Marlin Business Services 8K . Reports 30% Increase in First Quarter Net Income | MRLN 4 May 05

Exhibit 99.1

Marlin Business Services Corp. Reports 30% Increase in First Quarter Net
Income

MOUNT LAUREL, N.J., May 3 /PRNewswire-FirstCall/ -- Marlin Business Services Corp. (Nasdaq: MRLN) today reported net income of $3.9 million for the first quarter ended March 31, 2005, a 29.7% increase over $3.0 million for the same period in 2004. First quarter 2005 diluted net income per share was $0.33, a 26.9% increase over $0.26 per diluted share reported in the first quarter of 2004. Annualized returns on average assets and equity in the first quarter 2005 were 2.87% and 16.87%, respectively.

“We are off to a great start in 2005,” said Dan Dyer, Chairman and CEO of Marlin. “New asset originations grew a healthy 17% compared to the first quarter of 2004, led by a strong performance from our direct business. Asset quality improved as well, with a lower charge-off rate and portfolio delinquencies reported in the quarter.”

	Highlights for the quarter ended March 31, 2005 include:

	--	For the quarter ended March 31, 2005, net income was $3.9 million, a 29.7% increase over net income of $3.0 million for the quarter ended March 31, 2004.

	--	Diluted net income per share was $0.33 in the first quarter of 2005, a 26.9% increase over $0.26 diluted net income per share in the quarter ended March 31, 2004.

	--	The Company set records for new lease originations for both the quarter at $77.3 million and a single month of $28.7 million in March. Net investment in leases exceeded $510 million at March 31, 2005.

	--	Net interest and fee margin as a percentage of net investment in direct financing leases set a new quarterly record at 12.78%.

	--	Annualized Returns on average equity and assets were 16.87% and 2.87%, respectively, in the first quarter of 2005.

	Asset Origination

	--	Based on initial equipment cost, lease production was a record $77.3 million in the first quarter of 2005 compared with $66.8 million in the fourth quarter of 2004 and $66.1 million in the first quarter of 2004. Net investment in leases grew to $510.7 million at March 31, 2005, an increase of 4.3% in the quarter.

	--	Our end user customer base grew to more than 78,000 at March 31, 2005 compared with 76,000 as of year-end 2004 and 69,000 at March 31, 2004.

	Credit Quality

	--	Net charge-offs totaled $2.4 million for the quarter ended March 31, 2005 compared with $2.5 million for fourth quarter of 2004. The provision for credit losses was $2.7 million for the first quarter of 2005 and $2.5 million for the fourth quarter of 2004.

	--	On an annualized basis, net charge-offs were 1.98% of net investment in leases during the first quarter of 2005 compared to 2.11% for the fourth quarter of 2004 and 1.99% for the full year ended December 31, 2004.

	--	As of March 31, 2005, 0.65% of our total lease portfolio was 60 or more days delinquent, compared to 0.78% as of December 31, 2004 and 0.66% as of March 31, 2004.

	--	Allowance for credit losses was $6.3 million as of March 31, 2005, an approximate $200,000 increase from $6.1 million as of December 31, 2004. Allowance for credit losses as a percentage of net investment in leases was 1.26% at March 31, 2005 and December 31, 2004.

	--	In conjunction with this release, static pool loss statistics have been updated as supplemental information on the investor relations section of our website at http://www.marlincorp.com. Our last three years of production are tracking below our expected loss curve.

	Net Interest and Fee Margin and Cost of Funds

	--	The net interest and fee margin was 12.78% for the quarter ended March 31, 2005, an increase of 34 basis points compared to 12.44% for the quarter ended December 31, 2004.

	--	The average implicit yield on new business was 12.84% for the quarter ended March 31, 2005 compared to 13.71% for the quarter ended December 31, 2004.

	--	Fee income as a percentage of average net investment in leases was 3.63% for the quarter ended March 31, 2005 compared to 3.36% for the quarter ended December 31, 2004. The increase in fee income is primarily attributed to higher late fee income in the first quarter of 2005.

	--	The average cost of funds as a percentage of net investment in leases was 3.67% for the quarter ended March 31, 2005. This was a 16 basis point decrease from the 3.83% for the quarter ended December 31, 2004 and is primarily attributed to lower borrowing levels in relation to our net investment in leases.

	Operating Expenses

	--	Salaries and benefits expense was $4.4 million in the first quarter of 2005 compared to $4.2 million in the fourth quarter of 2004. Salaries and benefits expense was 3.6% as an annualized percentage of average net investment in leases for both the first quarter of 2005 and fourth quarter of 2004.

