 | | $ | 2,621 | |
| Non-accrual - Total Finance Receivables | | 0.22 | % | | 0.24 | % | | 0.25 | % | | 0.25 | % | | 0.27 | % |
| | | | | | |
| Restructured - Total Finance Receivables | $ | 450 | | $ | 350 | | $ | 769 | | $ | 798 | | $ | 878 | |
| | | | | | |
| Net Interest and Fee Margin after Net Charge-offs | | 10.12 | % | | 9.94 | % | | 10.04 | % | | 9.34 | % | | 9.22 | % |
| | | | | | |
| | | | | | |
| Expense Ratios: | | | | | |
| Salaries and Benefits Expense | $ | 7,812 | | $ | 7,817 | | $ | 8,083 | | $ | 9,391 | | $ | 9,070 | |
| Salaries and Benefits Expense | | | | | |
| Annualized % of Avg. Fin. Recbl. | | 4.43 | % | | 4.27 | % | | 4.24 | % | | 4.71 | % | | 4.34 | % |
| | | | | | |
| Total personnel end of quarter | | 315 | | | 318 | | | 318 | | | 330 | | | 329 | |
| | | | | | |
| General and Administrative Expense | $ | 4,628 | | $ | 4,980 | | $ | 5,450 | | $ | 10,170 | | $ | 6,110 | |
| General and Administrative Expense | | | | | |
| Annualized % of Avg. Fin. Recbl. | | 2.62 | % | | 2.72 | % | �� | 2.86 | % | | 5.10 | % | | 2.93 | % |
| | | | | | |
| Efficiency Ratio | | 55.63 | % | | 54.87 | % | | 54.58 | % | | 76.79 | % | | 56.69 | % |
| | | | | | |
| Balance Sheet: | | | | | |
| | | | | | |
| Assets | | | | | |
| Investment in Leases and Loans | $ | 727,707 | | $ | 756,144 | | $ | 793,285 | | $ | 824,942 | | $ | 858,671 | |
| Initial Direct Costs and Fees | | 12,473 | | | 13,351 | | | 14,369 | | | 15,585 | | | 16,591 | |
| Reserve for Credit Losses | | (9,430 | ) | | (10,073 | ) | | (10,937 | ) | | (11,687 | ) | | (12,559 | ) |
| Net Investment in Leases and Loans | $ | 730,750 | | $ | 759,422 | | $ | 796,717 | | $ | 828,840 | | $ | 862,703 | |
| Cash and Cash Equivalents | | 78,767 | | | 77,625 | | | 61,757 | | | 75,728 | | | 77,316 | |
| Restricted Cash | | 26 | | | - | | | - | | | - | | | - | |
| Other Assets | | 32,248 | | | 31,954 | | | 33,684 | | | 39,924 | | | 45,063 | |
| Total Assets | $ | 841,791 | | $ | 869,001 | | $ | 892,158 | | $ | 944,492 | | $ | 985,082 | |
| | | | | | |
| Liabilities | | | | | |
| Deposits | | 650,429 | | | 676,920 | | | 697,357 | | | 739,793 | | | 780,838 | |
| Other Liabilities | | 35,677 | | | 33,413 | | | 32,512 | | | 42,054 | | | 40,061 | |
| Total Liabilities | $ | 686,106 | | $ | 710,333 | | $ | 729,869 | | $ | 781,847 | | $ | 820,899 | |
| | | | | | |
| Stockholders' Equity | | | | | |
| Common Stock | $ | 125 | | $ | 126 | | $ | 126 | | $ | 126 | | $ | 125 | |
| Paid-in Capital, net | | 82,516 | | | 82,890 | | | 83,503 | | | 84,066 | | | 82,825 | |
| Other Comprehensive Income (Loss) | | (22 | ) | | (5 | ) | | (138 | ) | | (109 | ) | | (106 | ) |
| Retained Earnings | | 73,066 | | | 75,657 | | | 78,798 | | | 78,562 | | | 81,339 | |
| Total Stockholders' Equity | $ | 155,685 | | $ | 158,668 | | $ | 162,289 | | $ | 162,645 | | $ | 164,183 | |
| | | | | | |
| Total Liabilities and | | | | | |
| Stockholders' Equity | $ | 841,791 | | $ | 869,001 | | $ | 892,158 | | $ | 944,492 | | $ | 985,082 | |
| | | | | | |
| Capital and Leverage: | | | | | |
| Equity | $ | 155,685 | | $ | 158,668 | | $ | 162,289 | | $ | 162,645 | | $ | 164,183 | |
| Debt to Equity | | 4.18 | | | 4.27 | | | 4.30 | | | 4.55 | | | 4.76 | |
| Equity to Assets | | 18.49 | % | | 18.26 | % | | 18.19 | % | | 17.22 | % | | 16.67 | % |
| | | | | | |
| Regulatory Capital Ratios: | | | | | |
| Tier 1 Leverage Capital | | 18.90 | % | | 18.53 | % | | 18.36 | % | | 17.41 | % | | 16.81 | % |
| Common Equity Tier 1 Risk-based Capital | | 20.14 | % | | 19.77 | % | | 19.37 | % | | 18.37 | % | | 17.80 | % |
| Tier 1 Risk-based Capital | | 20.14 | % | | 19.77 | % | | 19.37 | % | | 18.37 | % | | 17.80 | % |
| Total Risk-based Capital | | 21.36 | % | | 21.02 | % | | 20.62 | % | | 19.63 | % | | 19.05 | % |
| | | | | | |
| | | | | | |
| Notes: | | | | | |
| Net investment in total finance receivables includes net investment in direct financing leases and loans. | |
| Equipment Finance consists of equipment leases and loans. | | | | |
| Funding Stream Loans consist of small business loans. | | | | |
| | | | | | |
Investor Contacts:
Taylor Kamp
Senior Vice President & Chief Financial Officer
856-505-4108
Lasse Glassen
Addo Investor Relations
lglassen@addoir.com
424-238-6249
