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Marlin Reports Second Quarter 2019 Earnings and Declares a Cash Dividend of $0.14 Per Share

Second Quarter Summary:

  • Net income of $6.1 million, or $0.49 per diluted share up from $5.1 million, or $0.41 per diluted share last quarter, but down from $6.5 million, or $0.52 per diluted share a year ago

  • Net Investment in Leases and Loans totaled $1.1 billion, up 10.3% from a year ago, and total managed assets ended the second quarter at $1.3 billion, up 20.2% from a year ago

  • Total sourced origination volume of $231.5 million, up 28.9% year-over-year; Direct origination volume of $49.0 million, up 34.9% year-over-year

  • Total origination yield of 12.95%, up 19 basis points from the prior quarter and up 71 basis points year-over-year

  • Annualized net charge-offs of 1.88%, compared with 1.83% in the prior quarter and 1.84% in the second quarter last year

  • Equity to assets ratio decreased to 16.06%, compared with 17.03% in the second quarter last year

MOUNT LAUREL, N.J., Aug. 01, 2019 (GLOBE NEWSWIRE) -- Marlin (MRLN), a nationwide provider of capital solutions to small businesses (“Marlin” or the “Company”), today reported second quarter 2019 net income of $6.1 million, or $0.49 per diluted share, compared with $5.1 million, or $0.41 per diluted share in the prior quarter, and $6.5 million, or $0.52 per share a year ago. Second quarter 2019 net income on an adjusted basis was $6.3 million, or $0.51 per diluted share, compared with $6.5 million or $0.52 per diluted share a year ago.

Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “Marlin delivered a productive second quarter highlighted by strong growth in origination volume, stable portfolio performance and improving profitability. Second quarter total sourced origination volume of $231.5 million increased 29% year-over-year, a record for a single quarter. Growth was strong in both our Equipment Finance and Working Capital Loan products and we continued to benefit from strong growth in both our Direct and Indirect origination channels. At quarter end, our Net Investment in Leases and Loans reached nearly $1.1 billion, up 10% from a year ago. Our portfolio of total managed assets, which includes assets we service for others, expanded to nearly $1.3 billion, an increase of 20% from the second quarter last year. Importantly, the credit quality of our portfolio remained stable and within expectations.”

Mr. Hilzinger continued, “Second quarter net income was $0.49 per diluted share, inclusive of severance expenses associated with a staff reorganization that we initiated during the quarter that lowered earnings by approximately $0.02 per diluted share. We continue to expect earnings to grow substantially during the second half of 2019 as the recent investments we’ve made in our salesforce continue to generate returns and, importantly, we are reaffirming our earnings guidance for the full year.”

Results of Operations
Total sourced origination volume for the second quarter of $231.5 million was up 28.9% from a year ago. Direct origination volume of $49.0 million in the second quarter was up 34.9% from $36.3 million in the second quarter of 2018. Indirect origination volume in the second quarter of 2019 was $160.3 million, up 18.0% from $135.9 million in the second quarter last year. Assets originated for sale in the second quarter of $18.0 million compared with $1.8 in the second quarter last year. Referral volume totaled $4.1 million, down from $5.6 million in the second quarter last year.

Net interest and fee margin as a percentage of average finance receivables was 9.38% for the second quarter, down 21 basis points from the first quarter of 2019 and down 93 basis points from a year ago. The year-over-year decrease in margin percentage was primarily a result of an increase in interest expense resulting from higher deposit rates as well as the higher cost of funds associated with the securitization that was executed in the second half of 2018, partially offset by an increase of 71 basis points in new origination loan and lease yield. The Company’s interest expense as a percent of average total finance receivables increased to 248 basis points in the second quarter of 2019 compared with 239 basis points for the first quarter of 2019 and 159 basis points for the second quarter of 2018. The sequential quarter increase was primarily due to an increase in deposits costs, while the year-over-year increase was due to a higher cost of funds associated with both deposits and long-term borrowings from the securitization.