	--	Other general and administrative expenses were $2.8 million for the first quarter of 2005, an increase of $300,000 from $2.5 million for the fourth quarter of 2004. Other general and administrative expenses as an annualized percentage of average net investment in leases were 2.31% for the first quarter of 2005, an increase of 17 basis points from 2.14% for the fourth quarter of 2004. Occupancy expense increased $85,000 over the previous quarter due in part to the Company’s move of its New Jersey offices in late December 2004 to a larger facility.

	Funding and Liquidity

	--	On April 15, 2005 Fitch Ratings announced upgrades for two of Marlin’s outstanding term borrowings. For the Series 2002-1 securitization, the Class A equipment contract backed notes were upgraded to ‘AA-’ from ‘A’; the Class B equipment contract backed notes were upgraded to ‘A’ from ‘BBB’; and the Class C equipment contract backed notes were upgraded to ‘BBB’ from ‘BB’.

		For the Series 2003-1 securitization, the Class A equipment contract backed notes were upgraded to ‘A+’ from ‘A’; the Class B equipment contract backed notes were upgraded to ‘BBB+’ from ‘BBB’; and the Class C equipment contract backed notes were upgraded to ‘BB+’ from ‘BB’.

Conference Call and Webcast

We will host a conference call on Wednesday, May 4, 2005 at 9:00 a.m. EDT to discuss our first quarter 2005 results. If you wish to participate, please call (877) 407-9210 (International participants please use (201) 689-8049) approximately 10 minutes in advance of the call time. The call will also be Webcast on the Investor Relations page of the Marlin Business Services Corp. website, http://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 solutions primarily to small businesses. The company’s principal operating subsidiary, Marlin Leasing Corporation, finances over 60 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. Headquartered in Mount Laurel, NJ, Marlin has regional offices in or near Atlanta, Chicago, Denver and Philadelphia. For more information, visit http://www.marlincorp.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 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 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
(in thousands)

	March 31, 2005			December 31, 2004

Assets
Cash and cash equivalents	$	5,997		$	16,092
Restricted cash		28,527			20,454
Net investment in direct financing leases		510,700			489,678
Property and equipment, net		3,736			3,555
Other assets		13,729			7,980

Total assets	$	562,689		$	537,759

Liabilities and Shareholders’ Equity
Debt and secured borrowings	$	426,747		$	416,603
Other liabilities:
Lease obligation payable		286			329
Accounts payable and accrued expenses		16,901			12,367
Deferred income tax liability		21,804			18,110

Total liabilities		465,738			447,409
Shareholders’ equity:
Common Stock, $0.01 par value; 75,000 shares authorized; 11,618 and 11,528 shares issued and outstanding		116			115
Preferred Stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding.		—			—
Additional paid-in capital		77,160			75,732
Stock subscription receivable		(44	)		(54	)
Deferred compensation		(2,345	)		(1,380	)
Other comprehensive income		2,552			374
Retained earnings		19,512			15,563

Total shareholders’ equity		96,951			90,350

Total liabilities and shareholders’ equity	$	562,689		$	537,759

MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)

	Three Months Ended March 31,

	2005		2004

Income:
Interest and fee income	$	20,162	$	16,214
Interest expense		4,492		3,931

Net interest and fee income		15,670		12,283
Provision for credit losses		2,680		2,323

Net interest and fee income after provision for credit losses		12,990		9,960
Insurance and other income		1,171		1,085

Operating income		14,161		11,045
Salaries and benefits		4,433		3,233
General and administrative		2,826		2,298
Financing related costs		373		482

Income before income taxes		6,529		5,032
Income taxes		2,580		1,987

Net income	$	3,949	$	3,045

Basic earnings per share:	$	0.34	$	0.27

Diluted earnings per share:	$	0.33	$	0.26

Shares used in computing basic earnings per share:		11,451,551		11,221,990

Shares used in computing diluted earnings per share:		11,842,236		11,660,498

SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except per share amounts)

	3/31/04			6/30/04			9/30/04			12/31/04			3/31/05

Quarter Ended:
New Asset Production:
# of Sales Reps		90			98			98			100			99
# of Leases		7,837			8,489			7,974			7,518			8,248
Equipment Volume	$	66,146		$	70,515		$	68,849		$	66,761		$	77,346
Average monthly sources		1,231			1,317			1,233			1,195			1,312
Implicit Yield on New Business		13.75	%		14.07	%		13.75	%		13.71	%		12.84	%
Net interest and fee margin
Interest Income Yield		12.85	%		12.87	%		13.01	%		12.91	%		12.82	%
Fee Income Yield		2.69	%		2.92	%		3.02	%		3.36	%		3.63	%

Interest and Fee Income Yield		15.54	%		15.79	%		16.03	%		16.27	%		16.45	%
Cost of Funds		3.77	%		3.30	%		4.00	%		3.83	%		3.67	%

