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Marlin Business Services Corp. Message Board

  • landshannen@gmail.com landshannen Feb 26, 2014 7:51 PM Flag

    weakness

    Postulate reason for weakness is fear that rising short term interest rates would hurt the spread and therefore EPS. I think that this is somewhat misplaced as the duration on their borrowings via CD's is pretty much in line with the duration of their leases. In a rising rate environment their borrowing costs will rise but this should be at least partially offset by some ability to raise the implicit interest rates on their leases and perhaps by lowered writeoffs is an improving economy is what is driving rising interest rates. Stock is scary thin so for strong stomachs only, but I like it for the long term.

    Sentiment: Buy

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    • The stock is also pretty illiquid so buying it in down days is the way to accumulate stock. They will be earning 13% on equity in 2015 on year end book of $14.20.

    • The Fed has no intention of raising short term rates. That would kill the economy. They will let long rates float up. MRLN is 1.7 book value and that represents good value as they will sell out at 3x book in 2016. Book will be $17. They will be earning 15% on equity or $2.50/share. The buyout price will be $50. They are developing a valuable and unique franchise that would be very attractive to a super regional. They are still ramping up to 15% ROE to maximize the buyout price and are still very much under leveraged.

      Sentiment: Strong Buy

      • 1 Reply to analyst112
      • landshannen@gmail.com landshannen Mar 29, 2014 10:09 AM Flag

        Agree with under leveraged situation--but the 15% ROE won't happen unless leverage rises and a buyout at 20X EPS and 3X book would be extremely high for the banking industry and a price at this level would probably cause analysts to tank the stock of the acquirer. a buyout in the area of 30-35 would be much easier to justify--and who says they want to be bought out?

 
MRLN
13.72+0.18(+1.33%)Aug 31 4:00 PMEDT