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Marlin Wraps Up 2017 with Strong Q4, Hits Record Origination Volume

February 02, 2018, 07:19 AM
Filed Under: Corporate Earnings

Marlin Business Services reported fourth quarter 2017 net income of $15.9 million compared to net income of $4.8 million for the fourth quarter last year. Fourth quarter 2017 earnings included an impact of a net tax benefit resulting from the Tax Cuts and Jobs Act of 2017. Excluding the impact of this and other non-recurring items, fourth quarter net income on an adjusted basis was $5.9 million compared with $4.8 million a year ago.

For the year ended December 31, 2017, net income was $25.3 million up from $17.3 million in 2016. For the year ended December 31, 2017, adjusted net income was $18.9 million.

Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “Marlin wrapped-up 2017 with a strong fourth quarter highlighted by record origination volume, improved portfolio performance and excellent earnings growth. Total fourth quarter sourced origination volume of $186.5 million was an all-time record for a single quarter and increased 16% from the prior quarter and 23% from the fourth quarter last year. The growth was primarily driven by strong customer demand in our Equipment Finance business. In addition, our working capital loan product, Funding Stream, continued to make a meaningful contribution with fourth quarter origination volume of $16.5 million, or nearly 9% of total sourced originations. This is up from $11.3 million, or 7%, of total sourced originations a year ago. We have now originated over $100 million of Funding Stream loans since the product was introduced in 2015, and we are very pleased with both the growing demand for this product and Funding Stream’s portfolio performance, which continues to exceed our expectations. I am also pleased with the early success of our Direct origination initiative, which identifies additional financing opportunities within our existing customer base.  During the quarter, direct origination volume increased to $26.9 million, an increase of 63% over last quarter and 42% over the fourth quarter last year. Also in the quarter, we referred or sold a combined $42.5 million of leases and loans as part of Marlin’s ongoing capital markets activities. As a combined result of these origination and capital markets activities, our Investment in Leases and Loans grew to a record $911.2 million, up more than 3% compared to the previous quarter and up 15% from a year ago.”

Hilzinger continued, “During the quarter, we took swift action to proactively address trends that were beginning to impact the performance of our portfolio.  These efforts included a strategic pivot within our Transportation channel to focus on financing transportation equipment used by small businesses rather than equipment used by transportation companies. Fourth quarter 30+ and 60+ day delinquencies improved sequentially for the first time in six quarters due primarily to an increase in our collection resources. Excluding charge-offs from the Transportation channel, the portfolio in 2017 continued to perform in a range that was consistent with what we have seen over the past four years and, in the near term, we expect our portfolio performance to continue to be stable and remain within our targeted range.”

Hilzinger concluded, “The tax reform legislation recently passed by Congress has resulted in greater economic optimism among our small business customers, which we expect will result in an increasing demand for equipment and working capital in the future. At the same time, the lower tax rate will significantly improve our earnings power and create a more rapid accumulation of capital which will broaden our strategic options, potentially including enhanced organic growth, M&A opportunities and the return of additional capital to shareholders. Moving forward, our momentum continues to build, and I am very confident in our ability to continue driving profitable growth as we look ahead to 2018 and beyond.”

To read the full release, click here.

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