Exhibit 99.1
MARLIN BUSINESS SERVICES CORP. REPORTS STRONG INCREASE
IN SECOND QUARTER NET INCOME
MOUNT LAUREL, N.J., Aug. 4 /PRNewswire-FirstCall/ -- Marlin Business
Services Corp. (Nasdaq: MRLN) today reported net income of $4.5 million for
the second quarter ended June 30, 2005, a 31.5% increase over $3.4 million for
the same period in 2004. Second quarter 2005 diluted net income per share was
$0.38, a 31.0% increase over $0.29 per diluted share reported in the second
quarter of 2004. Annualized returns on average assets and equity in the
second quarter 2005 were 3.13% and 18.09%, respectively.
For the six months ended June 30, 2005 net income was $8.4 million, or a
30.6% increase over $6.5 million for the same period in 2004. Diluted net income
per share for the six-month period ended June 30, 2005 was $0.71, a 29.1%
increase over $0.55 per diluted share reported for the same period in 2004.
Annualized returns on average assets and equity for the six months ended June
30, 2005 were 3.0% and 17.50%, respectively.
"Overall, a very strong performance quarter led by record new lease
originations and solid asset quality results," said Dan Dyer, Chairman and CEO
of Marlin.
Highlights for the quarter ended June 30, 2005 include:
-- Annualized Returns on average assets and equity were 3.13% and 18.09%,
respectively, in the second quarter of 2005.
-- The Company set records for new lease originations for both the quarter
at $85.0 million and a single month of $30.1 million in June. Net
investment in leases exceeded $537 million at June 30, 2005 and the
number of active leases in our portfolio exceeded 100,000 for the first
time.
-- Asset quality strengthened as annualized net charge-offs were 1.74% of
average net investment in leases during the second quarter of 2005
compared to 1.98% for the first quarter of 2005 and 1.99% for the full
year ended December 31, 2004. As of June 30, 2005, 0.57% of our minimum
lease payments receivable were 60 or more days delinquent compared to
0.65% as of March 31, 2005 and 0.66% as of June 30, 2004.
-- For the quarter ended June 30, 2005, net income was $4.5 million, a
31.5% increase over net income of $3.4 million for the quarter ended
June 30, 2004.
-- Diluted net income per share was $0.38 in the second quarter of 2005, a
31.0% increase over $0.29 diluted net income per share in the quarter
ended June 30, 2004.
Asset Origination
-- Based on initial equipment cost, lease production was $85.0 million in
the second quarter of 2005 compared to $77.3 million in the first
quarter of 2005 and $70.5 million in the second quarter of 2004. Net
investment in leases grew to $537.5 million at June 30, 2005.
-- Our end user customer base grew to more than 80,000 at June 30, 2005
compared with 78,000 as at March 31, 2005 and 72,000 at June 30, 2004.
The number of active leases in our portfolio was approximately 101,000
at June 30, 2005.
Credit Quality
-- Net charge-offs totaled $2.2 million for the quarter ended June 30, 2005
compared with $2.4 million for first quarter of 2005. The provision for
credit losses was $2.3 million for the second quarter of 2005 and $2.7
million for the first quarter of 2005.
-- On an annualized basis, net charge-offs were 1.74% of average net
investment in leases during the second quarter of 2005 compared to 1.98%
for the first quarter of 2005 and 1.99% for the full year ended December
31, 2004.
-- As of June 30, 2005, 0.57% of our total lease portfolio was 60 or more
days delinquent, compared to 0.65% as of March 31, 2005 and 0.66% as of
June 30, 2004.
-- Allowance for credit losses was $6.3 million as of June 30, 2005,
consistent with $6.3 million as of March 31, 2005. Allowance for credit
losses as a percentage of net investment in leases was 1.21% at June 30,
2005 compared to 1.26% at March 31, 2005.
-- At June 30, 2005, the allowance for credit losses was 179.8% of leases
60 or more days delinquent compared to 164.1% at March 31, 2005.
