MRLN - Earnings call transcript Q4 2018 | Marlin Business Services Corp

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Operator

Greetings, and welcome to the Marlin Business Services Corp. Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure Relations. your my Managing Lasse now Investor Director, is to host, introduce Glassen, It you. Thank

may You begin.

Lasse Glassen

quarter earnings Good Risk and us is along Business fourth with today and Jeff Officer. for full morning thank Chief Senior Marlin Services you Hilzinger, President Lou Corp's Executive today’s Maslowe, call. Chief On conference for and joining and call year Officer; XXXX President Vice

the results you are to company's that will filings refer Marlin's to beginning under risks some or the from variety turn financial for Before and me We a Jeff today's Litigation with today could and let recent those of and to a over statements call XXXX. Jeff? impact may Securities to With Marlin's be my future Private pleasure remind SEC forward-looking of President Actual made now the call, CEO, that, the discussion made the projected it's Act operating you differ due the that factors. condition. of of more detailed Reform Hilzinger. implied results materially

Jeff Hilzinger

equipment completed Good solid of detail fourth Lasse. with provider fourth year Chief strong and and year remarks, us credit financial quarter, results. to broader Lou's fourth on update of progress highlights and X.X portfolio quality. that will to performance. our everyone volume well our Marlin on additional year strategy lessor overall outlook. a for micro-ticket driven an and Risk will business quarter and and a into comment Maslowe, products discuss our quarter continues our provide transform by We you, results Thank XXXX thank to from quarter I businesses. will with origination the services begin small the credit Officer as Lou I our full morning fourth overview you joining as full a on our company After

level $XXX.X compared Finance along in our improvement a loan with fueled both leases income. growth net last total was resulting in million products. capital Our and of adjusted net $XXX.X and quarter excellent investment Fourth This working million, Equipment to loans growth with in from strong year-over-year XX.X%. by volume efforts was increase year-over-year record a reaching year led origination sourced

part capital capital and initiatives, from sold XX.X% nearly time markets in In addition ago as assets origination and markets company milestone leases managed these $X referred increased year first loans $XX.X time, and leases history. the total grew net or for a $X.X our to year Marlin's Due of we surpassed activities, of to billion an in loans. billion, and increase million investment the same the ago. At of a from X.X%

strong the compared with single activity to last remains and fourth performance Outside this we overall At share a performance the diluted expect incident due continue for his portfolio during targeted reported of of remain $X.XX and was our XXXX. our While by portfolio overall year. importantly, per line, range during charge-offs GAAP stable $X.XX per comments the earnings elevated and we fraudulent performance to discuss of primarily Lou the quarter portfolio were within as will bottom to stable quarter diluted fourth in our vendor. further share

quarter. required XXXX deferred assets and Jobs quarter may you liabilities benefit its of tax in revalue company the Cuts As resulting Act tax a in million fourth onetime a the from Tax benefit and recall, and resulted which the earnings included recorded to $XX.X net XXXX,

nearly increased million, And a ago. or income XXXX $XX.X million, with up of XX% other of share adjusted of this full per nearly non-recurring items, net net $XX.X year net of XXXX adjusted impact $X.XX and X% income per $X.XX diluted million, share, for $X.XX fourth the income adjusted compared share year or $X.XX diluted from per XXXX. quarter in diluted the $X.X share $X.X or was diluted Excluding million or per

Excluding GAAP in per press afternoon. the would adjusted fraud, adjusted income earnings of to A share yesterday available the is net release basis issued $X.XX. for have XXXX been reconciliation

addition We also Bogansky the to Marlin's leadership Senior recently Mike President senior announced Chief with as of Financial Officer. the hiring key team Vice and

