Exhibit 99.1
Marlin Business Services Corp. Reports Fourth Quarter and Year End 2006
Earnings
MOUNT LAUREL, N.J., Feb. 15 /PRNewswire-FirstCall/ -- Marlin Business
Services Corp. (Nasdaq: MRLN) today reported net income of $3.9 million for
the fourth quarter ended December 31, 2006, compared with net income of $4.4
million for the same period in 2005. Diluted net income per share was $0.32
for the fourth quarter of 2006, a decrease of 11.1% compared with $0.36 for
the same period in 2005. The quarterly net income was impacted by a one-time
after-tax charge of $0.9 million or $0.07 per share related to the departure
of Marlin's President, reported in Form 8-K filed December 21, 2006.
For the year ended December 31, 2006, net income was $18.6 million compared
to $16.2 million for the year ended December 31, 2005. Diluted net income per
share for the year ended December 31, 2006 was $1.53, an increase of 12.5%
compared to $1.36 per diluted share reported for the year ended December 31,
2005. Returns on average assets and equity for the year ended December 31, 2006
were 2.54% and 14.95%, respectively.
Excluding the impact of adjustments related to the departure of Marlin's
President in the fourth quarter of 2006 and Hurricane Katrina adjustments in
both 2006 and 2005, net income for the year ended December 31, 2006 would have
been $19.0 million compared to $17.0 million of net income for the year ended
December 31, 2005. Diluted earnings per share, excluding the impact of these
adjustments, would have been $1.56 for the year ended December 31, 2006 compared
to $1.42 per diluted share for the year ended December 31, 2005.
"Despite the pressure from a higher interest rate environment, 2006 marked
another year of progress and growth in our business," said Daniel P. Dyer,
Chairman and CEO of Marlin Business Services Corp. "New lease origination volume
grew 22.0% and portfolio asset quality was exceptional. We're also pleased with
our progress pursuing new opportunities to serve small businesses with the
launch of our Factoring and Business Capital Loan products in 2006."
Highlights for the year and quarter ended December 31, 2006 include:
Asset Origination
- Based on initial equipment cost, lease production increased 22.0% to
$388.7 million for the year ended December 31, 2006 compared to $318.5
million for 2005.
- Growth from direct sales was 13.9% year over year and growth from the
indirect channel was 37.5%.
- Net investment in leases was $693.9 million at December 31, 2006.
- Based on initial equipment cost, lease production was $106.8 million in
the fourth quarter of 2006 compared with $102.0 million in the third
quarter of 2006 and $76.5 million in the fourth quarter of 2005.
- Our end user customer base grew to more than 87,000 at December 31, 2006
compared with 86,000 at September 30, 2006 and 82,000 at December 31,
2005. The number of active leases in our portfolio was approximately
110,000 at December 31, 2006.
- As of December 31, 2006 the Company had $1.8 million of purchased
receivables balances for its factoring business "Marlin Trade
Receivables."
- As of December 31, 2006 the Company had $2.0 million of loan balances
recorded for its new Business Capital Loan Product.
Net Interest and Fee Margin and Cost of Funds
- The interest income yield was 13.11% as a percentage of average net
investment in leases for the quarter ended December 31, 2006, an increase
of 54 basis points from the quarter ended September 30, 2006 and an
increase of 15 basis points from the fourth quarter of 2005. This is due
primarily to interest income on free cash flow as a result of the debt
proceeds raised in our third quarter term securitization.
- Fee income as a percentage of average net investment in leases was 3.07%
for the quarter ended December 31, 2006 compared to 3.35% for the quarter
ended September 30, 2006. Fee income was $5.1 million for the quarter
ended December 31, 2006 compared to $5.2 million for the third quarter of
2006. The decrease in fee income is primarily attributed to lower renewal
income and lower net residual income on disposed equipment in the current
quarter compared to the third quarter of 2006. Renewal income net of
depreciation was $1.6 million in the fourth quarter compared to $1.7
million in the third quarter of 2006. Residual income from disposed
equipment was a net loss of $76,000 in the fourth quarter ended December
31, 2006 compared to a net gain of $68,000 in the third quarter ended
September 30, 2006.
- The average cost of funds as a percentage of net investment in leases was
4.95% for the quarter ended December 31, 2006. This was a 54 basis point
increase from the 4.41% for the quarter ended September 30, 2006. The
increase in the average cost of funds was attributed to the assumption of
higher debt balances primarily as a result of the prefunding feature of
the term securitization completed late in the third quarter. The
prefunding proceeds were used to finance fourth quarter originations.
- Due to the factors discussed above, the net interest and fee margin was
11.23% as a percentage of average net investment in leases for the
quarter ended December 31, 2006, a decrease of 28 basis points compared
to 11.51% for the quarter ended September 30, 2006.
