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Marlin Reports Total First Quarter Originations Up 35% Over Q1 2015

April 29, 2016, 07:19 AM
Filed Under: Corporate Earnings

Marlin Business Services reported first quarter 2016 net income of $3.7 million compared to $4.1 million for first quarter 2015.  Return on equity for the quarter was 9.74%, up from 9.33% a year ago.

Edward Siciliano, Interim CEO and Chief Sales Officer, said, “The record origination growth the Company experienced in the first quarter demonstrates that our strategic investments in talent and new channels are beginning to pay off, and we expect this momentum to continue throughout the year.  I want to thank all Marlin employees for their hard work and dedication in the first quarter.”

First Quarter Financial Summary:

  • Total first quarter originations of $108.4 million, up 35% over Q1 2015
  • Total loan originations of $7.9 million, more than doubling Q4 2015 loan volume
  • Net income of $3.7 million with EPS of $0.29 per share
  • ROE increased 41 basis points from prior year to 9.74%  
  • Total loan and lease yield of 11.69% increased 30 basis points from prior quarter and 84 basis points from prior year
  • Credit quality remained strong with delinquencies at 85 basis points and 52 basis points for the 30+ day and 60+ day delinquencies, respectively
  • Net investment in leases and loans ended the quarter at $702.1 million, up 11.8% over Q1 2015
  • Strong capital position with equity to assets ratio of 19.03%

Strategic Business Highlights:

  • Second straight quarter of record origination volume with low credit losses
  • Surpassed $800 million in total assets
  • Record origination volume accelerated progress towards goal of generating additional fee income
  • Continued expansion of working capital loan product (Funding Stream), and Franchise and Transportation initiatives
  • Continued to realign operating and sales functions and invest in talent pool to support strategic goals

Combined lease and loan production for the first quarter ended March 31, 2016 of $108.4 million was the second consecutive quarter of record originations for the Company.  Historically, first quarter origination has been the softest of the year; however, 2016 first quarter lease production of $100.5 million was down only slightly from our record fourth quarter of $103.9 million and up 26% compared to the first quarter of 2015.  The company also experienced solid loan production in the first quarter of $7.9 million, up from $3.7 million in the fourth quarter of 2015. The strong performance in all channels was mainly attributable to a more focused marketing strategy, the deployment of a re-energized and optimized salesforce and strategic investments in the expansion of the Company’s origination platform.   

Net interest and fee margin as a percentage of average finance receivables was 11.58% for the first quarter ended March 31, 2016, up 6 basis points from the fourth quarter of 2015 and down 82 basis points from a year ago. The decrease in margin percentage from a year ago was a result of the roll-off of higher yielding assets, a decline in late fees and a slight increase in the Company’s cost of funds. The Company’s cost of funds increased to 100 basis points, compared to 98 basis points for the fourth quarter of 2015 and 85 basis points for the first quarter of 2015.

On an absolute basis, net interest and fee margin increased to $19.7 million for the quarter ended March 31, 2016, compared to $19.3 million for the quarter ended March 31, 2015.

Allowance for credit losses as a percentage of total finance receivables was 1.31% at March 31, 2016, and represented 223% coverage of total 60+ day delinquencies.  The allowance was 16 basis points lower than the March 31, 2015 allowance percentage of 1.47% and the coverage ratio was about the same as the coverage ratio a year ago.

Credit quality remained strong as finance receivables over 30 days delinquent were 0.85% of the Company’s total finance receivables portfolio as of March 31, 2016, down two basis points from March 31, 2015.  Finance receivables over 60 days delinquent were 0.52% of the Company’s total finance receivables portfolio as of March 31, 2016, down five basis points from 0.57% at March 31, 2015.  First quarter net charge-offs were 1.35% of average total finance receivables versus 1.70% a year ago.

The Company’s efficiency ratio for the first quarter was 58.2% compared to 52.4% for the quarter ended March 31, 2015.  The increase was a direct result of Marlin’s investments in new initiatives over the last year and the ratio is expected to improve as those initiatives gain traction.  

The Company’s consolidated equity to assets ratio and risk based capital ratio were 19.03% and 21.74%, respectively.

The Board of Directors of Marlin Business Services Corp. today declared a $0.14 per share quarterly dividend. The dividend is payable May 19, 2016, to shareholders of record on May 9, 2016. Based on the closing stock price on April 26, 2016, the annualized dividend yield on the Company’s common stock is 3.68%.

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