EXHIBIT 99.1
Marlin Business Services Corp. Reports Fourth Quarter and
Year End 2004 Earnings
MOUNT LAUREL, N.J.--(BUSINESS WIRE)--Feb. 3, 2005--Marlin Business
Services Corp. (NASDAQ:MRLN) today reported net income of $3.7
million, or $0.31 per diluted share, for the quarter ended December
31, 2004 compared with a net income attributable to common
shareholders of $1.0 million, or $0.14 per diluted share, in the same
quarter of 2003. For the year ended December 31, 2004 net income was
$13.8 million, or $1.18 per diluted share, compared with net income
attributable to common shareholders of $1.2 million, or $0.35 per
diluted share, for the year ended December 31, 2003.
"We are quite pleased with our strong financial performance in
2004," said Dan Dyer, Chairman and CEO. "As a leading lender to
businesses in the U.S., our mission is to deliver an exceptional
customer service experience. Our success to date is a reflection of
the commitment Marlin makes to the customers we serve."
Marlin completed its initial public offering of common stock (IPO)
on November 12, 2003. Certain non-recurring expenses and preferred
dividends were recorded in 2003 and in prior periods which reduced net
income attributable to common shareholders. A reconciliation between
net income attributable to common shareholders in accordance with
accounting principles generally accepted in the United States of
America (GAAP) and pro forma net income for 2003 is provided in a
table immediately following the 2003 Supplemental Quarterly Data
included with this release. These charges ended in conjunction with
the November IPO and associated corporate reorganization and therefore
will not affect future reporting periods beginning in 2004. As a
result, we believe the pro forma numbers for 2003 present a clearer
and more comparable basis to review the company's fundamental
financial performance. On a pro forma basis, net income for the three
months and year ended December 31, 2003 was $2.6 million and $9.2
million, respectively.
Highlights for the quarter ended December 31, 2004 include:
-- For the quarter ended December 31, 2004, net income was $3.7
million, a 42.3% increase over the pro forma net income of
$2.6 million for the quarter ended December 31, 2003.
-- For the quarter ended December 31, 2004, diluted earnings per
share were $0.31 per diluted share, a 19.2% increase over pro
forma diluted earnings per share of $0.26 for the quarter
ended December 31, 2003.
-- Annualized returns on average equity and assets were 16.30%
and 2.62%, respectively, for the quarter ended December 31,
2004.
-- In December, the company relocated its New Jersey operations
to a new 50,000 square foot office facility at 300 Fellowship
Road, Mount Laurel, New Jersey.
Asset Origination
-- Based on initial equipment cost, lease production was $66.8
million in the fourth quarter of 2004 compared with $68.8
million in the third quarter of 2004. For the year ended
December 31, 2004, lease production was $272.3 million, a
12.4% increase over $242.3 million for 2003. Net investment in
leases grew to $492.9 million at December 31, 2004, an
increase of 16.9% from $421.7 million at December 31, 2003.
-- The weighted average implicit yield on new business was 13.71%
for the quarter ended December 31, 2004 compared to 13.75% for
the third quarter ended September 30, 2004. For the year ended
December 31, 2004 the weighted average implicit yield on new
business was 13.82% compared to 14.01% for the year 2003.
-- Our end user customer base grew to more than 76,000 at
December 31, 2004 compared with 66,000 as of year-end 2003.
Credit Quality
-- Net charge-offs totaled $2.5 million for the fourth quarter of
2004 compared to $2.2 million for the third quarter of 2004.
The provision for credit losses was $2.5 million for the
fourth quarter of 2004 compared to $2.7 million for the third
quarter of 2004.
-- On an annualized basis, net charge-offs were 2.09% of average
net investment in leases during the fourth quarter of 2004
compared to 1.90% for the third quarter of 2004. For the year
ended December 31, 2004 net charge-offs were 1.98% of average
net investment in leases. Fourth quarter charge-offs were
higher due in part to the charge-off of approximately $250,000
of specific accounts identified and reserved for in the third
quarter.
-- As of December 31, 2004, 0.78% of our total lease portfolio
was 60 or more days delinquent, compared with 0.73% as of
September 30, 2004. We have historically experienced higher
delinquency levels in the fourth quarter.
-- Allowance for credit losses was $6.1 million as of December
31, 2004, an approximate $31,000 increase over the prior
quarter. Allowance for credit losses as a percentage of
adjusted net investment in leases was 1.26% at December 31,
2004 compared to 1.28% as of September 30, 2004. The allowance
for credit losses in the third quarter included the
establishment of $250,000 of reserves for specific accounts
that were charged off in the fourth quarter.