Monday look our on with introducing the be will I call. Next in to Mike's and first earnings person company day next forward him

treasury for tax will managing accounting, Relations he activities. and reporting CFO, all have of responsibility and As Marlin's financial Investor planning,

share Marlin the Through our and first growth capital improve fixed target X.X, our processing company's consistent like with to company's expanding and equity scale returns X.X. areas confident risk and recent to the finance Mike by reduce Ocwen proactively given update last on and in growth like I'd Mike base necessary very since business efficiency as on strategic made level, of Marlin's many looks you and by Marlin, complexity. better progress market; soon. increasing leveraging costs; know PHH to the cost Marlin fourth I'd gears And origination cost to you Corporation, with meeting through at appetite. accounting improvements joining and improving through that Corporation. fixed we profile now which Mike each recently switch risk publicly drive of through I and was refer to servicing mortgage Financial we've operating initiative person growth; is expect and CFO we with second, is and to our activities an right speaking these and portfolio our traded our of an merged a with to Before provide the origination call. operational be strategically to that transformation forward I'm which Marlin's company, third, managing better unit lead increasingly leveraging

solely respect with First, and are than focused financing small equipment developing providing grow. help solutions marketing our X.X lessor, to thinking multiple Marlin expansion under an the on rather as strategic of ourselves businesses to strategy we products

market but directly vendor our with go-to broadened strategy have customers. our end-user also by only through equipment originate part to of not also As partners, continuing this, our we

finance product. capital our loan expanded Fourth core pleased our strong year-over-year While origination XX% trajectory, working volume growth equipment we its capital consistently $XX.X performance also by to million. working quarter the are continues business with nearly of loan

For origination loan working prior year. million, capital nearly the volume full over $XX.X was year, increased XX% the

and objective to approximately relationships pleased We provide solutions to is these directly market a our XXXX-plus with customers to broader also strategy small including customers customers. our our and set products meeting XX,XXX by originate of relationships strategy remained we business go-to relationships, each efforts with offering financing existing create ongoing their month. our our end-user by new of needs. part our with these multiple key is our end-user customer leveraging active customers customers under The opportunities additional financing financing direct the identify A with to

the During up in of a million year-over-year direct resulting volume increase million to origination from $XX.X the in increased and year quarter, XX%. fourth last $XX.X quarter

origination full increased the almost volume year. prior over the $XXX.X year, of direct XX% For million

further a campaign weeks. Going we forward Marlin we expect rolling that will both within branding to out the be indirect enhanced and momentum through several direct new be origination next

first third the FFR quarter So contributions fourth please stay which Fleet recent And quarter. Resources of of our tuned. in closed from or quarter full the marked -- late Financing acquisition finally, the

other currently equipment As you such of coaches, financing equipment transportation in commercial motor emphasis may an focused people. buses movement recall liberty used with buses, as on equipment is and the on FFR shuttle

domain renamed platform the companies. Vehicle transportation quarter, With transportation by primarily pursue vocational and Commercial previously used The to additional Group Group. equipment across fourth providing FFR Group while expertise Vehicle completed we accelerating the vocational the transportation small integration Commercial our FFR spectrum, bear will than of significant the Marlin's rather our to equipment Vehicle used scale focuses and by businesses stated equipment also strategy, equipment financing continue fully During entire which integrated, Commercial to platform. transportation on the now growth brings

million origination FFR During on the Commercial to during with you million to originated quarter, coming XXXX. progress expected updating the look the our volume forward Vehicle $XX quarters. Group We $XX.X in of exceed

during during cost of volume growth priority Marlin's our on we We capital. portfolio we strong Also and on X.X key and ratio the which common quarter second Thanks and were to origination reduce year XXXX, this our full repurchased good stock progress during year, the assets use and first XX.X% to quarter to of Marlin's also growth. year. solid fixed able focuses past quarter into leveraging capital of which equity Marlin the from of end compelling to at billion XX% fourth the a we last was believe made

to terms capital credit these better transactions particular exposure size classes. activities. markets funding, and managing Marlin composition as continued addition, portfolio our In levels source Along our our its optimize and balance sheet a to providing with with composition in and risk and returns, way of view industries, we to by geographies size we of through another asset manage overall of the

higher on Marlin's as $XX result by we million. sold During in of production sale. a generated FFR, large immediate million of was due strong assets pretax asset of and fourth that the gain quarter approximately an originated Overall investor than sale of from previous fourth sales portion were quarter $X.X contributed product total a demand for a quarters to the also which net