- The average implicit yield on new business was 12.66% for the quarter
ended December 31, 2006 compared to 12.73% for the quarter ended
September 30, 2006.
- Included in income for the year ended December 31, 2006 is $160,000 of
interest income related to the Company's factoring product and $67,000 of
interest income related to its Business Capital Loan product.
Credit Quality
- Net charge-offs were 1.56% of average net investment in leases for the
year ended December 31, 2006 compared to 1.74% for the year ended
December 31, 2005.
- Net charge-offs totaled $2.4 million for the quarter ended December 31,
2006 compared with $2.7 million for the third quarter of 2006. On an
annualized basis, net charge-offs were 1.46% of average net investment in
leases during the fourth quarter of 2006 compared to 1.72% for the third
quarter of 2006.
- As of December 31, 2006, 0.71% of our total lease portfolio was 60 or
more days delinquent, compared to 0.58% as of September 30, 2006 and
0.61% as of December 31, 2005.
- Allowance for credit losses was $8.2 million as of December 31, 2006,
compared to $7.8 million as of September 30, 2006. Allowance for credit
losses as a percentage of net investment in leases was 1.21% at both
December 31, 2006 and September 30, 2006.
- At December 31, 2006, the allowance for credit losses was 144.5% of
leases 60 or more days delinquent compared to 176.1% at September 30,
2006.
- 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.
Operating Expenses
- Salaries and benefits expense was $6.9 million in the fourth quarter of
2006 compared to $5.2 million in the third quarter. Salaries and benefits
expense included a one-time pretax charge of $1.45 million due to the
separation agreement related to the departure of Marlin's President.
Excluding this adjustment, salaries and benefits were 3.30% as an
annualized percentage of average net investment in leases for the fourth
quarter of 2006 versus 3.31% in the third quarter of 2006. Salaries and
benefits also included $110,000 of expenses in the fourth quarter of 2006
related to Marlin Business Bank (in organization).
- Other general and administrative expenses were $3.3 million in the fourth
quarter of 2006 compared to $2.9 million in the third quarter. Other
general and administrative expenses as an annualized percentage of
average net investment in leases were 1.98% for the fourth quarter of
2006 compared to 1.84% for the third quarter of 2006. We incurred
approximately $185,000 in professional fees associated with a follow on
offering done on behalf of a shareholder (pursuant to such shareholder's
registration rights) completed in the fourth quarter of 2006. In
addition, we incurred $229,000 in external consulting fees related to
recruiting and other projects.
Funding and Liquidity
- Our debt to equity ratio was 4.59:1 at December 31, 2006 compared to
5.50:1 at September 30, 2006.
- Capital increased an additional $143,000 through the exercise of employee
stock options and the related tax benefits during the fourth quarter of
2006.
- We raised $185,000 in additional capital from the sale of 8,270 common
shares through the Employee Stock Purchase Plan in the fourth quarter of
2006.
- The Company had $26.7 million in unrestricted cash balances as of
December 31, 2006.
Other
- On November 21, 2006, the Company closed on a follow on offering on
behalf of an institutional investor in the amount of 1.0 million shares.
Conference Call and Webcast
We will host a conference call on Friday, February 16, 2007 at 9:00 a.m. EST
to discuss our fourth quarter and year end 2006 results. If you wish to
participate, please call (800) 909-7113 approximately 10 minutes in advance of
the call time. The conference ID will be: "7Marlin." 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 70 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, Philadelphia and Salt Lake City.