-- In conjunction with this release, static pool loss statistics
have been updated as supplemental information on the investor
relation's section of our website at www.marlincorp.com.
Net Interest and Fee Margin and Cost of Funds
-- Based on the average net investment in leases, the net
interest and fee margin was 12.41% for the quarter ended
December 31, 2004, an increase of 37 basis points compared to
12.04% for the third quarter end September 30, 2004. Increased
fee income and lower interest expense were the primary
contributors to the improved fourth quarter margin.
-- Fee income as a percentage of average net investment in leases
was 3.88% for the quarter ended December 31, 2004 compared to
3.58% for the quarter ended September 30, 2004. Approximately
half of the fourth quarter increase was attributed to
additional fees for delinquent lease payments with the
remainder of the increase primarily attributed to end of term
income.
-- Interest expense, as a percentage of average net investment in
leases was 3.80% for the quarter ended December 31, 2004. This
was a 17 basis point decrease from the 3.97% for the quarter
ended September 30, 2004. The decrease reflects the fourth
quarter investment in leases of the balance of $80.5 million
prefunding proceeds from our third quarter term
securitization.
-- Interest expense as a percentage of weighted average
borrowings was 4.02% for the fourth quarter ended December 31,
2004 compared to 3.81% for the third quarter of 2004.
Borrowings in the fourth quarter were almost entirely
comprised of higher cost fixed rate term financing following
the successful completion of our sixth term securitization in
the third quarter 2004.
Operating Expenses
-- Salaries and benefits expense was $4.2 million in the fourth
quarter of 2004 compared to $3.5 million in the third quarter
of 2004. Salaries and benefits expense was 3.6% as an
annualized percentage of average net investment in leases for
the fourth quarter of 2004 compared with 3.1% in the third
quarter. Approximately $240,000 of the increase was for
general salary and benefits expense due in part to increases
in personnel and $290,000 of the quarterly increase related to
year end accrued bonus payments.
-- Other general and administrative expenses were $2.5 million
for both the third and fourth quarters of 2004. Other general
and administrative expenses as an annualized percentage of
average net investment in leases were 2.12% for the fourth
quarter of 2004 compared with 2.16% in the third quarter of
2004.
Funding and Liquidity
-- As of December 31, 2004 we have approximately $253 million of
committed warehouse funding capacity and more than $16 million
in available cash.
-- We raised $234,000 in additional capital from the sale of
17,430 common shares through the Employee Stock Purchase Plan
in the fourth quarter 2004.
-- Our debt to equity ratio was 4.51:1 at December 31, 2004
compared to 5.27:1 at September 30, 2004. The decrease in the
ratio is principally attributed to additional retained
earnings and lower borrowings in the fourth quarter.
Conference Call and Webcast
We will host a conference call on Friday, February 4, 2005 at 9:00
a.m. ET to discuss our fourth quarter 2004 results. If you wish to
participate, please call 877-407-8289 (International participants
please use 201-689-8341) 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,
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. In addition to Mount Laurel, NJ, Marlin has regional offices in
or near Atlanta, Chicago, Denver and Philadelphia. For more
information, visit 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)
December 31, December 31,
2004 2003
------------ ------------
Assets
Cash and cash equivalents $16,092 $29,435
Restricted cash 20,454 15,672
Net investment in direct financing leases 492,859 421,698
Property and equipment, net 3,555 2,413
Other assets 7,980 7,082
------------ ------------
Total assets $540,940 $476,300
============ ============
Liabilities and Shareholders' Equity
Debt and secured borrowings $416,603 $378,900
Other liabilities:
Lease obligation payable 329 630
Accounts payable and accrued expenses 12,367 10,539
Deferred income tax liability 19,343 10,799
------------ ------------
Total liabilities 448,642 400,868
Shareholders' equity:
Common Stock, $0.01 par value; 75,000
shares authorized; 11,528 and 11,214
shares issued and outstanding 115 112
Preferred Stock, $0.01 par value; 5,000
shares authorized; none issued and
outstanding -- --
Additional paid-in capital 75,732 71,918
Stock subscription receivable (54) (213)
Deferred compensation (1,380) (50)
Net gains on cash flow hedges 374 --
Retained earnings 17,511 3,665
------------ ------------
Total shareholders' equity 92,298 75,432
------------ ------------
Total liabilities and shareholders' equity $540,940 $476,300
============ ============
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
(dollars in thousands, except per share
amounts)
Three-Months ended Year ended
December 31, December 31,
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Income:
Interest and
fee income $19,346 $15,511 $71,811 $56,950
Interest
expense 4,532 4,810 16,675 18,069
------------ ------------ ------------ ------------
Net interest
and fee income 14,814 10,701 55,136 38,881
Provision for
credit losses 2,525 2,136 9,953 7,965
------------ ------------ ------------ ------------
Net interest
and fee income
after
provision for
credit losses 12,289 8,565 45,183 30,916
Insurance and
other income 1,140 934 4,383 3,423
------------ ------------ ------------ ------------
Operating
income 13,429 9,499 49,566 34,339
Salaries and
benefits 4,249 2,790 14,447 10,273
General and
administrative 2,532 2,458 10,063 7,745
Financing
related costs 487 452 2,055 1,604
Change in fair
value of
warrants -- 692 -- 5,723
------------ ------------ ------------ ------------
Income before
income taxes 6,161 3,107 23,001 8,994
Income taxes 2,502 1,503 9,155 5,816
------------ ------------ ------------ ------------
Net Income 3,659 1,604 13,846 3,178
Preferred stock
dividends -- 566 -- 2,006
------------ ------------ ------------ ------------
Net income
attributable to
common
shareholders $3,659 $1,038 $13,846 $1,172
============ ============ ============ ============
Basic earnings per
share: $0.32 $0.15 $1.22 $0.39
============ ============ ============ ============
Diluted earnings
per share: $0.31 $0.14 $1.18 $0.35
============ ============ ============ ============
Shares used in
computing basic
earnings per
share: 11,420,247 6,886,694 11,330,132 3,001,754
============ ============ ============ ============
Shares used in
computing diluted
earnings per
share: 11,798,968 7,355,133 11,729,703 3,340,968
============ ============ ============ ============
SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except per share amounts)
Quarter Ended: 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04
-------- -------- -------- -------- --------
New Asset Production:
# of Sales Reps 84 90 98 98 100
# of Leases 7,944 7,837 8,489 7,974 7,518
Equipment Volume $66,594 $66,146 $70,515 $68,849 $66,761
Average monthly
sources 1,188 1,231 1,317 1,233 1,195
Implicit Yield on New
Business 13.68% 13.75% 14.07% 13.75% 13.71%
Interest Income Yield 12.43% 12.29% 12.30% 12.43% 12.33%
Fee Income Yield 3.09% 3.32% 3.57% 3.58% 3.88%
-------- -------- -------- -------- --------
Interest and Fee
Income Yield 15.52% 15.61% 15.87% 16.01% 16.21%
Cost of Funds 4.81% 3.74% 3.28% 3.97% 3.80%
-------- -------- -------- -------- --------
Net interest and Fee
Margin 10.71% 11.87% 12.59% 12.04% 12.41%
======== ======== ======== ======== ========
Average Net
Investment in
Leases $399,755 $420,702 $442,372 $462,090 $477,557
Portfolio Asset
Quality:
60+ Days Past Due
Delinquencies % 0.74% 0.66% 0.66% 0.73% 0.78%
60+ Days Past Due
Delinquencies $ $3,629 $3,383 $3,540 $4,067 $4,453
Net Charge-offs $1,822 $2,078 $2,137 $2,198 $2,495
% on Average Net
Investment in
Leases Annualized 1.82% 1.98% 1.93% 1.90% 2.09%
Allowance for Credit
Losses $5,016 $5,261 $5,569 $6,031 $6,062
% of 60+
Delinquencies 138.2% 155.5% 157.3% 148.3% 136.1%
90+ Day Delinquencies
(Non-earning) $1,504 $1,422 $1,569 $1,722 $1,944
Balance Sheet
Assets
Investment in Direct
Financing
Leases $411,989 $430,393 $451,844 $470,039 $482,948
Initial Direct Costs
and Fees 14,725 15,299 15,684 16,127 15,973
Reserve for Credit
Losses (5,016) (5,261) (5,569) (6,031) (6,062)
-------- -------- -------- -------- --------
Net Investment in
Leases $421,698 $440,431 $461,959 $480,135 $492,859
Cash and Cash