the a measurable year receivables operating progress of in we business for implemented better with and XX.X% servicing both focus, through to reclassification cost XX% from noninterest ongoing full last finance automating amortization was of percentage year, third efficiency streamlining full Overall, we made processes. for operational temporary strides company's improving improvements. costs XXXX. in in that After average have to as growth also and mid-XXXX, area improved improved our acquisition-related by from ratio our adjusting year non-GAAP non-GAAP our and the make X.X% leveraging to and at Looking process the I'm the managed continue expense our of pleased in efficiencies the fixed for asset X.X%

continue process growth cost operate through we efficiently adjusted fixed We our initiatives. in to and more the expect to portfolio renewal further our various future efficiency our ratio leverage improve as and

managing our risk level types final the we is assume fourth willing enterprise-wide risk company's profitability commensurate and of proactively with growth the XXXX, profile area defines objectives. to fine-tune management Throughout appetite. to strategic key be risk and focus program Marlin to risk achieve is to work our Our of our aggregate and that

an While good yielding this has results. work been effort, our is ongoing

the Lou mentioned due activity in we elevated more to remain to detail within I to remarks. fourth notwithstanding we by mitigate charge-offs In summary, the charge-offs quarter portfolio about quarter during from performance were his non-recurring as overall, and our in earlier, a as actions future the fourth strong we a taken enjoyed which stable vendor. speak range. we primarily However, a productivity fraud have targeted single will view to But expect fraud continue our be event. elevated fraudulent

market. our and more year like we're pursue in to believe detail. XXXX expecting of our turn to good With we the call the to I'd that over I in to Maslowe, that, that discuss another the many in Officer Lou? Risk portfolio now Looking our opportunities well-positioned very strongly are Lou performance forward, exist Chief

Lou Maslowe

morning everyone. you, and Thank Jeff, good

the with of X.XX%, is industry The increased X.X% on Marlin's year-over-year we basis points. and by the the while trend. Looking points quarter fourth points from Equipment range. third finance prior is points X.XX%, to utilize key basis of year. X.X% XX quality XX receivables XX increase the the within consistent quarter four to XX from as receivables continue days increased Equipment at quarter up XXXX. is gradually in in in charge-offs average in from fourth basis last Finance that compared quarter-over-quarter quarter eight points four Business the delinquency fourth was still XX an Finance XX delinquency and benchmark prior levels which basis basis to modest receivables year-over-year. annualized delinquency nine with charge-offs days the asset quarter were up days experience basis up increased Aggregate points, of Small expected our and Index, net quarter from and fourth eight the we This increasing comparable points six basis Equipment the X.XX% Delinquency by delinquent basis increased metrics basis over PayNet over Finance XXXX. of delinquent the A quarter points

$X.X during charge-offs fourth in a by As primarily single increase due quarter Jeff mentioned, activity due the million to quarter-over-quarter vendor. was to the fraudulent

have would XXXX. Excluding lowest the the QX since X.XX%, of vendor Equipment fraud, the quarter Finance charge-offs for been

and the been limits It fraud small As of inherent to operational mentioned Finance the entire based of with business management other is appetite business, these experiencing earnings And been tracked in call historical in industry fraud based model Fraud small Equipment our Marlin the on quarter, always that Marlin's important amount a risks has has to fraud that activity. discussions the fraud. assumes statement because against our risk increased recent risk the is market. dealing recognize certain tolerances with on a is last level ticket is experience. risk within objective leaders, ticket is defined manage increased an in risk to especially

can While common of both transactional that end-user. theft, many identity take and forms, fraud most the is fraud we the the seeing are vendor

