Marlin Reports Fourth Quarter and Full Year 2020 Results and Declares a Cash Dividend of $0.14 Per Share

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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

30

60

90+

Current

Total

30

60

90+

Current

Total

Equipment Finance

Restructured Portfolio

$2,461

$610

$1,349

$99,867

$104,287

2.36

%

0.58

%

1.29

%

95.77

%

100

%

Non-Restructured

4,425

2,169

2,453

735,916

744,963

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

15

30

60+

Current

Total

15

30

60+

Current

Total

Working Capital

Restructured Portfolio

$225

$550

$135

$6,012

$6,922

3.25

%

7.95

%

1.95

%

86.85

%

100

%

Non-Restructured

36

56

13,019

13,111

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

Medical

13.7

%

8.1

%

Miscellaneous Services(1)

11.9

%

8.3

%

Retail

10.1

%

13.0

%

Construction

8.9

%

11.0

%

Restaurants

6.8

%

6.5

%

Professional Services

6.6

%

5.5

%

Manufacturing

6.0

%

7.5

%

Transportation

5.3

%

2.6

%

Auto Repair

3.3

%

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 Assets

2.74

%

-3.98

%

-1.88

%

0.98

%

5.74

%

Return on Average Stockholders' Equity

16.04

%

-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 - Basic

11,996,446

11,876,147

11,760,479

11,791,141

11,825,693

Number of Shares - Diluted

12,118,193

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

%

Direct

23.20

%

21.69

%

13.80

%

15.76

%

19.85

%

Indirect

9.19

%

9.39

%

8.64

%

8.42

%

8.38

%

Equipment Finance

8.91

%

8.95

%

8.80

%

8.77

%

7.97

%

Working Capital

33.51

%

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 Finance

7,279

5,863

3,178

3,410

3,552

Equipment Finance Approval Percentage

54

%

46

%

37

%

40

%

44

%

Average Monthly Equipment Finance Sources

1,033

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 Income

10.34

%

10.49

%

9.90

%

9.69

%

9.06

%

Fee Income (4)

1.46

%

1.10

%

1.00

%

1.21

%

1.17

%

Interest and Fee Income

11.80

%

11.59

%

10.90

%

10.90

%

10.23

%

Interest Expense

2.36

%

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 Capital

4,545

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 Finance

977,225

947,696

928,210

886,990

845,487

Average Working Capital Loans

57,239

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 Capital

59,043

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 Others

341,064

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

$

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 Receivables

2.15

%

5.09

%

6.53

%

6.75

%

5.09

%

Equipment Finance

$19,796

$44,860

$55,682

$57,869

$43,022

% of Net Investment Equipment Finance

2.09

%

4.66

%

5.97

%

6.57

%

5.07

%

Working Capital

$1,899

$7,200

$7,962

$3,456

$1,206

% of Total Working Capital Loans

3.14

%

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, Annualized

3.00

%

3.11

%

3.47

%

4.54

%

2.57

%

Equipment Finance

$6,634

$6,603

$7,872

$9,956

$5,203

% on Avg. Finance Receivables, Annualized

2.72

%

2.79

%

3.39

%

4.49

%

2.46

%

Working Capital

$1,137

$1,243

$622

$532

$385

% on Avg. Finance Receivables, Annualized

7.95

%

8.13

%

4.87

%

6.32

%

6.69

%

Delinquency

Total Finance Receivables:

30+ Days Past Due

1.40

%

1.79

%

3.83

%

2.15

%

1.63

%

60+ Days Past Due

0.83

%

1.00

%

2.46

%

1.42

%

0.77

%

Equipment Finance:

30+ Days Past Due

1.40

%

1.82

%

3.90

%

2.13

%

1.59

%

60+ Days Past Due

0.86

%

1.05

%

2.52

%

1.42

%

0.78

%

Working Capital:

15+ Days Past Due

1.75

%

2.55

%

4.38

%

3.93

%

5.00

%

30+ Days Past Due

1.42

%

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

Total

0.55

%

0.66

%

1.13

%

0.92

%

1.64

%

Equipment Finance

0.49

%

0.62

%

1.06

%

0.82

%

1.57

%

Working Capital

1.57

%

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 quarter

348

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 Assets

4.99

%

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 Ratio

43.22

%

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 Fees

20,508

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 Equivalents

123,096

211,070

211,706

195,132

135,691

Restricted Cash

6,931

6,474

6,072

5,771

4,719

Other Assets

70,896

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

Deposits

839,132

941,996

902,191

823,707

729,614

Total Debt

76,091

62,193

50,890

39,833

30,665

Other Liabilities

77,264

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, net

79,665

75,647

75,606

75,893

76,323

Other Comprehensive Income (Loss)

58

20

86

93

69

Retained Earnings

135,112

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 Equity

4.26

5.33

5.27

4.47

3.87

Equity to Assets

17.80

%

14.92

%

15.13

%

16.49

%

19.21

%

Regulatory Capital Ratios:

Tier 1 Leverage Capital

16.31

%

16.18

%

15.05

%

16.92

%

18.78

%

Common Equity Tier 1 Risk-based Capital

18.73

%

18.64

%

19.33

%

21.17

%

22.74

%

Tier 1 Risk-based Capital

18.73

%

18.64

%

19.33

%

21.17

%

22.74

%

Total Risk-based Capital

19.99

%

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 Assets

2.29

%

2.18

%

0.03

%

Return on Average Stockholders' Equity

13.27

%

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 - Basic

12,201,465

12,099,920

11,813,338

Number of Shares - Diluted

12,273,406

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

%

Direct

20.63

%

23.41

%

19.77

%

Indirect

10.37

%

9.71

%

8.81

%

Equipment Finance

9.88

%

9.43

%

8.66

%

Working Capital

34.26

%

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 Finance

31,478

29,230

16,003

Equipment Finance Approval Percentage

57

%

55

%

42

%

Average Monthly Equipment Finance Sources

1,186

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 Income

10.27

%

10.44

%

9.81

%

Fee Income (4)

1.68

%

1.48

%

1.12

%

Interest and Fee Income

11.95

%

11.92

%

10.93

%

Interest Expense

1.84

%

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 Capital

10,234

15,929

13,068

Average Total Finance Receivables

$

944,588

$

1,028,617

$

945,599

Average Net Investment Equipment Finance

913,358

979,787

902,096

Average Working Capital Loans

31,230

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 Capital

35,389

59,043

18,827

Total Owned Leases and Loans (3)

1,000,740

1,006,520

825,056

Assets Serviced for Others

164,029

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 Receivables

1.62

%

2.15

%

5.09

%

Equipment Finance

$14,633

$19,796

$43,022

% of Net Investment Equipment Finance

1.52

%

2.09

%

5.07

%

Working Capital

$1,467

$1,899

$1,206

% of Total Working Capital Loans

4.02

%

3.14

%

6.02

%

Net Charge-Offs

Total

$18,273

$22,441

$32,416

% on Avg. Finance Receivables, Annualized

1.93

%

2.18

%

3.43

%

Equipment Finance

$16,795

$19,909

$29,634

% on Avg. Finance Receivables, Annualized

1.84

%

2.03

%

3.29

%

Working Capital

$1,478

$2,532

$2,782

% on Avg. Finance Receivables, Annualized

4.73

%

5.19

%

6.59

%

Delinquency

Total Finance Receivables:

30+ Days Past Due

1.07

%

1.40

%

1.63

%

60+ Days Past Due

0.63

%

0.83

%

0.77

%

Equipment Finance:

30+ Days Past Due

1.06

%

1.40

%

1.59

%

60+ Days Past Due

0.63

%

0.86

%

0.78

%

Working Capital:

15+ Days Past Due

1.44

%

1.75

%

5.00

%

30+ Days Past Due

1.35

%

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

Total

0.36

%

0.55

%

1.64

%

Equipment Finance

0.32

%

0.49

%

1.57

%

Working Capital

1.35

%

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 quarter

341

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 Assets

6.14

%

6.14

%

5.85

%

Adjusted Non-Interest Expense /

Average Total Managed Assets (7)

5.90

%

5.35

%

4.46

%

Efficiency Ratio

55.32

%

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 Fees

20,456

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 Equivalents

97,156

123,096

135,691

Restricted Cash

14,045

6,931

4,719

Other Assets

55,105

70,896

56,532

Total Assets

$1,167,046

$1,207,443

$1,021,998

Liabilities

Deposits

$755,776

$839,132

$729,614

Total Debt

150,055

76,091

30,665

Other Liabilities

62,704

77,264

65,353

Total Liabilities

$968,535

$992,487

$825,632

Stockholders' Equity

Common Stock

$124

$121

$120

Paid-in Capital, net

83,496

79,665

76,323

Other Comprehensive Income (Loss)

(44

)

58

69

Retained Earnings

114,935

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 Equity

4.56

4.26

3.87

Equity to Assets

17.01

%

17.80

%

19.21

%

Regulatory Capital Ratios:

Tier 1 Leverage Capital

16.38

%

16.31

%

18.78

%

Common Equity Tier 1 Risk-based Capital

17.50

%

18.73