Fourth Quarter Summary:

  • Net income of $15.3 million, or $1.28 per diluted share, up from $8.4 million, or $0.69 per diluted share a year ago and up from $2.7 million, or $0.23 per diluted share last quarter.
  • Ended the quarter with total stockholders’ equity of $196.4 million, book value per share of $16.40 and a consolidated equity-to-assets ratio of 19.21%
  • Total 30+ day delinquencies were 1.63%, up from 1.40% prior year, but down from 2.15% in the third quarter; annualized net charge-offs of 2.57%, compared with 4.54% in the prior quarter and 3.00% in the fourth quarter last year
  • Non-interest expense of $14.8 million for the fourth quarter decreased 9.6% or $1.6 million from $16.4 million for the prior year quarter
  • Total sourced origination volume of $84.1 million, up 22.8% from the prior quarter but down 64.5% year-over-year. Average total finance receivables were $869.6 million, down 15.9% year-over-year
  • Loss provision net benefit of $12.7 million with ending allowance for credit losses of $44.2 million; allowance as a percentage of receivables was 5.07% for equipment finance and 6.02% for working capital, down from prior quarter percentages of 6.57% for equipment finance and 13.06% for working capital;

Full Year 2020 Summary:

  • Net income of $0.3 million, or $0.03 per diluted share, down from $27.1 million, or $2.20 per diluted share a year ago. Net income on an adjusted basis* of $3.4 million, or $0.29 per share, down from $27.2 million, or $2.20 per diluted share in the prior year
  • Net Investment in Leases and Loans totaled $825.1 million, compared with $1.0 billion a year ago, and total managed assets ended the fourth quarter at $1.1 billion, compared with $1.3 billion a year ago
  • Total sourced origination volume of $377.1 million, down 57.0% from a year ago; Direct origination volume of $61.5 million, down 66.7% year-over-year
  • In addition to quarterly dividends, returned capital through share repurchases totaling $4.2 million, or 264,470 shares

MOUNT LAUREL, N.J., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (NASDAQ: MRLN), a nationwide provider of capital solutions to small businesses (“Marlin” or the “Company”), today reported fourth quarter 2020 net income of $15.3 million, or $1.28 per diluted share, compared with net income of $2.7 million, or $0.23 per diluted share in the prior quarter, and net income of $8.4 million, or $0.69 per diluted share a year ago.

Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “Despite the unprecedented operating challenges and macro-economic uncertainty encountered throughout most of 2020 from the COVID-19 pandemic, Marlin finished the year with strong results in the fourth quarter. I am particularly pleased with the continued improvement in our portfolio performance and outlook, which supported a significant net release in loss reserves established earlier in the year. The performance of our portfolio improved throughout the fourth quarter with delinquencies and net charge-offs during the month of December trending in-line with pre-pandemic levels. While favorable macro-economic developments and our portfolio’s performance during the quarter contributed to our reserve release, we believe our allowance for loan losses of $44.2 million reflects the continuing near-term uncertainty of the macro-economic environment. In addition to the performance of the portfolio, I am also pleased with the progress we made during the quarter in growing our origination volume as the Company’s reorganized origination platforms continued to gain traction. Importantly, the operating results we delivered in the fourth quarter increased our book value per share to $16.40 as of December 31st, up $1.17, or nearly 8% from the prior quarter, and our capital position remains strong with a reserve coverage ratio of 5.09% and a total risk-based capital ratio of 24.04%.”  

Mr. Hilzinger concluded, “In light of the challenges we faced in 2020, I am very pleased with how we managed the impact of the pandemic and generated profitability on a full-year basis for 2020, which has now allowed us to increasingly focus on growing origination volume. As we look forward to 2021, given our strong capital position, our improved cost profile, the growing benefits from our digital initiative and the traction we are achieving in our re-organized origination platform, we believe Marlin is well-positioned to resume a trajectory of profitable growth as we emerge from the pandemic and as the small business economy improves.”

Results of Operations
Total sourced origination volume for the fourth quarter of $84.1 million was down 64.5% from a year ago. Direct origination volume of $8.7 million in the fourth quarter was down 82.8% from $50.4 million in the fourth quarter of 2019. Indirect origination volume in the fourth quarter of 2020 was $74.4 million, down 55.7% from $167.7 million in the fourth quarter last year. Marlin did not originate any assets for sale in the fourth quarter, compared with $16.3 million in the fourth quarter last year. Referral volume totaled $1.0 million, down from $2.0 million in the fourth quarter last year. Net Investment in Leases and Loans was $825.1 million, down 18.0% from fourth quarter last year, while total managed assets stood at approximately $1.1 billion, down 21.7% from the fourth quarter last year.

Net interest and fee margin as a percentage of average finance receivables was 8.36% for the fourth quarter, down 51 basis points from the third quarter of 2020 and down 108 basis points from a year ago. The sequential quarter decrease was driven primarily by a decrease in new origination loan and lease yields, interest income, and lower fee income, partially offset by a decrease in interest expense resulting from lower deposit rates. The year-over-year decrease in margin percentage was primarily related to the decrease in new origination loan and lease yields and interest income, and the change in the presentation of residual income driven by the adoption of CECL, partially offset by a decrease in interest expense resulting from lower deposit rates. During 2019 and prior periods, residual income was presented in fee income; however, effective in the first quarter 2020, residual income is included in the future cash flows used to assess credit losses and therefore this activity is reflected in the allowance for credit losses. The Company’s interest expense as a percent of average total finance receivables was 187 basis points in the fourth quarter of 2020 compared with 203 basis points for the prior quarter and 236 basis points for the fourth quarter of 2019, resulting from lower rates and a shift in mix, as higher rate long-term debt pays down.

On an absolute basis, net interest and fee income was $18.2 million for the fourth quarter of 2020 compared with $24.4 million in the fourth quarter last year.