-- 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 four 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 12.60% for the quarter ended June
30, 2005, a decrease of 18 basis points compared to 12.78% for the
quarter ended March 31, 2005. A combination of lower asset yields and
higher borrowing costs led to the decrease.
-- The average implicit yield on new business was 12.70% for the quarter
ended June 30, 2005 compared to 12.84% for the quarter ended March 31,
2005.
-- Fee income as a percentage of average net investment in leases was 3.57%
for the quarter ended June 30, 2005 compared to 3.63% for the quarter
ended March 31, 2005. The decrease in fee income is primarily attributed
to a $151,000 reduction in late fee income in the second quarter of 2005
compared to record late fee income in the first quarter.
-- The average cost of funds as a percentage of net investment in leases
was 3.73% for the quarter ended June 30, 2005. This was a 6 basis point
increase from the 3.67% for the quarter ended March 31, 2005 and is
primarily attributed to increased borrowing levels and interest costs on
the Company's variable rate warehouse facilities. Interest rates on such
facilities have risen due to recent Fed actions to raise short-term
rates. Borrowing levels on the Company's warehouse facilities routinely
increase in advance of the company's next term securitization
transaction now planned for August 2005.
Operating Expenses
-- Salaries and benefits expense was $4.4 million in both the first and
second quarters of 2005. Salaries and benefits expense was 3.4% as an
annualized percentage of average net investment in leases for the second
quarter of 2005 compared to 3.6% for the first quarter of 2005 and 3.1%
in the second quarter of 2004.
-- Other general and administrative expenses were $3.0 million for the
second quarter of 2005, an increase of $200,000 from $2.8 million for
the first quarter of 2005. Other general and administrative expenses as
an annualized percentage of average net investment in leases were 2.3%
for both the first and second quarters of 2005 compared to 2.5% in the
second quarter of 2004.
Funding and Liquidity
-- Capital exceeded $100 million for the first time as we raised $179,000
in additional capital from the sale of 10,031 common shares through the
Employee Stock Purchase Plan on June 30, 2005. An additional $906,000
was added to capital through the exercise of employee stock options and
the related tax benefits during the first six months of the year.
-- Our debt to equity ratio was 4.36:1 at June 30, 2005 compared to 4.40:1
at March 31, 2005. Our continued strong returns on equity and capital
raised through the stock transactions mentioned above combined to lower
this ratio.
Conference Call and Webcast
We will host a conference call on Friday, August 5, 2005 at 9:00 a.m. EDT to
discuss our second quarter 2005 results. If you wish to participate, please call
(800) 894-5910 (International participants please use (785) 424-1052)
approximately 10 minutes in advance of the call time. The conference ID will be:
"7Earnings." 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. In
addition to its executive offices 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)
June 30, December 31,
2005 2004
------------ ------------
Assets
Cash and cash equivalents $ 6,259 $ 16,092
Restricted cash 26,940 20,454
Net investment in direct financing leases 537,497 489,678
Property and equipment, net 3,624 3,555
Accrued property tax receivables 935 625
Fair value of cash flow hedges 2,273 618
Other assets 6,536 6,737
------------ ------------
Total assets $ 584,064 $ 537,759
============ ============
Liabilities and Shareholders' Equity
Debt and secured borrowings $ 441,355 $ 416,603
Other liabilities:
Accrued expenses and other liabilities 18,054 12,696
Deferred income tax liability 23,352 18,110
------------ ------------
Total liabilities 482,761 447,409
Shareholders' equity:
Common Stock, $0.01 par value; 75,000
shares authorized; 11,701 and 11,528 shares
issued and outstanding 117 115
Preferred Stock, $0.01 par value; 5,000
shares authorized; none issued and
outstanding - -
Additional paid-in capital 78,112 75,732
Stock subscription receivable (38) (54)
Deferred compensation (2,221) (1,380)
Other comprehensive income 1,336 374
Retained earnings 23,997 15,563
------------ ------------
Total shareholders' equity 101,303 90,350
------------ ------------
Total liabilities and shareholders' equity $ 584,064 $ 537,759
============ ============
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
Three Months ended Six Months ended
June 30, June 30,
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Income:
Interest and fee income $ 20,975 $ 17,326 $ 41,137 $ 33,539
Interest expense 4,792 3,624 9,285 7,555
------------ ------------ ------------ ------------
Net interest and fee
income 16,183 13,702 31,852 25,984
Provision for credit
losses 2,270 2,445 4,950 4,768
------------ ------------ ------------ ------------
Net interest and fee income
after provision for
credit losses 13,913 11,257 26,902 21,216
Insurance and other income 1,217 1,005 2,389 2,090
------------ ------------ ------------ ------------
Operating income 15,130 12,262 29,291 23,306
Salaries and benefits 4,391 3,428 8,824 6,660
General and administrative 2,971 2,742 5,797 5,040
Financing related costs 410 451 783 933
------------ ------------ ------------ ------------
Income before income taxes 7,358 5,641 13,887 10,673
Income taxes 2,874 2,230 5,453 4,217
------------ ------------ ------------ ------------
Net income $ 4,484 $ 3,411 $ 8,434 $ 6,456
============ ============ ============ ============
Basic earnings per share: $ 0.39 $ 0.30 $ 0.73 $ 0.57
============ ============ ============ ============
Diluted earnings per share: $ 0.38 $ 0.29 $ 0.71 $ 0.55
============ ============ ============ ============
Shares used in computing
basic earnings
per share: 11,508,519 11,283,348 11,483,678 11,252,744
============ ============ ============ ============
Shares used in computing
diluted earnings
per share: 11,912,329 11,676,895 11,891,369 11,668,954
============ ============ ============ ============
SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except per share amounts)
Quarter Ended: 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
New Asset Production:
# of Sales Reps 98 98 100 99 95
# of Leases 8,489 7,974 7,518 8,248 8,798
Equipment Volume $ 70,515 $ 68,849 $ 66,761 $ 77,346 $ 85,007
Average monthly sources 1,317 1,233 1,195 1,312 1,361
Implicit Yield on
New Business 14.07% 13.75% 13.71% 12.84% 12.70%
Net interest and fee margin
Interest Income Yield 12.87% 13.01% 12.91% 12.82% 12.76%
Fee Income Yield 2.92% 3.02% 3.36% 3.63% 3.57%
---------- ---------- ---------- ---------- ----------
Interest and Fee Income
Yield 15.79% 16.03% 16.27% 16.45% 16.33%
Cost of Funds 3.30% 4.00% 3.83% 3.67% 3.73%
---------- ---------- ---------- ---------- ----------
Net interest and Fee
Margin 12.49% 12.03% 12.44% 12.78% 12.60%
========== ========== ========== ========== ==========
Average Net Investment
in Leases $ 438,976 $ 458,270 $ 473,363 $ 490,293 $ 513,919
Portfolio Asset Quality:
60+ Days Past Due
Delinquencies 0.66% 0.73% 0.78% 0.65% 0.57%
60+ Days Past Due
Delinquencies $ 3,540 $ 4,067 $ 4,453 $ 3,849 $ 3,535
Net Charge-offs $ 2,137 $ 2,198 $ 2,495 $ 2,426 $ 2,231
% on Average Net
Investment in
Leases Annualized 1.95% 1.92% 2.11% 1.98% 1.74%
Allowance for Credit
Losses $ 5,569 $ 6,031 $ 6,062 $ 6,317 $ 6,355
% of 60+ Delinquencies 157.3% 148.3% 136.1% 164.1% 179.8%
90+ Day Delinquencies
(Non-earning) $ 1,569 $ 1,722 $ 1,944 $ 1,529 $ 1,705
Balance Sheet
Assets
Investment in Direct
Financing Leases $ 448,875 $ 466,943 $ 479,767 $ 500,766 $ 526,934
Initial Direct Costs
and Fees 15,684 16,127 15,973 16,250 16,918
Reserve for Credit
Losses (5,569) (6,031) (6,062) (6,316) (6,355)
---------- ---------- ---------- ---------- ----------
Net Investment in
Leases $ 458,990 $ 477,039 $ 489,678 $ 510,700 $ 537,497
Cash and Cash
Equivalents 12,686 66,774 16,092 5,997 6,259
Restricted Cash 18,257 19,505 20,454 28,527 26,940
Other Assets 10,580 11,492 11,535 17,465 13,368
---------- ---------- ---------- ---------- ----------
Total Assets $ 500,513 $ 574,810 $ 537,759 $ 562,689 $ 584,064
========== ========== ========== ========== ==========
Liabilities
Total Debt $ 390,271 $ 459,681 $ 416,603 $ 426,747 $ 441,355
Other Liabilities 28,264 29,725 30,806 38,991 41,406
---------- ---------- ---------- ---------- ----------
Total Liabilities $ 418,535 $ 489,406 $ 447,409 $ 465,738 $ 482,761
SUPPLEMENTAL QUARTERLY DATA - continued
(dollars in thousands, except per share amounts)
Quarter Ended: 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05
- ----------------------------------- ------------ ------------ ------------ ------------ ------------
Shareholders' Equity
Common Stock $ 115 $ 115 $ 115 $ 116 $ 117
Paid-in Capital,
net 73,304 73,822 74,298 74,771 75,853
Net gain (losses)
on cash flow hedges - (488) 374 2,552 1,336
Retained Earnings 8,559 11,955 15,563 19,512 23,997
------------ ------------ ------------ ------------ ------------
Total Shareholders'
Equity $ 81,978 $ 85,404 $ 90,350 $ 96,951 $ 101,303
Total Liabilities and
Shareholders'
Equity $ 500,513 $ 574,810 $ 537,759 $ 562,689 $ 584,064
============ ============ ============ ============ ============
Capital and Leverage:
Tangible Equity $ 81,978 $ 85,404 $ 90,350 $ 96,951 $ 101,303
Debt to Tangible
Equity 4.76 5.38 4.61 4.40 4.36
Expense Ratios:
Salaries and Benefits
Expense $ 3,428 $ 3,538 $ 4,249 $ 4,433 $ 4,391
Salaries and Benefits
Expense annualized
% of Avg. Net
Invest. 3.12% 3.09% 3.59% 3.62% 3.42%
Total personnel end
of quarter 264 265 273 271 277
General and
Administrative
Expense $ 2,742 $ 2,490 $ 2,532 $ 2,826 $ 2,971
General and
Administrative
Expense
annualized % of
Avg. Net Invest. 2.50% 2.17% 2.14% 2.31% 2.31%
Efficiency Ratio 41.95% 40.37% 42.73% 43.10% 42.31%
Net Income:
Net Income $ 3,411 $ 3,395 $ 3,608 $ 3,949 $ 4,484
Annualized Performance
Measures:
Return on Average
Assets 2.79% 2.53% 2.59% 2.87% 3.13%
Return on Average
Shareholders
Equity 17.13% 16.23% 16.42% 16.87% 18.09%
Per Share Data:
Number of Shares -
Basic 11,283,348 11,354,023 11,420,247 11,451,551 11,508,519
EPS - Basic $ 0.30 $ 0.30 $ 0.32 $ 0.34 $ 0.39
Number of Shares -
Diluted 11,676,895 11,728,015 11,798,968 11,842,236 11,912,329
EPS - Diluted $ 0.29 $ 0.29 $ 0.31 $ 0.33 $ 0.38
SOURCE Marlin Business Services Corp.
-0- 08/04/2005
/CONTACT: Bruce E. Sickel, CFO, Marlin Business Services Corp.,
+1-888-479-9111 ext. 4108/
/Web site: http://www.marlincorp.com /
(MRLN)