However, the impact fraud a an most transactions. fraud is to business it Marlin's by of vendor, can because dangerous risk model entire portfolio perpetrated

our As a was fraud $X.X led QX. unacceptable clear, stated vendor it that appetite. the charge-off we event risk and to view be in fraud earlier, To well above this million as

actions implementation combat it the new to to increase our an the given extraordinary to procedures. both also and be We taken of and These risk defenses the increased to tool, the in actions past staff fraud against surveillance year event, antifraud include believe over fraud vendor have non-recurring transactional accounts. we vendor strengthen fraud enhancements

include: and data we've team that model organization, difficult; attributes of be and the enhanced on continue surveillance throughout fraud and to that identifying applications higher Some identify Marlin's priority and high-risk will step continue we've our fraud e-mail more prevention and science process; will detected be tightened increased identify training we almost identity procedures, Fraud we've since high-risk characteristics. tools developed customer data the a a vendor historical top have our theft fraud; for programs to focused electronic every resources tools company document that fraud appetite. can to our working during our ensure at on-boarding we've IP XX-plus discuss and in the examples capital quarter. requirements, risk now loans. delinquency keep to even detection to indicating technological specific Both addresses; state-of-the-art making risk we to solutions identify the within implement progress XX-plus a fourth have and utilizing prevention Transitioning implemented increased

was the driver the delinquent increased, While the behind the loans number small in of XX-plus main of bucket. accounts delinquent number increase a larger

the capital working is more calls, annualized than to number charge-offs the and volatile in and prior on from but increased remains the quarter balances Equipment it third average accessible portfolio, the Working loan finance X.XX% smaller an discussed As given Finance basis loan in an range. X.XX% contracts receivables delinquency in fourth of larger quarter. within capital of on

product rate have As I on for current X% previous in environment. an the charge-off mentioned of calls, economic target we this annual

were our remains sequentially, receivables, The by This better-than-expected loan quality points X.XX% improvement the range. quarter. within X.XX% allowance performance to X.XX% So, up an was to charge-offs portfolio. in while losses higher a for working was acceptable in legacy average capital from Finance the in a basis credit bit allowance asset due driven decrease of finance fourth Equipment down X transportation

to basis improvement to XX loan point experienced from due performance. portfolio better-than-expected X.XX% for also working X.XX% the We capital product

Equipment charge-offs continued which, portfolio Looking right event. loan line in we a Finance working we with better XXXX, QX, than overall our experienced back previously fraud net the and over excluding with the capital non-recurring pleased expectations are The as portfolio to view noted, perform in target. our performance, were fraud as notwithstanding

our over back months, more continue credit environment We monitor to the business optimism And XXXX. we at quarter Jeff? that, indices has small With by fourth discussion utilizing Federation both business tempered the in stable remained remain ahead, of detailed the performance. Independent and to National expect historically call levels. sentiment small Looking Businesses high I'll a for to the recent turn Thomson indices Reuters although somewhat financial Jeff PayNet. published through of

Jeff Hilzinger

quarter yield from commensurate on the basis quarter, XX credit of XX.XX%, reflecting up up to XX.XX%, changes points Thank to ago, down base from risk. points quarter, pass-through the points indirect yield year from XX prior X.XX%, for originations in fourth but but channel. due ability the was basis was the a due XX basis from yields, prior down XX rate have quarter continued The that yield lower you, Lou. from direct quarter, was down XXXX. mix, generally in this platforms the origination quarter and points XXX total with to on quarter, our primarily lower points Fourth company's our originations Through product on to basis primarily the third originations mix the increases basis

For from points XX quarter, quarter, down the interest points year-over-year on X.XX%, the NIM in of interest XX a of basis over the was fourth XX and The the basis origination a an partially or year. on last was XXXX. prior of margin net increase basis from down points result primarily quarter NIM in offset by volume yield in new an increase basis decrease expense

fourth Interest our continue points in The to million cost year-over-year aggressively due release Fourth in million for the from primarily was $X was quarter increase than exclusively accretive of million basis expenses quarter income to quarter expense quarter. last the the year-over-year that, and rates million percent $XX.X to previous to increase fourth by previously, to fully that the a increases the was impact overtime, a funds, securitization market origination prior increase increased quarter the basis increased asset base more in $XX.X pass-through The a the million increasing sales. net year-over-year lesser generated important the the to non-interest fourth increase sales leverage company with from due offset completed we period. expense of an non-interest leverages as the the million $X.X income significantly points XXX in as percent we've costs XXX $XX.X on year commissions the of company's to the the were a the from in deposit interest is and allow. quarter, the $X.X $X.X driven the points compared to in in being increase prior expense from was to primarily quarter, with as basis in the with assets It increase average securitization. discussed is due securitized XXXX, by from year-over-year rates. for prior million receivables in capital the compared to funding third quarter finance compared will with XXX average ROE Non-interest extent, increased increased as of as volume. receivables result in year. As primarily and syndication note in due securitization the finance interest in interest the income The $X.X million a due recent increase on