Marlin recorded a $12.7 million provision for credit losses net benefit in the fourth quarter of 2020, compared to $7.2 million provision net expense in the third quarter of 2020, and $10.3 million provision net expense in the fourth quarter of 2019. The provision release in the fourth quarter of 2020 reflects better portfolio performance than expected and continued positive performance trends, and an improved macroeconomic outlook. While favorable macro-economic developments contributed to our reserve release in the quarter, we believe our allowance for loan losses of $44 million, which reflects various economic forecasts, continues to contemplate near-term macro-economic uncertainty.

Non-interest income was $4.1 million for the fourth quarter of 2020, compared with $4.2 million in the prior quarter and $13.5 million in the prior year period. The year-over-year decrease in non-interest income is primarily due to an $8.8 million decrease in gains from the sale of assets. Non-interest expense was $14.8 million for the fourth quarter of 2020, compared with $14.2 million in the prior quarter and $16.4 million in the fourth quarter of 2019. The sequential quarter increase was primarily due to a $1.4 million reduction in prior quarter in the estimated liability for contingent consideration related to the FFR acquisition. The year-over-year decrease was primarily due to a $1.3 million reduction in Salaries and Benefits expense due to lower commission on lower origination volumes and lower incentive compensation driven by company performance.

The Company’s efficiency ratio for the fourth quarter was 66.5% compared with 43.2% in the fourth quarter last year. Excluding the impact of certain non-GAAP adjustments, the Company’s efficiency ratio on an adjusted basis* for the fourth quarter was 63.9% compared with 40.2% in the fourth quarter of 2019.

Marlin recorded a $4.8 million tax expense in the fourth quarter, representing an effective tax rate of 23.9%. In the third quarter of 2020, the Company recorded a $0.5 million tax expense representing an effective tax rate of 16.1%, and in the fourth quarter of 2019, the Company recorded $2.9 million of tax expense, representing an effective tax rate of 25.5%. Tax expense included the recapture of $0.2 million tax benefit associated with a previous tax benefit limitation that was recognized in the fourth quarter.

Portfolio Performance
Allowance for credit losses as a percentage of total finance receivables was 5.09% at December 31, 2020 compared with 6.75% at September 30, 2020. In addition, under the incurred loss allowance model in 2019, the percentage was 2.15% at December 31, 2019.

For the three months ended December 31, 2020, the Company recorded a $12.7 million provision for credit losses net benefit, compared with $10.3 million provision net expense recognized in the fourth quarter of 2019 and $7.2 million provision net expense recorded for the third quarter of 2020. The provision release in the fourth quarter of 2020 was primarily due to positive changes in the outlook of macroeconomic assumptions to which the reserve is correlated as well as positive trends in portfolio performance.

As a result of the ongoing impact from COVID-19, through the end of the fourth quarter the Company has completed over 5,600 loan and lease restructure requests from customers who have been impacted by the pandemic. As of December 31, 2020, the Company had $111.2 million total receivables that were part of this program, or 12.8% of total net investment, or $104.3 million (12.3%) Equipment Finance and $6.9 million (34.6%) of Working Capital. Total modified receivables for Equipment Finance and Working Capital declined 11.4% and 43.3%, respectively from corresponding amounts as of September 30th. In the fourth quarter, as part of our loss mitigation strategies, modifications were extended for approximately 100 contracts totaling $10.2 million net investment.

The following table outlines the delinquency status of the Company’s portfolio as of December 31, 2020, including information on the restructured and non- restructured portfolio:

 Net Investment (in thousands) Delinquency Rate by population
 306090+CurrentTotal 30
60
90+CurrentTotal
Equipment Finance           
Restructured Portfolio$2,461$610$1,349$99,867$104,287 2.36%0.58%1.29%95.77%100%
Non-Restructured4,4252,1692,453735,916744,963 0.59%0.29%0.33%98.79%100%
            
Total Equipment Finance$6,886$2,779$3,802$835,783$849,250 0.81%0.33%0.45%98.41%100%


 Net Investment (in thousands) Delinquency Rate by population
 153060+CurrentTotal 153060+CurrentTotal
Working Capital            
Restructured Portfolio$225$550$135$6,012$6,922 3.25%7.95%1.95%86.85%100%
Non-Restructured3656—13,01913,111 0.27%0.43%0.00%99.30%100%
            
Total Working Capital$261$606$135$19,031$20,033 1.30%3.03%0.67%95.00%100%

Modified contracts are reported in our delinquency and non-accrual data based on their status with respect to their modified terms.

Equipment Finance receivables over 30 days delinquent were 159 basis points as of December 31, 2020, down 54 basis points from September 30, 2020, and up 19 basis points from December 31, 2019. Working Capital receivables over 15 days delinquent were 500 basis points as of December 31, 2020, up 107 basis points from September 30, 2020, and up 325 basis points from December 31, 2019. Annualized fourth quarter total net charge-offs were 2.57% of average total finance receivables versus 4.54% in the third quarter of 2020 and 3.00% a year ago.

Portfolio Concentration
Marlin has a well-diversified portfolio across industries and geographical areas for both Equipment Finance and Working Capital. As many cities slowly reopened and restrictions eased across the U.S. throughout the fourth quarter, the Company continued to remove underwriting restrictions on certain industries and geographies in response to improved business conditions as the economy continued to recover. The following table reflects Marlin’s portfolio concentrations by industry where net investment is in excess of 5% of the total portfolio as of December 31, 2020:

 Equipment
Finance		 Working
Capital
Medical13.7% 8.1%
Miscellaneous Services(1)11.9% 8.3%
Retail10.1% 13.0%
Construction8.9% 11.0%
Restaurants6.8% 6.5%
Professional Services6.6% 5.5%
Manufacturing6.0% 7.5%
Transportation5.3% 2.6%
Auto Repair3.3% 6.1%

________
(1)   Miscellaneous Services is an amalgamation of service related SIC codes, the largest of which are Business Services, Repair Services, and Equipment Rental and Leasing.

