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Marlin: Q3 Total Sourced Origination Volume Up 12.3% Y/Y, Direct Origination Volume Up 17.2%

November 01, 2019, 07:20 AM
Filed Under: Corporate Earnings

Marlin reported third quarter 2019 net income of $7.4 million, compared with $5.9 million a year ago. Third quarter 2019 net income on an adjusted basis was $7.4 million, compared with $6.4 million a year ago.

Commenting on the company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “We delivered strong growth in earnings and double-digit growth in total sourced origination volume on a year-over-year basis. While there was only a modest increase in net charge-offs during the quarter, earnings growth was tempered by an increase in our allowance for credit losses due to an increase in delinquencies and a $936,000 specific provision related to fraudulent activities within a specific equipment dealer’s portfolio.”

Hilzinger continued, “While lease and loan application volume was up by more than 20 percent, growth in origination volume was below expectations in both the equipment finance and working capital loan products as our approval and booking rates declined during the quarter. However, our capital markets execution was better than anticipated because we took advantage of favorable capital markets conditions and sold more loans and leases than expected given that our origination mix was skewed towards lower-yielding origination flows. As a result of these origination and capital markets activities, our net investment in leases and loans stood at $1.035 billion at quarter-end, up 6.6 percent from a year ago.”

Third Quarter Summary

  • Net income of $7.4 million, up 26.1 percent from $5.9 million, and up from $6.1 million last quarter.
  • Total sourced origination volume of $201.6 million, up 12.3 percent year-over-year; direct origination volume of $41.6 million, up 17.2 percent year-over-year; year-to-date through the end of the third quarter, total sourced originations of $641.4 million are up 22.6 percent from the same period last year.
  • Net Investment in leases and loans totaled $1.0 billion, up 6.6 percent from a year ago, and total managed assets ended the third quarter at $1.3 billion, up 18.2 percent from a year ago.
  • Total origination yield of 13.38 percent, up 43 basis points from the prior quarter and up 61 basis points year-over-year.
  • Annualized net charge-offs of 1.99 percent, compared with 1.88 percent in the prior quarter and 1.90 percent in the third quarter last year.
  • Net interest and fee margin as a percentage of average finance receivables of 9.55 percent, up 17 basis points from the prior quarter and down 39 basis points year-over-year.

Hilzinger concluded, “Overall credit quality remains acceptable and we are proactively managing the credit performance of the portfolio while continuing to grow prudently. Importantly, we are also realizing the expected cost savings from the reorganization we implemented last quarter and still expect strong earnings growth this year and we expect that momentum to continue next year.  Overall, the fundamentals of our business remain very strong and we continued to make good progress on both our near-term profitability and longer-term strategic objectives during the quarter.”

Business Outlook
The company’s guidance for the full year ending December 31, 2019 as follows:

  • Total Sourced Origination volume is expected to finish approximately 20 percent above 2018 levels
  • Total asset sales are now expected to be between $295 million and $305 million as the company continues to integrate the acquisition of Fleet Financing Resources and execute loan and lease syndications. Marlin expects to achieve an immediate gain on sale margin of 6.0 percent to 7.0 percent.
  • Delinquencies and net charge-offs are expected to remain at the higher end of its expected range.
  • Net interest and fee margin, as a percentage of average finance receivables, is expected to be between 9.5 percent and 10.0 percent

For more information, see the full release here.

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