fourth quarter first price the into shares in During and highlight XX,XXX and intrinsic We of and per use it an the the confidence quarter Marlin believe and common approximately as capital. see repurchases of appropriate indicative not stock approximately is value price Marlin's average $XX we XXXX, the our a current share of repurchased share. long-term these both of of we that timely our company through

As stock XX, remains share quarterly declared of payable $XX our today, million Board XXXX per on of of a announced as XXXX. And of repurchase future February the dividend Directors on $X program finally, to XX, available May million of regular $X.XX of XXXX for XX, record purchases. February shareholders

XXXX our for origination outlook volume to to XX% approximately above is expected turning Total levels. business increase Now sourced XXXX.

$X.XX is be fourth ROE be is per our between $X.XX. and And Net prepared the with margin interest of the to share expected XX is months. performance And operating Excluding experienced Operator? improve lastly, earnings to continue open expected of the vendor to questions. to average XXXX, in X.X% company call as expected let's in and improve as the portfolio and finance concludes the between a percentage fee is the scale. results line in past continues up over to That with observed to remain remarks. fraud expected that quarter XX%. for receivables XXXX

Operator

Thank you.

be now from question. session. proceed will Securities. conducting question line We York first your JMP Our question-and-answer with with the of a [Operator Instructions] comes Chris Please

Chris York

good morning. Hi, guys,

Jeff Hilzinger

Good morning.

Chris York

curious Mike outlook? weigh you in I joins week, did So, I'm Jeff, next the or said but bless you know XXXX

Jeff Hilzinger

governance or last guidance. in the the contributed experience to set board he participated board to of He rhythm the the hasn't Chris of specifically yet process, specifically and but to commented meet meetings No.

Chris York

it. Got

Jeff, as Okay. environment anecdotally your have that lending targeted And competitive then heard you how characterize the new niche? would today we've many entrants

Jeff Hilzinger

think the smaller quality. Marlin see between transaction segment to flows and if quality you continue -- market size, sizes credit I typical -- were credit transaction We the and lower Chris lower

always compete we set continue in the against that that and see don't concerted we We a traditional competition increase point. competitors of necessarily to at have

sizes touch to think you banks. to small credits; I better with when of a get transaction we start and market larger to the adjacency the begin lot the

And year competition for sizes than ago higher are quality, we increased before feeling the think a credit we a I higher year that. transaction so or did

Chris York

Okay.

mix within nine income the statement, income occurring on basis or Is declined explain that specifically that down your interest the change? yield there sequentially. reported could Looking pricing anything points within portfolio

Jeff Hilzinger

in -- high But to different It's transaction my funds with be customers as increases flows of continue versus said through large we in I within quality comments, very requirements. cost as the between try pass with credit again can price quality Yeah. as transaction aggressively our sensitivity customers increase rate lower to credit smaller the base requirements possible. from those

sort compression but also, well. away of business So happen generally the then some as the have that I legacy of continues from lifetime And that that. got there's in that into have lower platforms Finance Marlin is yields, losses Equipment lower shift a we've -- credit think from also to mix NIM has

Chris York

you it, any be still changes that sense. and excess a to And out could appears look of withstanding it capital ROE as then put Got on XXXX may guidance. last position makes XXXX question here pressure in your I capital structure

a still you think levers today the what So is of to And position? tuck-in about pursuit optimize consideration? your potentially are acquisitions capital

Jeff Hilzinger

consideration. capital for years. in and I is to any a that us grow we've and year that's to to a three are there that going pursue that to the to to as And of and we're that continue And two generate opportunities for company strategic shown to are do generate good I of is given mean and lot capital the HKF still we platforms inorganically. be will It to FFR news then continue lot sense think are Yes. the advantage with accretive we something I make a going over as we're earnings. of take next with think find able that --

the shares; We repurchasing until the were first beginning quarter in of we are actively the in fourth the market quarter.

continue as growth good environment. to particularly We see as that a capital, market we've And pretty today's organic in use got significant opportunities of well.

think to capital I So a function of be the drivers. is sort three use those going that of three those –

Chris York

it. Thanks Got Jeff.