On an absolute basis, net interest and fee income was $24.2 million for the second quarter of 2019 compared with $24.1 million for the second quarter last year.

Non-interest income was $7.2 million for the second quarter of 2019, compared with $12.9 million in the prior quarter and $4.6 million in the prior year period. The decrease compared with the prior quarter is primarily due to the Company’s January 1, 2019 adoption of ASC 842 – Lease Accounting, which increased non-interest income by $5.6 million for the first quarter of 2019, as certain lessor costs, including property taxes that are paid by the lessee to the lessor are required to be presented gross in the consolidated statement of operations. The year-over-year increase in non-interest income is primarily due to an increase in gains-on-sale and an increase in insurance-related income. Non-interest expense was $18.5 million for the second quarter of 2019, compared with $24.8 million in the prior quarter and $16.0 million in the second quarter last year. The decrease in non-interest expense compared with the prior quarter was primarily due to the aforementioned adoption of ASC 842, which increased non-interest expense by $6.2 million in the first quarter of 2019 due to the change in presentation of property taxes paid by the lessee to the lessor gross in the consolidated statement of operations. The year-over-year increase in non-interest expense is primarily due to higher employee related expenses and an increase in commissions tied to originations.

The Company’s efficiency ratio for the second quarter was 59.1% compared with 55.6% in the second quarter last year. The Company’s non-GAAP efficiency ratio for the second quarter was 55.8% compared with 54.3% in the second quarter last year. Marlin expects its efficiency ratio to improve during the remainder of 2019 as the Company continues to generate improving returns from recent investments in its salesforce, leverages its fixed costs through continued portfolio growth and generates continued operating efficiencies through its various process improvement and cost containment activities.

Marlin recorded an income tax expense of $2.0 million, representing an effective tax rate of 24.4% for the second quarter of 2019, compared with an income tax expense of $2.1 million, representing an effective tax rate of 24.1%, for the second quarter of 2018.

Portfolio Performance
Allowance for credit losses as a percentage of total finance receivables was 1.59% at June 30, 2019 compared with 1.66% at March 31, 2019 and 1.62% at June 30, 2018.

Finance receivables over 30 days delinquent were 1.05% of the Company’s total finance receivables portfolio as of June 30, 2019, down 6 basis points from March 31, 2019 and up 9 basis points from June 30, 2018. Finance receivables over 60 days delinquent were 0.64% of the Company’s total finance receivables portfolio as of June 30, 2019, down 2 basis points from March 31, 2019 and up 9 basis points from June 30, 2018. Annualized second quarter net charge-offs were 1.88% of average total finance receivables versus 1.83% in the first quarter of 2019 and 1.84% a year ago.

As of June 30, 2019, the Company’s consolidated equity to assets ratio was 16.06%. This compares to 16.17% and 17.03%, in the prior quarter and year ago quarter, respectively.

Corporate Developments
During the second quarter, the Company invested approximately $1.7 million to repurchase 72,824 shares at an average price of $23.44. As of June 30, 2019, there remained approximately $3.3 million available under the $10 million stock repurchase program authorized by the Board of Directors in 2017. Subsequent to the end of the quarter, the Company’s Board of Directors authorized a new stock repurchase program of up to an additional $10 million of its outstanding common stock upon completion of the 2017 authorization. The repurchase may be made on the open market, in block trades, through privately negotiated transactions or plans, pursuant to instructions or contracts established under Rule 10b5-1 under the Securities Exchange Act of 1934, or otherwise in accordance with applicable laws, rules and regulations. No time limit has been set for the completion of the program. The stock repurchase program does not obligate the Company to acquire any particular amount of common stock, and it may be suspended at any time at the Company's discretion. The stock repurchase will be funded using the Company's working capital. Any shares purchased under this program will be returned to the status of authorized but unissued shares of common stock.

