* Net income of $946,000
* Net Income on an Adjusted Basis of $555,000, which excludes the
impact of derivatives
* Strong capital position, equity to assets leverage ratio of 21.24%
* Total risk-based capital of 25.63%
* Pricing on new originations improved 193 basis points year over
year
* Lower 30+ lease delinquencies and charge-offs
quarter-over-quarter reflect the Company's credit discipline
MOUNT LAUREL, N.J., Aug. 6, 2009 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (Nasdaq:MRLN) today reported a second quarter 2009 GAAP net income of $946,000 or $0.08 per diluted share and net income on an adjusted basis of $555,000 or $0.04 per share.
Included in net income and net income on an adjusted basis is an after-tax severance charge of $424,000 related to a previously announced workforce reduction.
"Despite the economy's poor fundamentals, I am encouraged with the positive strides taken to strengthen our business franchise and position Marlin to capitalize on growth once the economy and capital markets return to a more normal state," says Daniel P. Dyer, Marlin's CEO. "Our disciplined operating approach along with the decision to tighten credit standards early in the credit cycle is working, evidenced by lower delinquencies and charge-offs and positive financial results posted this quarter."
Second quarter 2009 lease production was $15.8 million, based on initial equipment cost, compared to $36.3 million for the first quarter of 2009 and $62.5 million for the second quarter of 2008. The company's conservative underwriting standards are reflected in lease approval rates which were 36% for the second quarter of 2009, versus 41% for the first quarter of 2009 and 49% for the second quarter a year ago.
The reduction in approval rates and leasing volumes reflects management's actions to maintain tighter underwriting standards and disciplined pricing practices in this current period of limited funding visibility and uncertain economic conditions. Weaker demand for equipment was also a contributor to the volume reduction.
The average implicit yield on new lease production continues to improve and was 15.83% for the second quarter of 2009, up 143 basis points from the first quarter of 2009 and up 193 basis points from the second quarter of 2008.
The net interest and fee margin for the quarter ended June 30, 2009 was 9.69%, down 39 basis points from the first quarter of 2009 and down 4 basis points from 9.73% for the quarter ended June 30, 2008. The reduction from first quarter 2009 was driven by fee income and interest expense. Fee income as a percentage of average total finance receivables was 2.99% for the quarter ended June 30, 2009, down 13 basis points from the first quarter of 2009 due to lower late fee billings and up 11 basis points from 2.88% for the quarter ended June 30, 2008. Interest expense as a percentage of average total finance receivables was 5.08% for the second quarter of 2009 versus 4.86% for the first quarter of 2009 and 5.13% for the quarter ended June 30, 2008. The increase from first quarter 2009 was primarily due to higher conduit pricing, partially offset by a shift in mix between long term fixed-rate term securitizations and shorter term variable-rate facilities.
30+ day delinquencies demonstrated improvement in the second quarter of 2009. Leases over 30 days delinquent were 4.41% as of June 30, 2009, a decrease compared to 4.87% at March 31, 2009 and an increase compared to 3.04% at June 30, 2008. On a dollar basis, leases in the 30+ delinquency category totaled $27.4 million at June 30, 2009, down from $33.9 million at March 31, 2009 and up from $24.9 million at June 30, 2008. Leases over 60 days delinquent were 2.26% as of June 30, 2009, a decrease from 2.34% as of March 31, 2009 and an increase from 1.12% at June 30, 2008. On a dollar basis, leases over 60 days delinquent totaled $14.1 million at June 30, 2009, a decrease compared to $16.3 million at March 31, 2009 and an increase compared to $9.2 million at June 30, 2008.
Net lease charge-offs in the second quarter of 2009 were $7.6 million, or 5.26% of average net investment in leases on an annualized basis, compared to $8.0 million or 5.03% of average net investment in leases on an annualized basis during first quarter 2009.
The provision for credit losses was $6.8 million for the quarter ended June 30, 2009, down from $8.7 million for the first quarter of 2009, due to improvements in the credit migration of the lease portfolio and the declining portfolio. The allowance as a percentage of total finance receivables, which reflects management's estimate of future losses inherent in the portfolio, was strengthened to 2.52% at June 30, 2009 versus 2.47% at March 31, 2009 and 1.79% at June 30, 2008.
A $646,000 gain was reported on derivatives for the second quarter of 2009 due to a reclassification from accumulated other comprehensive income of $409,000 related to a change in a forecasted transaction and $237,000 representing a mark-to-market increase in the fair value of derivative contracts.
Salaries and benefits were $5.1 million for the second quarter ended June 30, 2009, down from $5.9 million for the first quarter of 2009. The decrease is primarily due to previously announced reductions in work force occurring in both the first and second quarters of 2009. In the second quarter ended June 30, 2009 the Company recorded a pre-tax severance adjustment of $700,000 versus a pretax severance adjustment of $500,000 in the first quarter of 2009.
General and administrative expenses were $3.3 million for the second quarter ended June 30, 2009, compared to $3.4 million for the first quarter 2009. The decrease from the first quarter is primarily related to continued reductions in discretionary spending.
At June 30, 2009, the Company has outstanding $89.3 million of leases and loans funded through its banking subsidiary, Marlin Business Bank, and has $77.3 million in FDIC insured deposits outstanding at an average borrowing rate of 3.41% with a weighted average term to maturity of 2.39 years. Second quarter 2009 average deposit outstandings were $74.4 million at a weighted average interest rate of 3.75%.
In conjunction with this release, static pool loss statistics and vintage delinquency analysis have been updated as supplemental information on the investor relations section of our website at www.marlincorp.com.
Conference Call and Webcast
We will host a conference call on Friday, August 7, 2009 at 9:00 a.m. ET to discuss our second quarter 2009 results. If you wish to participate, please call 888-208-1332 approximately 10 minutes in advance of the call time. The conference ID will be: "Marlin." 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 and working capital solutions primarily to small businesses. The Company's principal operating subsidiary, Marlin Leasing Corporation, finances over 90 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. For more information, visit www.marlincorp.com or call toll free at (888) 479-9111.
The Marlin Business Services Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4087
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.
