Marlin Business Services reported second quarter 2014 net income of $4.9 million compared to $4.5 million for second quarter 2013.
"New asset originations were up 20% this quarter," said Daniel P. Dyer, Co-Founder and Chief Executive Officer. "Our focus and attentiveness to delivering value to our customers, along with our disciplined operating approach, remain core elements to our profitable growth strategy. Favorable operating results and our confident outlook for the future led to the announced dividend increase to $0.125 per share this quarter," says Dyer.
Origination volume was $88.9 million, compared to $74.0 million for the quarter ended March 31, 2014, representing an increase of 20% over the first quarter of 2014. The yield on new originations for the quarter was 11.35% an increase of 8 basis points over the first quarter of 2014.
Selected Second Quarter Highlights:
- Net income of $4.9 million, up 10% year-over-year
- Origination volume increased 20% over the first quarter of 2014
- Return on average equity of 11.88% for the second quarter compared to 9.98% for the second quarter of 2013
- Risk adjusted net interest and fee margin of 11.24% for the quarter
Net interest and fee margin of 12.66% is down 39 basis points from the first quarter of 2014 and is down 70 basis points from the second quarter of 2013. The reduction from first quarter 2014 was driven by fee income and interest income. Fee income as a percentage of average total finance receivables is 2.30% for the quarter ended June 2014 compared to 2.50% in the first quarter of 2014 and 2.38% a year ago and is due to lower late fee billings. Interest income as a percentage of average finance receivables is 11.17% for the second quarter ended June 2014 compared to 11.35% in the first quarter of 2014 and 11.86% a year ago. The decrease in interest income is primarily due to the competitive low interest rate environment and its impact on origination yields in 2014.
The Company's cost of funds remained stable at 81 basis points, compared to 80 basis points for the first quarter of 2014, and improved 7 basis points from the second quarter of 2013. The improvement resulted from the Company's use of lower-cost insured deposits issued by the Company's subsidiary, Marlin Business Bank, its primary funding source.
The allowance for credit losses as a percentage of total finance receivables was 1.26% at June 30, 2014, and represents 218% of total 60+ day delinquencies.
Finance receivables over 30 days delinquent were 0.79% of the Company's lease portfolio as of June 30, 2014, 6 basis points lower than the first quarter of 2014 and 16 basis points lower than second quarter 2013. Finance receivables over 60 days delinquent were 0.51% of the Company's lease portfolio as of June 30, 2014, versus 0.50% at March 31, 2014.
Second quarter net charge-offs were 1.71% of total finance receivables up slightly from 1.38% of total finance receivables for the first quarter ended March 31, 2014 and 1.55% a year ago.
The Company's efficiency ratio was 50% for the quarter ended June 30, 2014 compared to 54% for the quarter ended March 31, 2014 and 53% for the quarter ended June 30, 2013.
The Company's consolidated equity to assets ratio is 22.9%. Our risk based capital ratio is 27.01%, which is well above regulatory requirements.
The Board of Directors of Marlin Business Services Corp. also declared a $0.125 per share quarterly dividend, a 13.6% increase over the prior quarter. The dividend is payable August 21, 2014, to shareholders of record on August 11, 2014. Based on the closing stock price on July 28, 2014, the annualized dividend yield on the Company's common stock is 2.70%.
To view the full Q2 2014 earnings release, click here.