Jeff Hilzinger

Chris. Thanks

Operator

you. Thank

of next with Our Blair. question proceed comes the question. William your from Hogan Brian line Please with

Brian Hogan

Hey good morning.

Jeff Hilzinger

Good morning, Brian.

Brian Hogan

on year-over-year political that so? XX% we the and the sourced shall question guidance have in a for that's a confidence and say that and confidence have like referral you? the growth First, owned sale do me XXXX originations, your What's get the global what let level how environment more today's, say, one, in little economy given is level? maybe in And versus uncertain, what you originations; economic and in mix you environment what then the there from perspective the

Jeff Hilzinger

That's so of economic I environment Brian, kind think the in of basic we're the in guidance terms we're that we is environment that to macro same the that sort -- in Yes. -- of continue stay now. assuming

sourced around then originate expecting to growth origination does for that's environment XXXX to of $XX the able small if million. XX% equipment FFR guidance by to declines, changes economic which our in for be ability and demand So The to capital, total businesses going we're grow include affect that at demand level. or

or So that sales will the impact volume continue to a we've these us. the the full the way to in portfolio that But there sort year strong in it's really FFR. growth for use of organic is – historical and in -- function and a we increase then we of them capability asset is – had believe optimize of we that quarterly continue growth of could our rate origination composition origination originations is

if in So recall will asset their in they've – concentration commission lot within that the lot of for more continue the we're FFR, gain we're smaller sale, case, acquisition help levels But because XX% case, they're business transaction of that structure. in unlike issues be HKF's XXXX. sale offset to sort more about the same volume with you been expecting a they repeat using origination FFR's that supplemental number at the – as rate part And customers. sale there's will out-of-work of on of the because paying the then do we're a originated a

even out the when there way So volume to likely originate controlling the its in but be through the FFR managing a of we're use will its all syndication level, of period, core supplemental most the as lot customers as can, work that volume, commission a also we always of business platform referral at concentration most optimal and serving let it risk.

Brian Hogan

otherwise with benefit volume XXXX. in million All guess from FFR, of increasing some $XXX right. stable be And XXXX but syndication – volume when said would syndication you you it say of the the volume or sale I

me you please? FFR? help syndication Or because of – be So are that understand XXXX up expecting volume in that next clarify to just

Jeff Hilzinger

Yeah.

syndication So that's the $XXX million sheet. that balance our off activity is actual

transactions like They're volume, and originated fund actually even sheet. don't have So cases hit we before them those most they then balance touch our balance a sheet. our the referral to FFR in place

you the million $XXX from and to So, rhythm million million about sort then way the $XX FFR a should amount is similar be quarterly XXXX on addition volume $XXX in of XX% think about in that. syndicated it would of of a or

Brian Hogan

an to improvement guess that then anticipating that's remained I what it's big anticipated of getting – but the that. are just kind haven't you year-over-year or improvement? improvement part you I guess steps I like efficiency, operating hitting Okay. stubbornly XXXX, like in the maybe point I think inflection to in yet doesn't because come as taking something And just seem That's know hit of Thank a helpful. on story, you're but you. high. I

Jeff Hilzinger

Yeah.

think We're think investing think – And temporary – it We're points. I salespeople we're HKF, that hundred in and to deciding development the it's improved or we some I business. digital you taking doing a additional FFR FFR adding advantage make multiple that engines growth marketing. of have commissions or I we're is when those adjusted definitely whether company data so like by the also companies of we then acquiring like areas, and or in additional and increased we're science of make and in opportunities. what on couple HKF basis drivers maintain, we investments sure in some finding growth for to product the capabilities for choosing

to improvement continue operating the efficiency to in level XXXX the expect we as same of the we ROE experienced XXXX. and to So in probably from improve XXXX,

