Marlin Business Services (MRLN) 10-Q 2021 Q1 Quarterly report

UNITED STATESSECURITIES AND EXCHANGE

COMMISSION

WASHINGTON,D.C. 20549

FORM

10-Q

☑

QUARTERLYREPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF

1934

For the Quarterly Period Ended

March 31, 2021

or

☐

TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the transition period from__________ to__________

Commission file number

000-50448

MARLIN BUSINESS SERVICES CORP.

(Exact name of registrant as specified in its charter)

Pennsylvania

38-3686388

(State of incorporation)

(I.R.S. Employer Identification Number)

300 Fellowship Road

,

Mount Laurel

,

NJ

08054

(Address of principal executive offices)

(Zip code)

(

888

)

479-9111

(Registrant’s telephone number,including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 per share

MRLN

NASDAQ

Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days.

Yes

☑

No

☐

Indicate by check mark whether the registrant has submitted electronicallyevery Interactive Data File required to be submitted

pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that

registrant was required to submit such files.)

Yes

☑

No

☐

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer,a non-accelerated filer, a smaller

reporting company or an emerging growth company.See the definitions of "large accelerated filer,”“accelerated filer", “smaller

reporting company” and “emerging growthcompany” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transitionperiod for

complying with any new or revised financial accounting standards providedpursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as definedin Rule 12b-2 of the Securities Exchange Act of 1934).

Yes

☐

No

☒

At April 23, 2021,

12,009,234

shares of Registrant’s commonstock, $.01 par value, were outstanding.

MARLIN BUSINESS SERVICES CORP.AND SUBSIDIARIES

Quarterly Report on Form 10-Q

for the Quarter Ended March 31, 2021

TABLE OF CONTENTS

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No.

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-3-

PARTI. Financial Information

Item

1.

Consolidated

Financial

Statements

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

March 31,

December 31,

2021

2020

(Dollars in thousands, except per-sharedata)

ASSETS

Cash and due from banks

$

5,244

$

5,473

Interest-earning deposits with banks

105,378

130,218

Total cash and cash equivalents

110,622

135,691

Time deposits with banks

4,482

5,967

Restricted interest-earning deposits related to consolidated VIEs

4,358

4,719

Investment securities (amortized cost of $

12.6

million and $

11.5

million at

March 31, 2021 and December 31, 2020, respectively)

12,373

11,624

Net investment in leases and loans:

Leases

319,092

337,159

Loans

517,249

532,125

Net investment in leases and loans, excluding allowance for credit losses (includes $

23.2

million and

$

30.4

million at March 31, 2021 and December 31, 2020, respectively, related to consolidated VIEs)

836,341

869,284

Allowance for credit losses

(38,912)

(44,228)

Total net investment in leases and loans

797,429

825,056

Intangible assets

5,510

5,678

Operating lease right-of-use assets

7,648

7,623

Property and equipment, net

8,603

8,574

Property tax receivables, net of allowance

12,063

6,854

Other assets

9,776

10,212

Total assets

$

972,864

$

1,021,998

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits

$

678,331

$

729,614

Long-term borrowings related to consolidated VIEs

23,670

30,665

Operating lease liabilities

8,517

8,700

Other liabilities:

Sales and property taxes payable

10,916

6,316

Accounts payable and accrued expenses

26,086

27,734

Net deferred income tax liability

23,642

22,604

Total liabilities

771,162

825,633

Commitments and contingencies

Stockholders’ equity:

Preferred Stock, $

0.01

par value;

5,000,000

shares authorized;

NaN

issued

0

0

Common Stock, $

0.01

par value;

75,000,000

shares authorized;

12,009,323

and

11,974,530

shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

120

120

Additional paid-in capital

76,682

76,323

Accumulated other comprehensive (loss) income

(115)

69

Retained earnings

125,015

119,853

Total stockholders’ equity

201,702

196,365

Total liabilities and stockholders’ equity

$

972,864

$

1,021,998

The accompanying notes are an integral part of the unaudited consolidatedfinancial statements.

-4-

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

Three Months Ended March 31,

2021

2020

(Dollars in thousands, except per-share

data)

Interest income

$

18,288

$

26,465

Fee income

2,455

2,766

Interest and fee income

20,743

29,231

Interest expense

3,263

5,680

Net interest and fee income

17,480

23,551

Provision for credit losses

(2,936)

25,150

Net interest and fee income (loss) after provision for credit losses

20,416

(1,599)

Non-interest income:

Gain on leases and loans sold

0

2,282

Insurance premiums written and earned

1,998

2,282

Other income

6,574

7,639

Non-interest income

8,572

12,203

Non-interest expense:

Salaries and benefits

8,373

9,519

General and administrative

11,246

13,605

Goodwill impairment

0

6,735

Non-interest expense

19,619

29,859

Income (loss) before income taxes

9,369

(19,255)

Income tax expense (benefit)

2,518

(7,434)

Net income (loss)

$

6,851

$

(11,821)

Basic earnings (loss) per share

$

0.57

$

(1.00)

Diluted earnings (loss)per share

$

0.57

$

(1.00)

The accompanying notes are an integral part of the unaudited consolidatedfinancial statements.

-5-

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

Three Months Ended March 31,

2021

2020

(Dollars in thousands)

Net income (loss)

$

6,851

$

(11,821)

Other comprehensive income (loss):

Decrease in fair value of debt securities available for sale

(246)

(51)

Tax effect

62

13

Total other comprehensiveloss

(184)

(38)

Comprehensive income (loss)

$

6,667

$

(11,859)

The accompanying notes are an integral part of the unaudited consolidatedfinancial statements.

-6-

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(Unaudited)

Accumulated

Common

Additional

Other

Total

Common

Stock

Paid-In

Comprehensive

Retained

Stockholders’

Shares

Amount

Capital

Income (Loss)

Earnings

Equity

(Dollars in thousands)

Balance, December 31, 2019

12,113,585

121

79,665

58

135,112

$

214,956

Repurchase of common stock

(285,593)

(3)

(4,535)

0

0

(4,538)

Stock issued in connection with restricted

stock and RSUs, net of forfeitures

56,481

1

(1)

0

0

0

Stock option compensation recognized

—

0

518

0

0

518

Net change in unrealized gain/loss on

securities available for sale, net of tax

—

0

0

(38)

0

(38)

Net loss

—

0

0

0

(11,821)

(11,821)

Impact of adoption of new accounting

standards

(1)

—

0

0

0

(8,877)

(8,877)

Cash dividends paid ($

0.14

per share)

—

0

0

0

(1,710)

(1,710)

Balance, March 31, 2020

11,884,473

$

119

$

75,647

$

20

$

112,704

$

188,490

Balance, December 31, 2020

11,974,530

120

76,323

69

119,853

196,365

Repurchase of common stock

(16,038)

0

(224)