Capital and Liquidity
As of December 31, 2020, the Company had $135.7 million of Cash and cash equivalents, a decrease of $59.4 million from September 30, 2020 and an increase of $12.6 million from December 31, 2019. As of December 31, 2020, the Company had additional available liquidity of $25.0 million from lines of credit with financial institutions and the Federal Reserve discount window. There were no borrowings made on these additional sources of liquidity as of December 31, 2020 or subsequently.

As of December 31, 2020, the Company’s consolidated equity to assets ratio was 19.21%. This compares to 16.49% and 17.80%, in the prior quarter and year ago quarter, respectively. The Company’s Total Risk-based capital ratio was 24.04% as of December 31, 2020, which was 16.04% above our minimum regulatory requirement.

Corporate Developments
On January 28, 2021, Marlin’s Board of Directors declared a $0.14 per share quarterly dividend. The dividend is payable on February 18, 2021, to shareholders of record on February 8, 2021. Based on the closing stock price on January 27, 2021, the annualized dividend yield on the Company’s common stock is 4.75%.

* Non-GAAP Financial Measures: Net income (loss) on an adjusted basis and adjusted efficiency ratio are financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP). See “Regulation G – Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for a detailed description and reconciliation of such Non-GAAP financial measures to their most directly comparable GAAP financial measures, in accordance with Regulation G.

Conference Call and Webcast
Marlin will host a conference call on Friday, January 29, 2021 at 9:00 a.m. ET to discuss the Company’s fourth quarter and full year 2020 results. The conference call details are as follows:

Fourth Quarter and Full Year 2020 Financial Results Conference Call

Date:Friday, January 29, 2021
Time:9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time
Dial-in:1-877-407-0792 (Domestic)
1-201-689-8263 (International)
Conference ID:13714827
Webcast:http://public.viavid.com/index.php?id=142947

For those unable to participate during the live broadcast, a replay of the call will also be available from 12:00 p.m. Eastern Time on January 29, 2021 through 11:59 p.m. Eastern Time on February 12, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13714827.

About Marlin
Marlin is a nationwide provider of capital solutions to small businesses with a mission of helping small businesses fulfill their American dream. Our products and services are offered directly to small businesses and through financing programs with independent equipment dealers and other intermediaries. For more information about Marlin, visit marlincapitalsolutions.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, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements represent only the company’s current beliefs regarding future events and are not guarantees of performance or results. All forward-looking statements (including statements regarding expectations of 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,” “could”, “intend” and similar expressions are generally intended to identify forward-looking statements. Economic, business, funding, market, competitive, legal and/or regulatory factors, among others (including but not limited to the impact of the COVID-19 pandemic), 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 under the headings “Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the United States Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are also available in the “Investors” section of our website. 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. Investors are cautioned not to place undue reliance on such forward-looking statements.

Regulation G – Non-GAAP Financial Measures
The Company uses certain financial measures which are not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines net income on an adjusted basis as net income excluding after-tax income and expenses that are deemed to be unusual in nature or infrequent in occurrence and are not indicative of the underlying performance of the business for the period presented. The Company defines diluted earnings per share on an adjusted basis, return on average assets on an adjusted basis and return on average equity on an adjusted basis as the calculation used for the “as reported” number substituting net income as reported with net income on an adjusted basis while using the same denominator in the “as reported” number, where appropriate. The Company defines efficiency ratio on an adjusted basis as the calculation used for the “as reported” ratio adjusting the numerator for any discrete pre-tax adjustments used to present net income on an adjusted basis as well as the impact of pass-through lease expenses that are required to be presented on a gross basis in the income statement, acquisition related expense, and Rep and Warranty liability adjustments, as applicable. The Company adjusts the denominator in the “as reported” ratio for pass-through lease revenue that is required to be presented on a gross basis in the income statement, as applicable. The Company defines General and administrative annualized percent of average finance receivables, on an adjusted basis, as the calculation used for the “as reported” ratio, adjusting the numerator for any General and administrative discrete pre-tax adjustments used to present net income on an adjusted basis, acquisition related general and administrative expenses, Rep and Warranty liability adjustments, and pass-through lease expenses that are required to be presented on a gross basis in the income statement, as applicable. The adjusted ratio uses the same denominator as the “as reported” ratio. The Company defines Non-interest expense divided by average total managed assets, on an adjusted basis, as the calculation used for the “as reported” ratio adjusting the number for any non-interest expense discrete pre-tax adjustments used to present net income on an adjusted basis as well as the impact of pass-through lease expenses that are required to be presented on a gross basis in the income statement, acquisition related expenses, and Rep and Warranty liability adjustments, as applicable. The adjusted ratio uses the same denominator as the “as reported” ratio. The Company believes that these non-GAAP measures are useful performance metrics for management, investors and lenders, because it provides a means to evaluate period-to-period comparisons of the Company's financial performance without the effects of certain adjustments in accordance with GAAP that may not necessarily be indicative of current operating performance.