Brian Hogan

And you are it the mean you've understand Sure. economic because on that, your for relatively any outlined I any being I stable. credit, just that, credit but know I I then, have tightening? of done tightened assumptions mean outlook? mean, I on your have XXXX the -- Or tightening? loss done you is economy? have you views what

Jeff Hilzinger

Yeah.

me -- Lou, ask shot take can Let that. at a

Lou Maslowe

portfolio have dollar Yes. always at tightened a slicing performance across I looking that variety dicing monitoring of we by and would the the not ways. performance branch, and and in say board. size We're portfolio

scale it's adjustments. not don't conservative. become performing, is a more making right on based and adjustment see But kind our constantly now need intent to we of we're wide So portfolio how to our

Brian Hogan

Sure. views on the economy? And then your

Lou Maslowe

headwinds. I of I'm predictions there concerns but are recession there lot think there're are trying to be economist there, a out XXXX. that for in still an not

our watch closely. metrics we So

metrics the closely indicators. watch also macroeconomic -- We

rate some next does an PayNet past variables, for the default this at an items about PD the points, on the up the that year that macroeconomic a showed and basis basis they is months. is about points, forecasts -- of from for them the in experience default And increase forward-looking absolute keep eight XXX. XX eight is increase which next year by analysis in forecast utilizing One eye I

modest would I probably So increase. think it's line gradual nothing underwriting is can we in strategy. with some but to a It's nothing what There a our very default cause in and make levels, us increase to current change material expect. that

Jeff Hilzinger

closer sure all that is to would that we than is only else's, I than Yes. our better crystal say today we're that thing Brian, downturn anybody I but that, a think ball day we we know to believe no yesterday. the were one for

science point, We're portfolio or our that So closely. at Lou data be as us to the trends we the portfolio's performance, using help upon help changes this we any those as if understand underwriting standards. said, minds. us it's trends made whether on to changing of inform are our We're there based But would team emerging yet. should haven't our watching

Brian Hogan

up a sale roughly X% run it's you run quarter, good was a think mean, in little Sure. bit is? yield what prior on but rate? I the you The good that's think from quarter. rate the gain do bounced a Do

Jeff Hilzinger

Yes.

I think a number. points basis good XXX is

Brian Hogan

talked All right. we've then how in there? And And you do longer-term soon Has about the previous changed calls ROE get that all? at outlook.

Jeff Hilzinger

in cause of potential we is it Brian, the that than that ago. ROE nothing see business, or the business would different a the today to There's us that two think thought was we year

efficiency likely a products digital we're change think customers delivering products business developing also be helps sure but evolving of leverage think as make I demographic to new that deliver and I I those. that our approach and in time. access over way way are I to services also think, operating that able fixed more our to the we're going we're and cost, the as those helps which want the changing we A products, think

is and operating thought much as that we'll of quite be in So, I look interface the improve in we of we'll market. efficiency more offset the product our we're because it'll sort the will products customers capital make with that way like in will than what sure allowing loan growth resulting in more probably working that that while will as company the business, to staying investing but current yields faster -- higher think the not which be happen we a that here have our more

Brian Hogan

All right. for time. Thank you your

Jeff Hilzinger

you. Thank

Operator

Thank you.

end would to We have question-and-answer call I for of back closing our to the Mr. turn Hilzinger like any over remark. reached session. the

Jeff Hilzinger

a and highlighted a by accelerating second enjoyed year. the strong year. past growth for great half in your call. their of as this for and Thank to efforts earnings fourth origination employees our well shareholders the volume support for I'd dedication tireless joining attention also year excellent as We quarter their you for in on and and continued us world-class our XXXX, adjusted thank today's like

another report year when With the with Marlin growth carry Thank we momentum we we terrific results of in for forward poised early May. you to our XXXX, and XXXX quarter again speaking is into profitable first look you.

Operator

Thank you. teleconference. today's concludes This

this you lines your Thank a wonderful disconnect day. and may time. at You have for your participation

Marlin Business Services (MRLN) 1 Feb 192018 Q4 Earnings call transcript