Equivalents 29,435 7,528 12,686 66,774 16,092
Restricted Cash 15,672 18,566 18,257 19,505 20,454
Other Assets 9,495 14,446 10,580 11,521 11,535
-------- -------- -------- -------- --------
Total Assets $476,300 $480,971 $503,482 $577,935 $540,940
======== ======== ======== ======== ========
Liabilities
Total Debt $378,900 $375,769 $390,271 $459,681 $416,603
Other Liabilities 21,968 26,213 29,412 30,953 32,039
-------- -------- -------- -------- --------
Total Liabilities $400,868 $401,982 $419,683 $490,634 $448,642
SUPPLEMENTAL QUARTERLY DATA - continued
(dollars in thousands, except per share amounts)
Quarter Ended: 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04
-------- ------- ------- ------- --------
Shareholders'
Equity
Common Stock $112 $114 $115 $115 $115
Paid-in Capital,
net 71,655 72,042 73,304 73,822 74,298
Net gain (losses)
on cash flow
hedges -- -- -- (488) 374
Retained Earnings 3,665 6,833 10,380 13,852 17,511
------ ------ ------ ------ ------
Total
Shareholders'
Equity $75,432 $78,989 $83,799 $87,301 $92,298
Total Liabilities
and Shareholders'
Equity $476,300 $480,971 $503,482 $577,935 $540,940
======== ======== ======== ======== ========
Capital and
Leverage:
Tangible Equity $75,432 $78,989 $83,799 $87,301 $92,298
Debt to Tangible
Equity 5.02 4.76 4.66 5.27 4.51
Expense Ratios:
Salaries and
Benefits Expense $2,790 $3,233 $3,428 $3,538 $4,249
Salaries and
Benefits Expense
annualized % of
Avg. Net
Investment 2.79% 3.07% 3.10% 3.06% 3.56%
Total personnel
end of quarter 237 248 264 265 273
General and
Administrative
Expense $2,458 $2,298 $2,742 $2,490 $2,532
General and
Administrative
Expense
annualized %
of Avg. Net
Investment 2.46% 2.18% 2.48% 2.16% 2.12%
Efficiency Ratio 45.11% 40.75% 41.32% 40.03% 42.51%
Net Income:
Net Income $1,604 $3,168 $3,547 $3,471 $3,659
Preferred
Dividends (566) NA NA NA NA
------ ------ ------ ------ ------
Net Income
attributable to
common $1,038 $3,168 $3,547 $3,471 $3,659
Per Share Data:
Number of Shares
- Diluted 7,355,133 11,660,498 11,676,895 11,728,015 11,798,968
EPS- Diluted $0.14 $0.27 $0.30 $0.30 $0.31
Pro Forma Number
of Shares
- Diluted (a) 10,022,957 NA NA NA NA
Pro Forma
Diluted Earnings
Per Share $0.26 NA NA NA NA
(a) Pro forma shares outstanding assume conversion of convertible
preferred stock and the exercise of warrants outstanding. The
preferred stock and warrants were exercised into common shares in
conjunction with the company's IPO in November 2003.
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Pro Forma 2003 Financial Information
(dollars in thousands, except per share amounts)
Quarter Ended: 3/31/03 6/30/03 9/30/03 12/31/03
------- ------- ------- --------
Net income (loss)
attributable to common
shareholders per GAAP $(198) $(36) $371 $1,038
Change in fair value
of warrants 1,773 1,841 1,416 692
Preferred stock
dividends 473 480 487 566
Unamortized discount
expensed on payoff
of subordinated
debt, net of tax -- -- -- 270
------ ------ ------ ------
Pro forma Net Income $2,048 $2,285 $2,274 $2,566
====== ====== ====== ======
Pro forma average
diluted shares
outstanding 7,817,269 7,965,277 8,021,402 10,022,957
Pro forma diluted
earnings per share $0.26 $0.29 $0.28 $0.26
In conjunction with its November 2003 IPO, Marlin's capital structure
was simplified into one class of outstanding common stock. All
previously outstanding warrants and convertible preferred stock were
exercised and converted to common stock. Prior to the IPO, warrants
outstanding were recorded as a liability and periodically marked to
their fair market value with increases in value causing current period
expense. This non-cash expense was $5.7 million for the year ended
2003. Upon the exercise of the warrants to common stock, the warrant
liability was reclassified to shareholders equity. Similarly, all
outstanding convertible preferred stock converted to common stock at
the time of the IPO. The pro forma adjustments above reflect the
exercise of the warrants and conversion of the preferred stock and the
add back of the expenses and dividends associated with each in the
pre-IPO periods. Pursuant to GAAP, these adjustments are anti-dilutive
and, therefore, not reported in diluted earnings per share
calculations.
CONTACT: Marlin Business Services Corp.
Bruce E. Sickel, 888-479-9111 x4108