Net interest and Fee Margin		11.77	%		12.49	%		12.03	%		12.44	%		12.78	%

Average Net Investment in Leases	$	417,253		$	438,976		$	458,270		$	473,363		$	490,293
Portfolio Asset Quality:
60+ Days Past Due Delinquencies		0.66	%		0.66	%		0.73	%		0.78	%		0.65	%
60+ Days Past Due Delinquencies	$	3,383		$	3,540		$	4,067		$	4,453		$	3,849
Net Charge-offs	$	2,078		$	2,137		$	2,198		$	2,495		$	2,426
% on Average Net Investment in Leases Annualized		1.99	%		1.95	%		1.92	%		2.11	%		1.98	%
Allowance for Credit Losses	$	5,261		$	5,569		$	6,031		$	6,062		$	6,317
% of 60+ Delinquencies		155.5	%		157.3	%		148.3	%		136.1	%		164.1	%
90+ Day Delinquencies (Non-earning)	$	1,422		$	1,569		$	1,722		$	1,944		$	1,529
Balance Sheet
Assets
Investment in Direct Financing Leases	$	427,650		$	448,875		$	466,943		$	479,767		$	500,766
Initial Direct Costs and Fees		15,299			15,684			16,127			15,973			16,250
Reserve for Credit Losses		(5,261	)		(5,569	)		(6,031	)		(6,062	)		(6,316	)

Net Investment in Leases	$	437,688		$	458,990		$	477,039		$	489,678		$	510,700
Cash and Cash Equivalents		7,528			12,686			66,774			16,092			5,997
Restricted Cash		18,566			18,257			19,505			20,454			28,527
Other Assets		14,446			10,580			11,492			11,535			17,465

Total Assets	$	478,228		$	500,513		$	574,810		$	537,759		$	562,689

Liabilities
Total Debt	$	375,769		$	390,271		$	459,681		$	416,603		$	426,747
Other Liabilities		25,154			28,264			29,725			30,806			38,991

Total Liabilities	$	400,923		$	418,535		$	489,406		$	447,409		$	465,738

SUPPLEMENTAL QUARTERLY DATA - continued
(dollars in thousands, except per share amounts)

	3/31/04			6/30/04			9/30/04			12/31/04			3/31/05

Quarter Ended:
Shareholders’ Equity
Common Stock	$	114		$	115		$	115		$	115		$	116
Paid-in Capital, net		72,042			73,304			73,822			74,298			74,771
Net gain (losses) on cash flow hedges		—			—			(488	)		374			2,552
Retained Earnings		5,149			8,559			11,955			15,563			19,512

Total Shareholders’ Equity	$	77,305		$	81,978		$	85,404		$	90,350		$	96,951
Total Liabilities and Shareholders’ Equity	$	478,228		$	500,513		$	574,810		$	537,759		$	562,689

Capital and Leverage:
Tangible Equity	$	77,305		$	81,978		$	85,404		$	90,350		$	96,951
Debt to Tangible Equity		4.86			4.76			5.38			4.61			4.40
Expense Ratios:
Salaries and Benefits Expense	$	3,233		$	3,428		$	3,538		$	4,249		$	4,433
Salaries and Benefits Expense annualized% of Avg. Net Invest.		3.10	%		3.12	%		3.09	%		3.59	%		3.62	%
Total personnel end of quarter		248			264			265			273			271
General and Administrative Expense	$	2,298		$	2,742		$	2,490		$	2,532		$	2,826
General and Administrative Expense annualized% of Avg. Net Invest.		2.20	%		2.50	%		2.17	%		2.14	%		2.31	%
Efficiency Ratio		41.37	%		41.95	%		40.37	%		42.73	%		43.10	%
Net Income:
Net Income	$	3,045		$	3,411		$	3,395		$	3,608		$	3,949
Annualized Performance Measures:
Return on Average Assets		2.56	%		2.79	%		2.53	%		2.59	%		2.87	%
Return on Average Shareholders’ Equity		16.11	%		17.13	%		16.23	%		16.42	%		16.87	%
Per Share Data:
Number of Shares - Basic		11,221,990			11,283,348			11,354,023			11,420,247			11,451,551
EPS - Basic	$	0.27		$	0.30		$	0.30		$	0.32		$	0.34
Number of Shares - Diluted		11,660,498			11,676,895			11,728,015			11,798,968			11,842,236
EPS - Diluted	$	0.26		$	0.29		$	0.29		$	0.31		$	0.33

SOURCE Marlin Business Services Corp.
          -0-                                                       05/03/2005
          /CONTACT: Bruce E. Sickel, CFO, Marlin Business Services, +1-888-479-9111 X4108/
          /Web site: http://www.marlincorp.com/

Marlin Business Services (MRLN) 8-KMarlin Business Services Corp. Reports 30% Increase in First Quarter Net Income