Subsequent to quarter end, the Company announced the resignation of Senior Vice President, General Counsel and Chief Compliance Officer, Edward Dietz. Mr. Dietz will remain with Marlin through the end of 2019 to assist in the transition of the Company’s legal and compliance functions. Commenting on Mr. Dietz’s resignation, Jeff Hilzinger said, “On behalf of the Board and everybody at Marlin, we thank Ed for his contributions and many years of service to the organization. We wish him all the best in his future endeavors.”

Marlin’s Board of Directors today declared a $0.14 per share quarterly dividend. The dividend is payable August 22, 2019, to shareholders of record on August 12, 2019. Based on the closing stock price on July 31, 2019, the annualized dividend yield on the Company’s common stock is 2.41%.

Business Outlook
The Company is reaffirming its previously issued guidance for the full year ending December 31, 2019 as follows:

  • Total Sourced Origination volume is expected to finish approximately 20% above 2018 levels

  • Total asset sales are expected to be $250 to $280 million as we continue to integrate the acquisition of Fleet Financing Resources and execute loan and lease syndications. We expect to achieve an immediate gain on sale margin of 6.0% to 7.0%.

  • Portfolio performance is expected to remain in line with the results observed over the last 12 months

  • Net interest and fee margin, as a percentage of average finance receivables, is expected to be between 9.5% and 10.0%

  • ROE is expected to continue to improve in 2019 as the Company continues to improve operating scale

  • Adjusted EPS is expected to be between $2.30 and $2.40 per share

Conference Call and Webcast
Marlin will host a conference call on Friday, August 2, 2019 at 9:00 a.m. ET to discuss the Company’s second quarter 2019 results. The conference call details are as follows:

Second Quarter 2019 Financial Results Conference Call

Date:

Friday, August 2, 2019

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:

13691886

Webcast:

http://public.viavid.com/index.php?id=135004

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 August 2, 2019 through 11:59 p.m. Eastern Time on August 16, 2019 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13691886.

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. All forward-looking statements (including statements regarding future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. 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,” “intend” and similar expressions are generally intended to identify forward-looking statements. Economic, business, funding, market, competitive, legal and/or regulatory factors, among others, 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 in our filings with the Securities and Exchange Commission, including the sections captioned “Risk Factors” and “Business” in the Company’s Form 10-K filed with the Securities and Exchange Commission. 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.

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 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, 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 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

---Tables to Follow--

MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Consolidated Balance Sheets

June 30,

December 31,

2019

2018

(Dollars in thousands, except per-share data)

ASSETS

Cash and due from banks

$

5,170

$

5,088

Interest-earning deposits with banks

134,561

92,068

Total cash and cash equivalents

139,731

97,156

Time deposits with banks

12,679

9,659

Restricted interest-earning deposits (includes $8.1 and $10.0 million at June 30, 2019, and

8,152

14,045

December 31, 2018, respectively, related to consolidated VIEs)

Investment securities (amortized cost of $10.7 million and $11.2 million at

10,633

10,956

June 30, 2019 and December 31, 2018, respectively)

Net investment in leases and loans:

Leases

478,068

489,299

Loans

600,980

527,541

Net investment in leases and loans, excluding allowance for credit losses

1,079,048

1,016,840

(includes $109.8 million and $150.2 million at June 30, 2019 and December 31, 2018,

respectively, related to consolidatedVIEs)

Allowance for credit losses

(16,777

)

(16,100

)

Total net investment in leases and loans

1,062,271

1,000,740

Intangible assets

7,920

7,912

Goodwill

6,735

7,360

Operating lease right-of-use assets

8,626

Property and equipment, net

4,014

4,317

Property tax receivables

8,070

5,245

Other assets

11,152

9,656

Total assets

$

1,279,983

$

1,167,046

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits

$

888,561

$

755,776

Long-term borrowings related to consolidated VIEs

109,637

150,055

Operating lease liabilities

9,074

Other liabilities:

Sales and property taxes payable

7,827

3,775

Accounts payable and accrued expenses

32,597

36,369

Net deferred income tax liability

26,733

22,560

Total liabilities

1,074,429

968,535

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;

12,285,564 and 12,367,724 shares issued and outstanding at June 30, 2019 and

123

124

December 31, 2018, respectively

Additional paid-in capital

82,726

83,498

Stock subscription receivable

(2

)

(2

)

Accumulated other comprehensive loss

48

(44

)

Retained earnings

122,659

114,935

Total stockholders’ equity

205,554

198,511

Total liabilities and stockholders’ equity

$

1,279,983

$

1,167,046

MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Consolidated Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

(Dollars in thousands, except per-share data)

Interest income

$

27,082

$

23,964

$

52,965

$

47,243

Fee income

3,507

3,876

7,549

7,835

Interest and fee income

30,589

27,840

60,514

55,078

Interest expense

6,408

3,711

12,370

7,110

Net interest and fee income

24,181

24,129

48,144

47,968

Provision for credit losses

4,756

4,256

10,119

8,868

Net interest and fee income after provision for credit losses

19,425

19,873

38,025

39,100

Non-interest income:

Insurance premiums written and earned

2,176

1,993

4,308

3,932

Other income

5,025

2,634

15,841

5,929

Non-interest income

7,201

4,627

20,149

9,861

Non-interest expense:

Salaries and benefits

12,469

9,527

23,920

19,550

General and administrative

6,068

6,449

19,422

13,020

Non-interest expense

18,537

15,976

43,342

32,570

Income before income taxes

8,089

8,524

14,832

16,391

Income tax expense

1,974

2,057

3,576

3,739

Net income

$

6,115

$

6,467

$

11,256

$

12,652

Basic earnings per share

$

0.50

$

0.52

$

0.91

$

1.02

Diluted earnings per share

$

0.49

$

0.52

$

0.91

$

1.01

MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

(Dollars in thousands, except per-share data)

(Dollars in thousands, except per-share data)

Net income as reported

$6,115

$6,467

$11,256

$12,652

Deduct:

Reversal of charges in connection with executive separation

-

-

218

-

Charge in connection with workforce reorganization

(311)

(311)

Tax effect

79

-

24

-

Total adjustments, net of tax

(232)

-

(69)

-

Net Income on an adjusted basis

$6,347

$6,467

$11,325

$12,652

Diluted earnings per share as reported

$0.49

$0.52

$0.91

$1.01

Diluted earnings per share on an adjusted basis

$0.51

$0.52

$0.91

$1.01

Return on Average Assets as reported

1.94%

2.41%

1.82%

2.39%

Return on Average Assets on an adjusted basis

2.02%

2.41%

1.84%

2.39%

Return on Average Equity as reported

12.05%

13.93%

11.26%

13.81%

Return on Average Equity on an adjusted basis

12.51%

13.93%

11.33%

13.81%

Efficiency Ratio numerator as reported

$18,537

$15,976

$43,343

$32,570

Adjustments to Numerator:

Expense adjustments as seen in Net Income reconciliation above

(311)

-

(93)

-

Acquisition related expenses

(757)

(359)

(1,472)

(725)

pass-through expenses

(10)

-

(6,242)

-

Efficiency ratio numerator on an adjusted basis

$17,459

$15,617

$35,536

$31,845

Adjustments to Denominator:

Efficiency Ratio denominator as reported

$31,381

$28,756

$68,292

$57,829

pass-through revenue

(79)

-

(5,722)

-

Efficiency Ratio denominator on an adjusted basis

$31,302

$28,756

$62,570

$57,829

Efficiency Ratio as reported

59.07%

55.56%

63.47%

56.32%

Efficiency Ratio on an adjusted basis

55.78%

54.31%

56.79%

55.07%

MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)

Quarter Ended:

6/30/2018

9/30/2018

12/31/2018

3/31/2019

6/30/2019

Net Income:

Net Income

$6,467

$5,906

$6,422

$5,141

$6,115

Annualized Performance Measures:

Return on Average Assets

2.41%

2.04%

2.28%

1.69%

1.94%

Return on Average Stockholders' Equity

13.93%

12.36%

13.16%

10.45%

12.05%

EPS Data:

Net Income Allocated to Common Stock

$6,352

$5,808

$6,322

$5,069

$6,041

Number of Shares - Basic

12,199,089

12,214,913

12,202,652

12,165,646

12,184,996

Basic Earnings per Share

$0.52

$0.48

$0.52

$0.42

$0.50

Number of Shares - Diluted

12,269,989

12,296,726

12,286,748

12,252,116

12,266,851

Diluted Earnings per Share

$0.52

$0.47

$0.51

$0.41

$0.49

Cash Dividends Declared per share

$0.14

$0.14

$0.14

$0.14

$0.14

New Asset Production:

Direct Originations

$36,338

$35,469

$40,381

$43,565

$49,038

Indirect Originations

$135,865

$137,605

$159,534

$149,875

$160,279

Total Originations

$172,203

$173,074

$199,915

$193,440

$209,317

Equipment Finance Originations

$155,385

$153,503

$180,116

$169,831

$181,824

Working Capital Loans Originations

$16,818

$19,571

$19,799

$23,609

$27,493

Total Originations

$172,203

$173,074

$199,915

$193,440

$209,317

Assets originated for sale in the period

$1,801

$3,890

$11,905

$11,298

$18,025

Assets referred in the period

$5,638

$2,540

$4,451

$3,617

$4,140

Total Sourced Originations

$179,642

$179,504

$216,271

$208,355

$231,482

Assets sold in the period

$16,890

$40,986

$58,138

$52,867

$57,640

Implicit Yield on Direct Originations

18.59%

22.39%

21.79%

23.09%

23.09%

Implicit Yield on Indirect Originations

10.54%

10.29%

9.97%

9.76%

9.85%

Total Implicit Yield on Total Originations

12.24%

12.77%

12.36%

12.76%

12.95%

Implicit Yield on Equipment Finance Originations

9.94%

9.96%

9.68%

9.59%

9.71%

Implicit Yield on Working Capital Loans Originations

33.52%

34.85%

36.67%

35.55%

34.34%

# of Leases / Loans Equipment Finance

8,238

7,603

7,873

7,467

7,648

Equipment Finance Approval Percentage

56%

57%

59%

58%

55%

Average Monthly Equipment Finance Sources

1,240

1,174

1,140

1,074

1,149

Notes and Footnotes:

(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.


MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)

Quarter Ended:

6/30/2018

9/30/2018

12/31/2018

3/31/2019

6/30/2019

Net Interest and Fee Margin (NIM)

Percent of Average Total Finance Receivables:

Interest Income

10.24%

10.37%

10.28%

10.36%

10.50%

Fee Income

1.66%

1.64%

1.68%

1.62%

1.36%

Interest and Fee Income

11.90%

12.01%

11.96%

11.98%

11.86%

Interest Expense

1.59%

2.07%

2.20%

2.39%

2.48%

Net Interest and Fee Margin (NIM)

10.31%

9.94%

9.76%

9.59%

9.38%

Cost of Funds (1)

1.76%

2.15%

2.43%

2.49%

2.60%

Interest Income Equipment Finance

$21,082

$21,489

$21,590

$21,722

$22,390

Interest Income Working Capital Loans

$2,463

$2,626

$2,824

$3,228

$3,767

Average Total Finance Receivables

$936,007

$957,755

$970,785

$999,432

$1,031,774

Average Net Investment Equipment Finance

$905,583

$925,900

$937,004

$960,501

$986,075

Average Working Capital Loans

$30,424

$31,855

$33,781

$38,931

$45,699

End of Period Net Investment Equipment Finance

$933,261

$937,897

$965,351

$981,664

$1,012,463

End of Period Working Capital Loans

$29,848

$32,528

$35,389

$41,526

$49,808

Total Owned Net Investment in Leases and Loans (2)