Non-GAAP financial measures should not be considered as an alternative to GAAP financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Investor Contacts:
Mike Bogansky, Senior Vice President & Chief Financial Officer
856-505-4108

Lasse Glassen, Addo Investor Relations
lglassen@addoir.com
424-238-6249

 
Marlin Business Services Corp. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except share amounts)
     
  December 31, December 31,
  2020 2019
ASSETS      
Cash and due from banks $5,473  $4,701 
Interest-earning deposits with banks  130,218   118,395 
Total cash and cash equivalents  135,691   123,096 
Time deposits with banks  5,967   12,927 
Restricted interest-earning deposits  4,719   6,931 
Investment securities  11,624   11,076 
Net investment in leases and loans:      
 Leases  337,159   426,608 
 Loans  532,125   601,607 
Net investment in leases and loans, excluding allowance for credit losses  869,284   1,028,215 
Allowance for credit losses  (44,228)  (21,695)
Total net investment in leases and loans  825,056   1,006,520 
Intangible assets  5,678   7,461 
Goodwill  —   6,735 
Operating lease right-of-use assets  7,623   8,863 
Property and equipment, net  8,574   7,888 
Property tax receivables, net of allowance  6,854   5,493 
Other assets  10,212   10,453 
Total assets $1,021,998  $1,207,443 
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Deposits $729,614  $839,132 
Long-term borrowings  30,665   76,091 
Operating lease liabilities  8,700   9,730 
Other liabilities:      
Sales and property taxes payable  6,316   2,678 
Accounts payable and accrued expenses  27,734   34,028 
Net deferred income tax liability  22,604   30,828 
Total liabilities  825,633   992,487 
       
Stockholders’ equity:      
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued  —   — 
Common Stock, $0.01 par value; 75,000,000 shares authorized; 11,974,530 and      
12,113,585 shares issued and outstanding at December 31, 2020 and December 31, 2019,  120   121 
respectively      
Additional paid-in capital  76,323   79,665 
Accumulated other comprehensive income  69   58 
Retained earnings  119,853   135,112 
Total stockholders’ equity  196,365   214,956 
Total liabilities and stockholders’ equity $1,021,998  $1,207,443 
         


Marlin Business Services Corp. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except share amounts)
       
    Three Months Ended December 31, Twelve Months Ended December 31,
    2020
 2019 2020
 2019
                 
Interest income$19,688  $26,747  $92,799  $107,420 
Fee income 2,541   3,787   10,560   15,205 
 Interest and fee income 22,229   30,534   103,359   122,625 
Interest expense 4,066   6,102   19,868   25,033 
 Net interest and fee income 18,163   24,432   83,491   97,592 
Provision for credit losses (12,651)  10,255   38,509   28,036 
 Net interest and fee income after provision for credit losses 30,814   14,177   44,982   69,556 
              
Non-interest income:             
 Gain on leases and loans sold —   8,810   2,426   22,210 
 Insurance premiums written and earned 2,064   2,258   8,677   8,796 
 Other income 2,065   2,452   13,237   13,025 
  Non-interest income 4,129   13,520   24,340   44,031 
Non-interest expense:             
 Salaries and benefits 8,081   9,351   33,783   44,168 
 General and administrative 6,745   7,052   30,914   32,566 
 Goodwill impairment —   —   6,735   — 
 Intangible assets impairment —   —   1,016   — 
  Non-interest expense 14,826   16,403   72,448   76,734 
   Income (loss) before income taxes 20,117   11,294   (3,126)  36,853 
Income tax expense (benefit) 4,815   2,880   (3,468)  9,737 
   Net income$15,302  $8,414   342  $27,116 
              
Basic earnings per share$1.28  $0.69  $0.03  $2.21 
Diluted earnings per share$1.28  $0.69  $0.03  $2.20 
                


Marlin Business Services Corp. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands, except share amounts)
    
 Three Months Ended December 31, Twelve Months Ended December 31,
 2020
 2019
 2020
 2019
            
Net income as reported$15,302  $8,414  $342  $27,116 
Deduct:           
Goodwill impairment —   —   (6,735)  — 
Intangible assets impairment —   —   (1,016)  — 
Charge in connection with workforce reorganization —   —   (1,713)  (311)
Charge in connection with office lease termination —   —   (414)  — 
Acquisition earn out valuation adjustment —   —   1,435   — 
Reversal of charges in connection with executive separation —   —   —   218 
Tax effect —   —   2,082   24 
Total adjustments, net of tax —   —   (6,361)  (69)
            
Net tax benefit resulting from the CARES Act of 2020 —   —   3,256   — 
Net income on an adjusted basis$15,302  $8,414  $3,447  $27,185 
            
Diluted earnings per share           
As reported$1.28  $0.69  $0.03  $2.20 
As adjusted$1.28  $0.69  $0.29  $2.20 
Return on Average Assets           
As reported 5.74%  2.74%  0.03%  2.18%
As adjusted 5.74%  2.74%  0.30%  2.19%
Return on Average Equity           
As reported 33.59%  16.04%  0.18%  13.33%
As adjusted 33.59%  16.04%  1.81%  13.36%
            
Efficiency Ratio numerator as reported$14,826  $16,403  $72,448  $76,734 
Adjustments to Numerator:           
Expense adjustments as seen in Net Income reconciliation —   —   (8,443)  (93)
Acquisition related expenses (295)  (1,050)  (1,252)  (3,193)
Rep & Warranty liability adjustment (140)  —   (1,122)  — 
Pass-through expenses (324)  (374)  (6,387)  (6,624)
Efficiency ratio numerator on an adjusted basis$14,067  $14,979  $55,244  $66,824 
            
Efficiency Ratio denominator as reported$22,292  $37,952  $107,831  $141,623 
Adjustments to Denominator:           
Pass-through revenue (288)  (721)  (5,535)  (6,401)
Efficiency Ratio denominator on an adjusted basis$22,004  $37,231  $102,296  $135,222 
            
Efficiency Ratio           
As reported 66.51%  43.22%  67.19%  54.18%
As adjusted 63.93%  40.23%  54.00%  49.42%
                


Marlin Business Services Corp. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(Dollars in thousands, except share amounts)
    
 Three Months Ended December 31, Twelve Months Ended December 31,
 2020
 2019
 2020
 2019
            
Non-interest Expense / Average total managed assets numerator, as reported$14,826  $16,403  $72,448  $76,734 
Adjustments to Numerator:           
Expense adjustments as seen in Net Income reconciliation —   —   (8,443)  (93)
Acquisition related expenses (295)  (1,050)  (1,252)  (3,193)
Rep & Warranty liability adjustment (140)  —   (1,122)  — 
Pass-through expenses (324)  (374)  (6,387)  (6,624)
Non-interest Expense / Average total managed assets numerator, on an adjusted basis$14,067  $14,979  $55,244  $66,824 
            
Non-interest Expense / Average total managed assets           
As reported 5.32%  4.99%  5.85%  6.14%
As adjusted 5.05%  4.56%  4.46%  5.35%
            
General and administrative expense Annualized % of           
Avg. Fin. Receivables numerator, as reported$6,745  $7,052  $30,914  $32,566 
Adjustments to Numerator:           
Expense adjustments as seen in Net Income reconciliation —   —   1,021   — 
Acquisition related expenses (168)  (480)  (767)  (1,181)
Rep & Warranty liability adjustment (140)  —   (1,122)  — 
Pass-through expenses (324)  (374)  (6,387)  (6,624)
General and administrative expense Annualized % of           
Avg. Fin. Receivables numerator, as adjusted$6,113  $6,198  $23,659  $24,761 
            
General and administrative expense Annualized % of           
Average Finance Receivables           
As reported 3.10%  2.73%  3.27%  3.17%
As adjusted 2.81%  2.40%  2.50%  2.41%
                


Marlin Business Services Corp. and Subsidiaries
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
          
 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
          
Net Income (Loss)$8,414  ($11,821) ($5,882) $2,743  $15,302 
          
Annualized Performance Measures:         
Return on Average Assets2.74% -3.98% -1.88% 0.98% 5.74%
Return on Average Stockholders' Equity16.04% -22.75% -12.41% 6.00% 33.59%
          
EPS Data:         
Net Income (Loss) Allocated to Common Stock$8,313  ($11,821) ($5,882) $2,707  $15,112 
Basic Earnings (loss) per Share$0.69  ($1.00) ($0.50) $0.23  $1.28 
Diluted Earnings (loss) per Share$0.69  ($1.00) ($0.50) $0.23  $1.28 
Number of Shares - Basic11,996,446  11,876,147  11,760,479  11,791,141  11,825,693 
Number of Shares - Diluted12,118,193  11,876,147  11,760,479  11,832,413  11,841,134 
          
Cash Dividends Declared per share$0.14  $0.14  $0.14  $0.14  $0.14 
          
New Asset Production:         
Direct Originations$50,421  $37,821  $6,617  $8,381  $8,658 
Indirect Originations$167,740  $113,760  $58,802  $58,736  $74,353 
Total Originations (1)$218,161  $151,581  $65,419  $67,117  $83,011 
          
Equipment Finance Originations$186,852  $127,681  $64,572  $65,764  $75,873 
Working Capital Loans Originations$31,309  $23,900  $847  $1,353  $7,138 
Total Originations (1)$218,161  $151,581  $65,419  $67,117  $83,011 
          
Assets originated for sale in the period$16,344  $3,301  $1,135  $62  — 
Assets referred in the period$1,961  $2,509  $664  $1,297  $1,046 
Total Sourced Originations (1)$236,466  $157,391  $67,218  $68,476  $84,057 
          
Implicit Yield on Loans Originated:         
Total (1)12.43% 12.45% 9.16% 9.34% 9.63%
Direct23.20% 21.69% 13.80% 15.76% 19.85%
Indirect9.19% 9.39% 8.64% 8.42% 8.38%
Equipment Finance8.91% 8.95% 8.80% 8.77% 7.97%
Working Capital33.51% 31.16% 36.75% 36.62% 26.72%
          
Paycheck Protection Program Loans Originated—  —  $4,178  $202  — 
Implicit Yield on PPP Loans Originated—  —  4.56% 2.76% — 
          
Assets sold in the period$114,483  $22,929  $1,127  $4,286  — 
          
# of Leases / Loans Equipment Finance7,279  5,863  3,178  3,410  3,552 
Equipment Finance Approval Percentage54% 46% 37% 40% 44%
Average Monthly Equipment Finance Sources1,033  932  518  547  566 

_________________
(1)    Excludes Paycheck Protection Program (PPP) Loans Originated.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
          
 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
          
Net Interest and Fee Margin Percentage         
of Average Total Finance Receivables:         
Interest Income10.34% 10.49% 9.90% 9.69% 9.06%
Fee Income (4)1.46% 1.10% 1.00% 1.21% 1.17%
Interest and Fee Income11.80% 11.59% 10.90% 10.90% 10.23%
Interest Expense2.36% 2.25% 2.22% 2.03% 1.87%
Net Interest and Fee Margin (NIM)9.44% 9.34% 8.68% 8.87% 8.36%
          
Cost of Funds (2)2.57% 2.50% 2.17% 2.13% 1.97%
          
Interest Income Equipment Finance$21,620  $21,076  $19,985  $19,719  $18,068 
Interest Income Working Capital4,545  4,932  4,095  2,526  1,515 
          
Average Total Finance Receivables$1,034,464  $1,008,823  $979,313  $924,635  $869,625 
Average Net Investment Equipment Finance977,225  947,696  928,210  886,990  845,487 
Average Working Capital Loans57,239  61,127  51,103  33,696  23,019 
          
End of Period Net Investment in leases and loans,         
net of allowance:         
Equipment Finance$947,477  $918,264  $876,919  $823,712  $806,229 
Working Capital59,043  51,812  34,116  23,016  18,827 
Total Owned Leases and Loans (3)1,006,520  970,076  911,035  846,728  825,056 
          
Assets Serviced for Others341,064  328,252  296,401  261,144  229,530 
Total Managed Assets$1,347,584  $1,298,328  $1,207,436  $1,107,872  $1,054,586 
          
Average Total Managed Assets$1,314,728  $1,343,862  $1,292,052  $1,203,502  $1,114,929 
          
Restructured Receivables:         
Payment Deferral Modification Program:         
Equipment Finance—  $12,530  $115,941  $117,672  $104,287 
Working Capital—  6,987  17,876  12,210  6,922 
Total - $—  $19,517  $133,817  $129,882  $111,209 
          
Total - as a % of Ending Finance Receivables—  2.0% 13.7% 14.3% 12.8%
Total - # of Active Modified Contracts—  520  5,017  5,237  4,809 
          
Other Restructured Contracts$2,668  $3,096  $1,751  $1,035  $922 

_________________
(2)   COF is defined as interest expense for the period divided by average interest-bearing liabilities, annualized
(3)   Net investment in total finance receivables includes net investment in Equipment finance leases and loans and Working Capital loans.
(4)   Effective January 1, 2020, in connection with the adoption of ASU 2016-13 “CECL”, residual income is no longer recorded as a component of fee income and instead is presented within the allowance for loan loss.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
          
 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
          
Portfolio Asset Quality         
          
Allowance         
Total$21,695  $52,060  $63,644  $61,325  $44,228 
% of Total Finance Receivables2.15% 5.09% 6.53% 6.75% 5.09%
          
Equipment Finance$19,796  $44,860  $55,682  $57,869  $43,022 
% of Net Investment Equipment Finance2.09% 4.66% 5.97% 6.57% 5.07%
          
Working Capital$1,899  $7,200  $7,962  $3,456  $1,206 
% of Total Working Capital Loans3.14% 12.20% 18.92% 13.06% 6.02%
          
Net Charge-Offs         
Total$7,771  $7,846  $8,494  $10,488  $5,588 
% on Avg. Finance Receivables, Annualized3.00% 3.11% 3.47% 4.54% 2.57%
          
Equipment Finance$6,634  $6,603  $7,872  $9,956  $5,203 
% on Avg. Finance Receivables, Annualized2.72% 2.79% 3.39% 4.49% 2.46%
          
Working Capital$1,137  $1,243  $622  $532  $385 
% on Avg. Finance Receivables, Annualized7.95% 8.13% 4.87% 6.32% 6.69%
          
Delinquency         
Total Finance Receivables:         
30+ Days Past Due1.40% 1.79% 3.83% 2.15% 1.63%
60+ Days Past Due0.83% 1.00% 2.46% 1.42% 0.77%
          
Equipment Finance:         
30+ Days Past Due1.40% 1.82% 3.90% 2.13% 1.59%
60+ Days Past Due0.86% 1.05% 2.52% 1.42% 0.78%
          
Working Capital:         
15+ Days Past Due1.75% 2.55% 4.38% 3.93% 5.00%
30+ Days Past Due1.42% 1.14% 2.68% 2.94% 3.69%
          


 
Marlin Business Services Corp. and Subsidiaries
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
          
 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
          
          
Delinquency (continued)         
Total Finance Receivables:         
30+ Days Past Due$14,081  $18,249  $37,347  $19,527  $14,209 
60+ Days Past Due$8,383  $10,220  $24,015  $12,925  $6,717 
          
Equipment Finance:         
30+ Days Past Due$13,226  $17,576  $36,217  $18,750  $13,468 
60+ Days Past Due$8,112  $10,156  $23,353  $12,546  $6,582 
          
Working Capital:         
15+ Days Past Due$1,058  $1,504  $1,843  $1,041  $1,001 
30+ Days Past Due$855  $673  $1,130  $777  $741 
          
          
Non-Accrual         
Total0.55% 0.66% 1.13% 0.92% 1.64%
Equipment Finance0.49% 0.62% 1.06% 0.82% 1.57%
Working Capital1.57% 1.28% 2.83% 4.32% 4.65%
          
          
Total (5)$5,592  $6,705  $11,031  $8,375  $14,289 
Equipment Finance$4,646  $5,950  $9,842  $7,231  $13,357 
Working Capital$946  $755  $1,189  $1,144  $932 

_________________
(5)   Non-Accrual as of December 31, 2020 includes restructured contracts totaling $10.7 million for Equipment Finance and $0.8 million for Working Capital.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
          
 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
          
          
Expense Ratios         
Salaries and Benefits Expense$9,351  $9,519  $7,668  $8,515  $8,081 
As a % of Avg. Fin. Receivables (annualized)3.62% 3.77% 3.13% 3.68% 3.72%
          
Total personnel end of quarter348  339  240  247  254 
          
General and Administrative Expense$7,052  $13,605  $5,847  $4,717  $6,745 
As a % of Avg. Fin. Receivables (annualized)2.73% 5.39% 2.39% 2.04% 3.10%
          
Adjusted General and Administrative Expense         
As a % of Avg. Fin. Receivables (annualized) (6)2.40% 2.62% 2.21% 2.40% 2.81%
          
Non-Interest Expense /         
Average Total Managed Assets4.99% 8.89% 4.18% 4.74% 5.32%
          
Adjusted Non-Interest Expense /         
Average Total Managed Assets (7)4.56% 4.74% 3.75% 4.36% 5.05%
          
Efficiency Ratio43.22% 83.51% 53.92% 57.64% 66.51%
          
Adjusted Efficiency Ratio (7)40.23% 52.68% 47.58% 53.38% 63.93%
          

_________________
(6)   Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(7)   Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)
          
 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
          
Balance Sheet:         
Assets         
Investment in Leases and Loans$1,007,707  $1,002,611  $956,981  $891,940  $854,701 
Initial Direct Costs and Fees20,508  19,525  17,698  16,113  14,583 
Reserve for Credit Losses(21,695) (52,060) (63,644) (61,325) (44,228)
Net Investment in Leases and Loans$1,006,520  $970,076  $911,035  $846,728  $825,056 
Cash and Cash Equivalents123,096  211,070  211,706  195,132  135,691 
Restricted Cash6,931  6,474  6,072  5,771  4,719 
Other Assets70,896  75,917  67,402  58,320  56,532 
Total Assets$1,207,443  $1,263,537  $1,196,215  $1,105,951  $1,021,998 
          
Liabilities         
Deposits839,132  941,996  902,191  823,707  729,614 
Total Debt76,091  62,193  50,890  39,833  30,665 
Other Liabilities77,264  70,858  62,130  60,061  65,353 
Total Liabilities$992,487  $1,075,047  $1,015,211  $923,601  $825,632 
          
Stockholders' Equity         
Common Stock$121  $119  $119  $120  $120 
Paid-in Capital, net79,665  75,647  75,606  75,893  76,323 
Other Comprehensive Income (Loss)58  20  86  93  69 
Retained Earnings135,112  112,704  105,193  106,244  119,854 
Total Stockholders' Equity$214,956  $188,490  $181,004  $182,350  $196,366 
          
Total Liabilities and         
Stockholders' Equity$1,207,443  $1,263,537  $1,196,215  $1,105,951  $1,021,998 
          
Capital and Leverage:         
Equity$214,956  $188,490  $181,004  $182,350  $196,366 
Debt to Equity4.26  5.33  5.27  4.47  3.87 
Equity to Assets17.80% 14.92% 15.13% 16.49% 19.21%
          
Regulatory Capital Ratios:         
Tier 1 Leverage Capital16.31% 16.18% 15.05% 16.92% 18.78%
Common Equity Tier 1 Risk-based Capital18.73% 18.64% 19.33% 21.17% 22.74%
Tier 1 Risk-based Capital18.73% 18.64% 19.33% 21.17% 22.74%
Total Risk-based Capital19.99% 19.94% 20.65% 22.49% 24.04%
               


 
Marlin Business Services Corp. and Subsidiaries
Supplemental Annual Data
(Dollars in thousands, except share amounts)
      
 2018
 2019
 2020
      
Net Income$24,980  $27,116  $342 
      
Annualized Performance Measures:     
Return on Average Assets2.29% 2.18% 0.03%
Return on Average Stockholders' Equity13.27% 13.33% 0.18%
      
EPS Data:     
Net Income Allocated to Common Stock$24,548  $26,777  $339 
Basic Earnings per Share$2.01  $2.21  $0.03 
Diluted Earnings per Share$2.00  $2.20  $0.03 
Number of Shares - Basic12,201,465  12,099,920  11,813,338 
Number of Shares - Diluted12,273,406  12,197,797  11,855,561 
      
Cash Dividends Declared per share$0.56  $0.56  $0.56 
      
New Asset Production:     
Direct Originations$143,057  $184,580  $61,477 
Indirect Originations$561,837  $617,366  $305,651 
Total Originations (1)$704,894  $801,946  $367,128 
      
Equipment Finance Originations$630,650  $693,288  $333,890 
Working Capital Loans Originations$74,244  $108,658  $33,238 
Total Originations (1)$704,894  $801,946  $367,128 
      
Assets originated for sale in the period$17,596  $63,841  $4,498 
Assets referred in the period$16,830  $12,126  $5,516 
Total Sourced Originations (1)$739,320  $877,913  $377,142 
      
Implicit Yield on Loans Originated:     
Total (1)12.45% 12.86% 10.65%
Direct20.63% 23.41% 19.77%
Indirect10.37% 9.71% 8.81%
Equipment Finance9.88% 9.43% 8.66%
Working Capital34.26% 34.72% 30.57%
      
Paycheck Protection Program Loans Originated—  —  $4,380 
Implicit Yield on PPP Loans Originated—  —  4.48%
      
Assets sold in the period$138,995  $310,415  $28,342 
      
# of Leases / Loans Equipment Finance31,478  29,230  16,003 
Equipment Finance Approval Percentage57% 55% 42%
Average Monthly Equipment Finance Sources1,186  1,081  641 

_________________
(1)    Excludes Paycheck Protection Program (PPP) Loans Originated.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Annual Data
(Dollars in thousands, except share amounts)
      
 2018
 2019
 2020
      
Net Interest and Fee Margin Percentage     
of Average Total Finance Receivables:     
Interest Income10.27% 10.44% 9.81%
Fee Income (4)1.68% 1.48% 1.12%
Interest and Fee Income11.95% 11.92% 10.93%
Interest Expense1.84% 2.43% 2.10%
Net Interest and Fee Margin (NIM)10.11% 9.49% 8.83%
      
Cost of Funds (2)2.02% 2.58% 2.20%
      
Interest Income Equipment Finance$84,800  $88,087  $78,848 
Interest Income Working Capital10,234  15,929  13,068 
      
Average Total Finance Receivables$944,588  $1,028,617  $945,599 
Average Net Investment Equipment Finance913,358  979,787  902,096 
Average Working Capital Loans31,230  48,830  42,236 
      
End of Period Net Investment in leases and loans,     
net of allowance:     
Equipment Finance$965,351  $947,477  $806,229 
Working Capital35,389  59,043  18,827 
Total Owned Leases and Loans (3)1,000,740  1,006,520  825,056 
      
Assets Serviced for Others164,029  341,064  229,530 
Total Managed Assets$1,164,769  $1,347,584  $1,054,586 
      
Average Total Managed Assets$1,053,829  $1,250,131  $1,238,586 
      
Restructured Receivables:     
Payment Deferral Modification Program:     
Equipment Finance—  —  $104,287 
Working Capital—  —  6,922 
Total - $—  —  $111,209 
      
Total - as a % of Ending Finance Receivables—  —  12.8%
Total - # of Active Modified Contracts—  —  4,809 
      
Other Restructured Contracts$3,636  $2,906  $922 

_________________
(2)   COF is defined as interest expense for the period divided by average interest-bearing liabilities, annualized
(3)   Net investment in total finance receivables includes net investment in Equipment finance leases and loans and Working Capital loans.
(4)   Effective January 1, 2020, in connection with the adoption of ASU 2016-13 “CECL”, residual income is no longer recorded as a component of fee income and instead is presented within the allowance for loan loss.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Annual Data
(Dollars in thousands, except share amounts)
      
 2018
 2019
 2020
      
Portfolio Asset Quality     
      
Allowance     
Total$16,100  $21,695  $44,228 
% of Total Finance Receivables1.62% 2.15% 5.09%
      
Equipment Finance$14,633  $19,796  $43,022 
% of Net Investment Equipment Finance1.52% 2.09% 5.07%
      
Working Capital$1,467  $1,899  $1,206 
% of Total Working Capital Loans4.02% 3.14% 6.02%
      
Net Charge-Offs     
Total$18,273  $22,441  $32,416 
% on Avg. Finance Receivables, Annualized1.93% 2.18% 3.43%
      
Equipment Finance$16,795  $19,909  $29,634 
% on Avg. Finance Receivables, Annualized1.84% 2.03% 3.29%
      
Working Capital$1,478  $2,532  $2,782 
% on Avg. Finance Receivables, Annualized4.73% 5.19% 6.59%
      
Delinquency     
Total Finance Receivables:     
30+ Days Past Due1.07% 1.40% 1.63%
60+ Days Past Due0.63% 0.83% 0.77%
      
Equipment Finance:     
30+ Days Past Due1.06% 1.40% 1.59%
60+ Days Past Due0.63% 0.86% 0.78%
      
Working Capital:     
15+ Days Past Due1.44% 1.75% 5.00%
30+ Days Past Due1.35% 1.42% 3.69%
      


Marlin Business Services Corp. and Subsidiaries
Supplemental Annual Data
(Dollars in thousands, except share amounts)
      
 2018
 2019
 2020
      
      
Delinquency (continued)     
Total Finance Receivables:     
30+ Days Past Due$10,633  $14,081  $14,209 
60+ Days Past Due$6,228  $8,383  $6,717 
      
Equipment Finance:     
30+ Days Past Due$10,141  $13,226  $13,468 
60+ Days Past Due$6,036  $8,112  $6,582 
      
Working Capital:     
15+ Days Past Due$526  $1,058  $1,001 
30+ Days Past Due$492  $855  $741 
      
      
Non-Accrual     
Total0.36% 0.55% 1.64%
Equipment Finance0.32% 0.49% 1.57%
Working Capital1.35% 1.57% 4.65%
      
      
Total (5)$3,607  $5,592  $14,289 
Equipment Finance$3,115  $4,646  $13,357 
Working Capital$492  $946  $932 
      

_________________
(5)   Non-Accrual as of December 31, 2020 includes restructured contracts totaling $10.7 million for Equipment Finance and $0.8 million for Working Capital.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Annual Data
(Dollars in thousands, except share amounts)
      
 2018
 2019
 2020
      
      
Expense Ratios     
Salaries and Benefits Expense$39,750  $44,168  $33,783 
As a % of Avg. Fin. Receivables (annualized)4.21% 4.29% 3.57%
      
Total personnel end of quarter341  348  254 
      
General and Administrative Expense$24,915  $32,566  $30,914 
As a % of Avg. Fin. Receivables (annualized)2.64% 3.17% 3.27%
      
Adjusted General and Administrative Expense     
As a % of Avg. Fin. Receivables (annualized) (6)2.58% 2.41% 2.50%
      
Non-Interest Expense /     
Average Total Managed Assets6.14% 6.14% 5.85%
      
Adjusted Non-Interest Expense /     
Average Total Managed Assets (7)5.90% 5.35% 4.46%
      
Efficiency Ratio55.32% 54.18% 67.19%
      
Adjusted Efficiency Ratio (7)53.16% 49.42% 54.00%

_________________
(6)   Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(7)   Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

 
Marlin Business Services Corp. and Subsidiaries
Supplemental Annual Data
(Dollars in thousands, except share amounts)
      
 2018
 2019
 2020
      
Balance Sheet:     
Assets     
Investment in Leases and Loans$996,384  $1,007,707  $854,701 
Initial Direct Costs and Fees20,456  20,508  14,583 
Reserve for Credit Losses(16,100) (21,695) (44,228)
Net Investment in Leases and Loans$1,000,740  $1,006,520  $825,056 
Cash and Cash Equivalents97,156  123,096  135,691 
Restricted Cash14,045  6,931  4,719 
Other Assets55,105  70,896  56,532 
Total Assets$1,167,046  $1,207,443  $1,021,998 
      
Liabilities     
Deposits$755,776  $839,132  $729,614 
Total Debt150,055  76,091  30,665 
Other Liabilities62,704  77,264  65,353 
Total Liabilities$968,535  $992,487  $825,632 
      
Stockholders' Equity     
Common Stock$124  $121  $120 
Paid-in Capital, net83,496  79,665  76,323 
Other Comprehensive Income (Loss)(44) 58  69 
Retained Earnings114,935  135,112  119,854 
Total Stockholders' Equity$198,511  $214,956  $196,366 
      
Total Liabilities and     
Stockholders' Equity$1,167,046  $1,207,443  $1,021,998 
      
Capital and Leverage:     
Equity$198,511  $214,956  $196,366 
Debt to Equity4.56  4.26  3.87 
Equity to Assets17.01% 17.80% 19.21%
      
Regulatory Capital Ratios:     
Tier 1 Leverage Capital16.38% 16.31% 18.78%
Common Equity Tier 1 Risk-based Capital17.50% 18.73% 22.74%
Tier 1 Risk-based Capital17.50% 18.73% 22.74%
Total Risk-based Capital18.76% 19.99% 24.04%
         

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