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
(Dollars in thousands, except per-share data)
December 31, December 31,
2006 2005
------------ ------------
(Unaudited)
Assets
Cash and cash equivalents $ 26,663 $ 34,472
Restricted cash 57,705 47,786
Net investment in direct financing leases 693,911 572,581
Property and equipment, net 3,430 3,776
Property tax receivables 257 191
Fair value of cash flow hedge derivatives 456 3,383
Other assets 13,030 8,800
------------ ------------
Total assets $ 795,452 $ 670,989
============ ============
Liabilities and Stockholders' Equity
Revolving and term secured borrowings $ 616,322 $ 516,849
Other liabilities:
Fair value of cash flow hedge derivatives 1,607 --
Sales and property taxes payable 8,034 7,702
Accounts payable and accrued expenses 12,269 8,467
Deferred income tax liability 22,931 25,362
------------ ------------
Total liabilities 661,163 558,380
------------ ------------
Commitments and Contingencies
Stockholders' equity:
Common Stock, $0.01 par value;
75,000,000 shares authorized;
12,030,259 and 11,755,225 shares
issued and outstanding, respectively 120 117
Preferred Stock, $0.01 par value;
5,000,000 shares authorized; none issued -- --
Additional paid-in capital 81,850 77,186
Stock subscription receivable (18) (25)
Cumulative other comprehensive income 1,892 3,520
Retained earnings 50,445 31,811
------------ ------------
Total stockholders' equity 134,289 112,609
------------ ------------
Total liabilities and
stockholders' equity $ 795,452 $ 670,989
============ ============
MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per-share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Income:
Interest income $ 21,648 $ 17,979 $ 77,644 $ 67,572
Fee income 5,066 4,699 20,311 17,957
------------ ------------ ------------ ------------
Interest and
fee income 26,714 22,678 97,955 85,529
Interest expense 8,173 5,933 26,562 20,835
------------ ------------ ------------ ------------
Net interest and
fee income 18,541 16,745 71,393 64,694
Provision for
credit losses 2,838 2,426 9,934 10,886
------------ ------------ ------------ ------------
Net interest and
fee income
after provision
for credit losses 15,703 14,319 61,459 53,808
Insurance and
other income 1,551 1,131 5,501 4,682
------------ ------------ ------------ ------------
Operating
income 17,254 15,450 66,960 58,490
------------ ------------ ------------ ------------
Non-interest expense:
Salaries and
benefits 6,898 4,782 22,468 18,173
General and
administrative 3,264 3,062 11,957 11,908
Financing related
costs 264 382 1,324 1,554
------------ ------------ ------------ ------------
Non-interest
expense 10,426 8,226 35,749 31,635
------------ ------------ ------------ ------------
Income before
income taxes 6,828 7,224 31,211 26,855
Income taxes 2,946 2,854 12,577 10,607
------------ ------------ ------------ ------------
Net income $ 3,882 $ 4,370 $ 18,634 $ 16,248
============ ============ ============ ============
Basic earnings
per share $ 0.33 $ 0.38 $ 1.58 $ 1.41
Diluted earnings
per share $ 0.32 $ 0.36 $ 1.53 $ 1.36
Shares used in
computing basic
earnings per
share 11,889,262 11,646,864 11,803,973 11,551,589
Shares used in
computing diluted
earnings per
share 12,231,808 12,075,882 12,161,479 11,986,088
SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except share amounts)
(unaudited)
Quarter Ended: 12/31/2005 3/31/2006 6/30/2006
- -------------------------------- -------------- -------------- --------------
New Asset Production:
# of Sales Reps 103 101 103
# of Leases 7,566 7,734 8,553
Equipment Volume $ 76,472 $ 82,049 $ 97,871
Average monthly sources 1,202 1,219 1,333
Implicit Yield on
New Business 12.87% 12.84% 12.68%
Net interest and fee margin
Interest Income Yield 12.96% 12.54% 12.54%
Fee Income Yield 3.39% 3.45% 3.44%
Interest and Fee Income Yield 16.35% 15.99% 15.98%
Cost of Funds 4.28% 3.87% 4.06%
Net interest and Fee Margin 12.07% 12.12% 11.92%
Average Net Investment
in Leases $ 554,705 $ 568,248 $ 591,905
Portfolio Asset Quality:
60+ Days Past Due
Delinquencies 0.61% 0.49% 0.54%
60+ Days Past Due
Delinquencies $ 4,063 $ 3,320 $ 3,867
Net Charge-offs $ 2,513 $ 2,324 $ 2,132
% on Average Net
Investment in
Leases Annualized 1.81% 1.64% 1.44%
Allowance for Credit
Losses $ 7,813 $ 7,904 $ 7,370
% of 60+ Delinquencies 192.30% 238.10% 190.59%
90+ Day Delinquencies