$963,109

$970,425

$1,000,740

$1,023,190

$1,062,271

Total Assets Serviced for Others

$98,442

$128,539

$164,029

$192,731

$213,797

Total Managed Assets

$1,061,551

$1,098,964

$1,164,769

$1,215,921

$1,276,068

Average Total Managed Assets

$1,030,579

$1,071,246

$1,117,069

$1,177,812

$1,229,588

Portfolio Asset Quality:

Total Finance Receivables

30+ Days Past Due Delinquencies

0.96%

1.02%

1.09%

1.11%

1.05%

30+ Days Past Due Delinquencies

$10,438

$11,270

$12,295

$12,849

$12,594

60+ Days Past Due Delinquencies

0.55%

0.57%

0.65%

0.66%

0.64%

60+ Days Past Due Delinquencies

$6,007

$6,244

$7,292

$7,626

$7,686

Equipment Finance

30+ Days Past Due Delinquencies

0.97%

1.02%

1.08%

1.13%

1.08%

30+ Days Past Due Delinquencies

$10,286

$10,913

$11,803

$12,565

$12,354

60+ Days Past Due Delinquencies

0.56%

0.57%

0.65%

0.68%

0.67%

60+ Days Past Due Delinquencies

$5,952

$6,137

$7,100

$7,626

$7,686

Working Capital Loans

15+ Days Past Due Delinquencies

0.59%

1.17%

1.44%

1.41%

0.52%

15+ Days Past Due Delinquencies

$183

$394

$526

$605

$268

30+ Days Past Due Delinquencies

0.49%

1.06%

1.35%

0.66%

0.47%

30+ Days Past Due Delinquencies

$152

$357

$492

$284

$240

Notes and Footnotes:

(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.


MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)

Quarter Ended:

6/30/2018

9/30/2018

12/31/2018

3/31/2019

6/30/2019

Net Charge-offs - Total Finance Receivables

$4,306

$4,546

$5,578

$4,581

$4,861

% on Average Total Finance Receivables

Annualized

1.84%

1.90%

2.30%

1.83%

1.88%

Net Charge-offs - Equipment Finance

$3,851

$4,194

$5,132

$3,927

$4,310

% on Average Net Investment in Equipment Finance

Annualized

1.70%

1.81%

2.19%

1.64%

1.75%

Net Charge-offs - Working Capital Loans

$456

$352

$446

$654

$551

% of Average Working Capital Loans

Annualized

6.00%

4.42%

5.28%

6.72%

4.82%

Total Allowance for Credit Losses

$15,570

$15,917

$16,100

$16,882

$16,777

% of Total Finance Receivables

1.62%

1.65%

1.62%

1.66%

1.59%

% of 60+ Delinquencies

259.19%

254.92%

220.79%

221.37%

218.28%

Allowance for Credit Losses - Equipment Finance

$14,236

$14,498

$14,633

$15,198

$14,837

% of Net Investment Equipment Finance

1.53%

1.55%

1.52%

1.56%

1.47%

% of 60+ Delinquencies

239.18%

236.24%

206.10%

199.28%

193.03%

Allowance for Credit Losses - Working Capital Loans

$1,334

$1,419

$1,467

$1,684

$1,940

% of Total Working Capital Loans

4.32%

4.22%

4.02%

3.94%

3.79%

Non-accrual - Equipment Finance

$3,211

$3,392

$3,720

$4,390

$4,282

Non-accrual - Equipment Finance

0.30%

0.32%

0.34%

0.39%

0.37%

Non-accrual - Working Capital Loans

$147

$217

$492

$284

$248

Non-accrual - Working Capital Loans

0.48%

0.65%

1.35%

0.66%

0.48%

Non-accrual - Total Finance Receivables

$3,358

$3,609

$4,212

$4,674

$4,530

Non-accrual - Total Finance Receivables

0.31%

0.33%

0.37%

0.40%

0.38%

Restructured - Total Finance Receivables

$3,747

$3,456

$3,636

$3,363

$3,122

Expense Ratios:

Salaries and Benefits Expense

$9,527

$10,292

$9,908

$11,451

$12,469

Salaries and Benefits Expense

Annualized % of Avg. Fin. Recbl.

