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Marlin Business Services (MRLN) Message Board

  • analyst112 analyst112 Jul 11, 2013 10:53 AM Flag

    Stock worth $50

    MRLN has a bank charter. Therefore it is able to borrow at the Federal Reserve Bank window at .25%. They have a 70 person sales force that seeks leases, primarily on office equipment. The lease interest rate is 14% which is the industry standard. Therefore the interest rate margin after lease losses is 10%, the highest of any bank in the country. The banks capital is only 40% deployed. When it is fully deployed, they will be earnings close to 20% on equity and the company will sell out at 3x book value. This will take 24-30 months. BV is $14.50 but will be $17 by the end of next year. 3x $17 is $51/shr and that is what we expect to get. The stock also pays a 2% dividend that shoulkd grow each year. This is a unique investment that should be a large holding. Volatile stock so buy on dips.

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    • Amen. A virtual bank--salesmen working the phones in one room to drum up business, salesmen in another room to drum up fed guaranteed CD's--which are the main source of funding, not borrowings from the Fed in another room. Pretty simple operation. Interesting to see that they are acting as an agent for another bank to make this type of loan--the other bank wants to serve its customers but apparently doesn't want to build the staff and expertise to do it itself. If this can be replicated with other banks it would be great for MRLN since the other bank would essentially be acting as a producer of qualified leads making MRLN's sales efforts much more efficient. Not a cheap stock on present earnings and book so you are paying up for growth and/or merger potentials. Terribly thin. An order for as few as 1000 shares can move it a point--so buy only on dips and with limit orders

      Sentiment: Buy

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