(Non-earning) $ 2,017 $ 1,544 $ 1,648
Balance Sheet:
Assets
Investment in Direct
Financing Leases $ 562,039 $ 577,219 $ 609,359
Initial Direct Costs
and Fees 18,355 19,329 20,826
Reserve for Credit Losses (7,813) (7,904) (7,370)
Net Investment in Leases $ 572,581 $ 588,644 $ 622,815
Cash and Cash Equivalents 34,472 4,929 3,168
Restricted Cash 47,786 52,987 54,457
Other Assets 16,150 23,735 17,667
Total Assets $ 670,989 $ 670,295 $ 698,107
Liabilities
Total Debt $ 516,849 $ 504,459 $ 526,286
Other Liabilities 41,531 46,645 45,580
Total Liabilities $ 558,380 $ 551,104 $ 571,866
Stockholders' Equity
Common Stock $ 117 $ 118 $ 120
Paid-in Capital, net 77,161 78,308 79,583
Other Comprehensive Income 3,520 4,220 4,705
Retained Earnings 31,811 36,545 41,833
Total Stockholders'
Equity $ 112,609 $ 119,191 $ 126,241
Total Liabilities and
Stockholders' Equity $ 670,989 $ 670,295 $ 698,107
Capital and Leverage:
Tangible Equity $ 112,609 $ 119,191 $ 126,241
Debt to Tangible Equity 4.59 4.23 4.17
Expense Ratios:
Salaries and Benefits
Expense $ 4,781 $ 5,145 $ 5,254
Salaries and Benefits
Expense annualized %
of Avg. Net Invest. 3.45% 3.62% 3.55%
Total personnel end
of quarter 296 301 319
General and Administrative
Expense $ 3,062 $ 2,746 $ 3,078
General and Administrative
Expense annualized %
of Avg. Net Invest. 2.21% 1.93% 2.08%
Efficiency Ratio 43.87% 42.46% 44.16%
Net Income:
Net Income $ 4,370 $ 4,734 $ 5,288
Annualized Performance
Measures:
Return on Average Assets 2.49% 2.82% 3.09%
Return on Average
Stockholders' Equity 15.89% 16.34% 17.24%
Per Share Data:
Number of Shares
- Basic 11,646,864 11,702,161 11,780,018
EPS- Basic $ 0.38 $ 0.40 $ 0.45
Number of Shares
- Diluted 12,075,882 12,042,436 12,092,752
EPS- Diluted $ 0.36 $ 0.39 $ 0.44
SUPPLEMENTAL QUARTERLY DATA
(dollars in thousands, except share amounts)
(unaudited)
Quarter Ended: 9/30/2006 12/31/2006
- -------------------------------------- -------------- --------------
New Asset Production:
# of Sales Reps 100 100
# of Leases 8,882 9,045
Equipment Volume $ 101,962 $ 106,779
Average monthly sources 1,321 1,309
Implicit Yield on New Business 12.73% 12.66%
Net interest and fee margin
Interest Income Yield 12.57% 13.11%
Fee Income Yield 3.35% 3.07%
Interest and Fee Income Yield 15.92% 16.18%
Cost of Funds 4.41% 4.95%
Net interest and Fee Margin 11.51% 11.23%
Average Net Investment in Leases $ 624,711 $ 660,529
Portfolio Asset Quality:
60+ Days Past Due Delinquencies 0.58% 0.71%
60+ Days Past Due Delinquencies $ 4,411 $ 5,676
Net Charge-offs $ 2,685 $ 2,405
% on Average Net Investment in
Leases Annualized 1.72% 1.46%
Allowance for Credit Losses $ 7,767 $ 8,201
% of 60+ Delinquencies 176.08% 144.49%
90+ Day Delinquencies (Non-earning) $ 1,876 $ 2,250
Balance Sheet:
Assets
Investment in Direct Financing
Leases $ 642,113 $ 677,848
Initial Direct Costs and Fees 22,496 24,264
Reserve for Credit Losses (7,767) (8,201)
Net Investment in Leases $ 656,842 $ 693,911
Cash and Cash Equivalents 34,159 26,663
Restricted Cash 179,964 57,705
Other Assets 15,954 17,173
Total Assets $ 886,919 $ 795,452
Liabilities
Total Debt $ 712,355 $ 616,322
Other Liabilities 44,963 44,841
Total Liabilities $ 757,318 $ 661,163
Stockholders' Equity
Common Stock $ 120 $ 120
Paid-in Capital, net 80,548 81,832
Other Comprehensive Income 2,370 1,892
Retained Earnings 46,563 50,445
Total Stockholders' Equity $ 129,601 $ 134,289
Total Liabilities and
Stockholders' Equity $ 886,919 $ 795,452
Capital and Leverage:
Tangible Equity $ 129,601 $ 134,289
Debt to Tangible Equity 5.50 4.59
Expense Ratios:
Salaries and Benefits Expense $ 5,171 $ 6,898
Salaries and Benefits Expense
annualized % of Avg. Net Invest. 3.31% 4.18%
Total personnel end of quarter 310 314
General and Administrative Expense $ 2,868 $ 3,264
General and Administrative Expense
annualized % of Avg. Net Invest. 1.84% 1.98%
Efficiency Ratio 41.55% 50.58%
Net Income:
Net Income $ 4,730 $ 3,882
Annualized Performance Measures:
Return on Average Assets 2.55% 1.86%
Return on Average Stockholders' Equity 14.79% 11.77%
Per Share Data:
Number of Shares - Basic 11,838,677 11,889,262
EPS- Basic $ 0.40 $ 0.33
Number of Shares - Diluted 12,154,889 12,231,808
EPS- Diluted $ 0.39 $ 0.32
SOURCE Marlin Business Services Corp.
-0- 02/15/2007
/CONTACT: Lynne Wilson of Marlin Business Services Corp., +1-888-479-9111
ext. 4108/
/Web site: http://www.marlincorp.com /
(MRLN)