4.07%

4.30%

4.08%

4.58%

4.83%

Total personnel end of quarter

320

339

341

352

356

General and Administrative Expense

$6,449

$5,445

$6,450

$13,354

$6,068

General and Administrative Expense

Annualized % of Avg. Fin. Recbl.

2.76%

2.27%

2.66%

5.34%

2.35%

Adjusted General and Administrative Expense

Annualized % of Avg. Fin. Recbl. (3)

2.73%

2.25%

2.57%

2.75%

2.26%

Notes and Footnotes:

(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.


MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data
(Dollars in thousands, except share amounts)

Quarter Ended:

6/30/2018

9/30/2018

12/31/2018

3/31/2019

6/30/2019

Non-Interest Expense/Average Total Managed Assets

6.20%

5.88%

5.86%

8.42%

6.03%

Adjusted Non-Interest Expense/Average Total Managed Assets (4)

6.06%

5.46%

5.61%

6.14%

5.68%

Efficiency Ratio

55.56%

55.69%

53.11%

67.20%

59.07%

Adjusted Efficiency Ratio (4)

54.31%

51.70%

50.90%

57.80%

55.78%

Balance Sheet:

Assets

Investment in Leases and Loans

$959,452

$966,659

$996,384

$1,019,311

$1,057,726

Initial Direct Costs and Fees

19,227

19,683

20,456

20,761

21,322

Reserve for Credit Losses

(15,570)

(15,917)

(16,100)

(16,882)

(16,777)

Net Investment in Leases and Loans

$963,109

$970,425

$1,000,740

$1,023,190

$1,062,271

Cash and Cash Equivalents

99,227

88,448

97,156

140,942

139,731

Restricted Cash

-

10,049

14,045

13,174

8,152

Other Assets

50,975

57,811

55,105

69,409

69,829

Total Assets

$1,113,311

$1,126,733

$1,167,046

$1,246,725

$1,279,983

Liabilities

Deposits

863,568

700,107

755,776

840,167

888,561

Total Debt

-

174,519

150,055

129,171

109,637

Other Liabilities

60,101

58,564

62,704

75,737

76,231

Total Liabilities

$923,669

$933,190

$968,535

$1,045,075

$1,074,429

Stockholders' Equity

Common Stock

$124

$124

$124

$123

$123

Paid-in Capital, net

83,472

83,315

83,496

83,213

82,724

Other Comprehensive Income (Loss)

(73)

(149)

(44)

(4)

48

Retained Earnings

106,119

110,253

114,935

118,318

122,659

Total Stockholders' Equity

$189,642

$193,543

$198,511

$201,650

$205,554

Total Liabilities and

Stockholders' Equity

$1,113,311

$1,126,733

$1,167,046

$1,246,725

$1,279,983

Capital and Leverage:

Equity

$189,642

$193,543

$198,511

$201,650

$205,554

Debt to Equity

4.55

4.52

4.56

4.81

4.86

Equity to Assets

17.03%

17.18%

17.01%

16.17%

16.06%

Regulatory Capital Ratios:

Tier 1 Leverage Capital

17.04%

15.57%

16.38%

15.41%

15.24%

Common Equity Tier 1 Risk-based Capital

18.07%

17.46%

17.50%

17.25%

17.01%

Tier 1 Risk-based Capital

18.07%

17.46%

17.50%

17.25%

17.01%

Total Risk-based Capital

19.33%

18.72%

18.76%

18.50%

18.26%

Notes and Footnotes:

(1) COF is defined as interest expense for the period divided by average interest bearing liabilities, annualized.
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.
(4) Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

**Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans.