-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JPH7//cqZnNXQ9HhjwHrCNeHZbdRT1PG1+p7JZJ8lumKqGXH//KfOt19OTbVLUaQ +zImvuwjnJsopvqPJupL5w== 0001157523-05-001041.txt : 20050203 0001157523-05-001041.hdr.sgml : 20050203 20050203171712 ACCESSION NUMBER: 0001157523-05-001041 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050203 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050203 DATE AS OF CHANGE: 20050203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARLIN BUSINESS SERVICES CORP CENTRAL INDEX KEY: 0001260968 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 383686388 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50448 FILM NUMBER: 05574242 BUSINESS ADDRESS: STREET 1: 300 FELLOWSHIP ROAD CITY: MT. LAUREL STATE: NJ ZIP: 08054 BUSINESS PHONE: 8884799111 MAIL ADDRESS: STREET 1: 300 FELLOWSHIP ROAD CITY: MT. LAUREL STATE: NJ ZIP: 08054 FORMER COMPANY: FORMER CONFORMED NAME: MARLIN BUSINESS SERVICES INC DATE OF NAME CHANGE: 20030822 8-K 1 a4814983.txt MARLIN BUSINESS SERVICES 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): February 3, 2005 MARLIN BUSINESS SERVICES CORP. (Exact Name of Registrant Specified in Charter) Pennsylvania 000-50448 38-3686388 (State or Other (Commission File (I.R.S. Employer Jurisdiction of Number) Identification No.) Incorporation) 300 Fellowship Road Mount Laurel, NJ 08054 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (888) 479-9111 124 Gaither Drive, Suite 170 Mount Laurel, NJ 08054 (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. ---------------------------------------------- The Registrant issued a press release on February 3, 2005 announcing its results of operations for the fourth quarter and the year ended December 31, 2004. A copy of the press release is being furnished as Exhibit 99.1 to this report. The information in this Current Report, including the Exhibit hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission. Item 9.01. Financial Statements and Exhibits. ---------------------------------- (c) Exhibits. 99.1 Press Release issued by Marlin Business Services Corp. on February 3, 2005. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MARLIN BUSINESS SERVICES CORP. Date: February 3, 2005 By: /s/ Daniel P. Dyer --------------------------- Name: Daniel P. Dyer Title: Chief Executive Officer INDEX TO EXHIBITS 99.1 Press Release issued by Marlin Business Services Corp. on February 3, 2005. EX-99.1 2 a4814983ex991.txt PRESS RELEASE EXHIBIT 99.1 Marlin Business Services Corp. Reports Fourth Quarter and Year End 2004 Earnings MOUNT LAUREL, N.J.--(BUSINESS WIRE)--Feb. 3, 2005--Marlin Business Services Corp. (NASDAQ:MRLN) today reported net income of $3.7 million, or $0.31 per diluted share, for the quarter ended December 31, 2004 compared with a net income attributable to common shareholders of $1.0 million, or $0.14 per diluted share, in the same quarter of 2003. For the year ended December 31, 2004 net income was $13.8 million, or $1.18 per diluted share, compared with net income attributable to common shareholders of $1.2 million, or $0.35 per diluted share, for the year ended December 31, 2003. "We are quite pleased with our strong financial performance in 2004," said Dan Dyer, Chairman and CEO. "As a leading lender to businesses in the U.S., our mission is to deliver an exceptional customer service experience. Our success to date is a reflection of the commitment Marlin makes to the customers we serve." Marlin completed its initial public offering of common stock (IPO) on November 12, 2003. Certain non-recurring expenses and preferred dividends were recorded in 2003 and in prior periods which reduced net income attributable to common shareholders. A reconciliation between net income attributable to common shareholders in accordance with accounting principles generally accepted in the United States of America (GAAP) and pro forma net income for 2003 is provided in a table immediately following the 2003 Supplemental Quarterly Data included with this release. These charges ended in conjunction with the November IPO and associated corporate reorganization and therefore will not affect future reporting periods beginning in 2004. As a result, we believe the pro forma numbers for 2003 present a clearer and more comparable basis to review the company's fundamental financial performance. On a pro forma basis, net income for the three months and year ended December 31, 2003 was $2.6 million and $9.2 million, respectively. Highlights for the quarter ended December 31, 2004 include: -- For the quarter ended December 31, 2004, net income was $3.7 million, a 42.3% increase over the pro forma net income of $2.6 million for the quarter ended December 31, 2003. -- For the quarter ended December 31, 2004, diluted earnings per share were $0.31 per diluted share, a 19.2% increase over pro forma diluted earnings per share of $0.26 for the quarter ended December 31, 2003. -- Annualized returns on average equity and assets were 16.30% and 2.62%, respectively, for the quarter ended December 31, 2004. -- In December, the company relocated its New Jersey operations to a new 50,000 square foot office facility at 300 Fellowship Road, Mount Laurel, New Jersey. Asset Origination -- Based on initial equipment cost, lease production was $66.8 million in the fourth quarter of 2004 compared with $68.8 million in the third quarter of 2004. For the year ended December 31, 2004, lease production was $272.3 million, a 12.4% increase over $242.3 million for 2003. Net investment in leases grew to $492.9 million at December 31, 2004, an increase of 16.9% from $421.7 million at December 31, 2003. -- The weighted average implicit yield on new business was 13.71% for the quarter ended December 31, 2004 compared to 13.75% for the third quarter ended September 30, 2004. For the year ended December 31, 2004 the weighted average implicit yield on new business was 13.82% compared to 14.01% for the year 2003. -- Our end user customer base grew to more than 76,000 at December 31, 2004 compared with 66,000 as of year-end 2003. Credit Quality -- Net charge-offs totaled $2.5 million for the fourth quarter of 2004 compared to $2.2 million for the third quarter of 2004. The provision for credit losses was $2.5 million for the fourth quarter of 2004 compared to $2.7 million for the third quarter of 2004. -- On an annualized basis, net charge-offs were 2.09% of average net investment in leases during the fourth quarter of 2004 compared to 1.90% for the third quarter of 2004. For the year ended December 31, 2004 net charge-offs were 1.98% of average net investment in leases. Fourth quarter charge-offs were higher due in part to the charge-off of approximately $250,000 of specific accounts identified and reserved for in the third quarter. -- As of December 31, 2004, 0.78% of our total lease portfolio was 60 or more days delinquent, compared with 0.73% as of September 30, 2004. We have historically experienced higher delinquency levels in the fourth quarter. -- Allowance for credit losses was $6.1 million as of December 31, 2004, an approximate $31,000 increase over the prior quarter. Allowance for credit losses as a percentage of adjusted net investment in leases was 1.26% at December 31, 2004 compared to 1.28% as of September 30, 2004. The allowance for credit losses in the third quarter included the establishment of $250,000 of reserves for specific accounts that were charged off in the fourth quarter. -- In conjunction with this release, static pool loss statistics have been updated as supplemental information on the investor relation's section of our website at www.marlincorp.com. Net Interest and Fee Margin and Cost of Funds -- Based on the average net investment in leases, the net interest and fee margin was 12.41% for the quarter ended December 31, 2004, an increase of 37 basis points compared to 12.04% for the third quarter end September 30, 2004. Increased fee income and lower interest expense were the primary contributors to the improved fourth quarter margin. -- Fee income as a percentage of average net investment in leases was 3.88% for the quarter ended December 31, 2004 compared to 3.58% for the quarter ended September 30, 2004. Approximately half of the fourth quarter increase was attributed to additional fees for delinquent lease payments with the remainder of the increase primarily attributed to end of term income. -- Interest expense, as a percentage of average net investment in leases was 3.80% for the quarter ended December 31, 2004. This was a 17 basis point decrease from the 3.97% for the quarter ended September 30, 2004. The decrease reflects the fourth quarter investment in leases of the balance of $80.5 million prefunding proceeds from our third quarter term securitization. -- Interest expense as a percentage of weighted average borrowings was 4.02% for the fourth quarter ended December 31, 2004 compared to 3.81% for the third quarter of 2004. Borrowings in the fourth quarter were almost entirely comprised of higher cost fixed rate term financing following the successful completion of our sixth term securitization in the third quarter 2004. Operating Expenses -- Salaries and benefits expense was $4.2 million in the fourth quarter of 2004 compared to $3.5 million in the third quarter of 2004. Salaries and benefits expense was 3.6% as an annualized percentage of average net investment in leases for the fourth quarter of 2004 compared with 3.1% in the third quarter. Approximately $240,000 of the increase was for general salary and benefits expense due in part to increases in personnel and $290,000 of the quarterly increase related to year end accrued bonus payments. -- Other general and administrative expenses were $2.5 million for both the third and fourth quarters of 2004. Other general and administrative expenses as an annualized percentage of average net investment in leases were 2.12% for the fourth quarter of 2004 compared with 2.16% in the third quarter of 2004. Funding and Liquidity -- As of December 31, 2004 we have approximately $253 million of committed warehouse funding capacity and more than $16 million in available cash. -- We raised $234,000 in additional capital from the sale of 17,430 common shares through the Employee Stock Purchase Plan in the fourth quarter 2004. -- Our debt to equity ratio was 4.51:1 at December 31, 2004 compared to 5.27:1 at September 30, 2004. The decrease in the ratio is principally attributed to additional retained earnings and lower borrowings in the fourth quarter. Conference Call and Webcast We will host a conference call on Friday, February 4, 2005 at 9:00 a.m. ET to discuss our fourth quarter 2004 results. If you wish to participate, please call 877-407-8289 (International participants please use 201-689-8341) approximately 10 minutes in advance of the call time. The call will also be webcast on the Investor Relations page of the Marlin Business Services Corp. website, www.marlincorp.com. An audio replay will also be available on the Investor Relations section of Marlin's website for approximately 90 days. About Marlin Business Services Corp. Marlin Business Services Corp. is a nationwide provider of equipment leasing solutions primarily to small businesses. The company's principal operating subsidiary, Marlin Leasing Corporation, finances over 60 equipment categories in a segment of the market generally referred to as "small-ticket" leasing (i.e. leasing transactions less than $250,000). The company was founded in 1997 and completed its initial public offering of common stock on November 12, 2003. In addition to Mount Laurel, NJ, Marlin has regional offices in or near Atlanta, Chicago, Denver and Philadelphia. For more information, visit www.marlincorp.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 and Section 21E of the Securities Exchange Act of 1934. 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 SEC, 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. MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) December 31, December 31, 2004 2003 ------------ ------------ Assets Cash and cash equivalents $16,092 $29,435 Restricted cash 20,454 15,672 Net investment in direct financing leases 492,859 421,698 Property and equipment, net 3,555 2,413 Other assets 7,980 7,082 ------------ ------------ Total assets $540,940 $476,300 ============ ============ Liabilities and Shareholders' Equity Debt and secured borrowings $416,603 $378,900 Other liabilities: Lease obligation payable 329 630 Accounts payable and accrued expenses 12,367 10,539 Deferred income tax liability 19,343 10,799 ------------ ------------ Total liabilities 448,642 400,868 Shareholders' equity: Common Stock, $0.01 par value; 75,000 shares authorized; 11,528 and 11,214 shares issued and outstanding 115 112 Preferred Stock, $0.01 par value; 5,000 shares authorized; none issued and outstanding -- -- Additional paid-in capital 75,732 71,918 Stock subscription receivable (54) (213) Deferred compensation (1,380) (50) Net gains on cash flow hedges 374 -- Retained earnings 17,511 3,665 ------------ ------------ Total shareholders' equity 92,298 75,432 ------------ ------------ Total liabilities and shareholders' equity $540,940 $476,300 ============ ============ MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES Consolidated Statements of Operations (dollars in thousands, except per share amounts) Three-Months ended Year ended December 31, December 31, ------------------------- ------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Income: Interest and fee income $19,346 $15,511 $71,811 $56,950 Interest expense 4,532 4,810 16,675 18,069 ------------ ------------ ------------ ------------ Net interest and fee income 14,814 10,701 55,136 38,881 Provision for credit losses 2,525 2,136 9,953 7,965 ------------ ------------ ------------ ------------ Net interest and fee income after provision for credit losses 12,289 8,565 45,183 30,916 Insurance and other income 1,140 934 4,383 3,423 ------------ ------------ ------------ ------------ Operating income 13,429 9,499 49,566 34,339 Salaries and benefits 4,249 2,790 14,447 10,273 General and administrative 2,532 2,458 10,063 7,745 Financing related costs 487 452 2,055 1,604 Change in fair value of warrants -- 692 -- 5,723 ------------ ------------ ------------ ------------ Income before income taxes 6,161 3,107 23,001 8,994 Income taxes 2,502 1,503 9,155 5,816 ------------ ------------ ------------ ------------ Net Income 3,659 1,604 13,846 3,178 Preferred stock dividends -- 566 -- 2,006 ------------ ------------ ------------ ------------ Net income attributable to common shareholders $3,659 $1,038 $13,846 $1,172 ============ ============ ============ ============ Basic earnings per share: $0.32 $0.15 $1.22 $0.39 ============ ============ ============ ============ Diluted earnings per share: $0.31 $0.14 $1.18 $0.35 ============ ============ ============ ============ Shares used in computing basic earnings per share: 11,420,247 6,886,694 11,330,132 3,001,754 ============ ============ ============ ============ Shares used in computing diluted earnings per share: 11,798,968 7,355,133 11,729,703 3,340,968 ============ ============ ============ ============ SUPPLEMENTAL QUARTERLY DATA (dollars in thousands, except per share amounts) Quarter Ended: 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 -------- -------- -------- -------- -------- New Asset Production: # of Sales Reps 84 90 98 98 100 # of Leases 7,944 7,837 8,489 7,974 7,518 Equipment Volume $66,594 $66,146 $70,515 $68,849 $66,761 Average monthly sources 1,188 1,231 1,317 1,233 1,195 Implicit Yield on New Business 13.68% 13.75% 14.07% 13.75% 13.71% Interest Income Yield 12.43% 12.29% 12.30% 12.43% 12.33% Fee Income Yield 3.09% 3.32% 3.57% 3.58% 3.88% -------- -------- -------- -------- -------- Interest and Fee Income Yield 15.52% 15.61% 15.87% 16.01% 16.21% Cost of Funds 4.81% 3.74% 3.28% 3.97% 3.80% -------- -------- -------- -------- -------- Net interest and Fee Margin 10.71% 11.87% 12.59% 12.04% 12.41% ======== ======== ======== ======== ======== Average Net Investment in Leases $399,755 $420,702 $442,372 $462,090 $477,557 Portfolio Asset Quality: 60+ Days Past Due Delinquencies % 0.74% 0.66% 0.66% 0.73% 0.78% 60+ Days Past Due Delinquencies $ $3,629 $3,383 $3,540 $4,067 $4,453 Net Charge-offs $1,822 $2,078 $2,137 $2,198 $2,495 % on Average Net Investment in Leases Annualized 1.82% 1.98% 1.93% 1.90% 2.09% Allowance for Credit Losses $5,016 $5,261 $5,569 $6,031 $6,062 % of 60+ Delinquencies 138.2% 155.5% 157.3% 148.3% 136.1% 90+ Day Delinquencies (Non-earning) $1,504 $1,422 $1,569 $1,722 $1,944 Balance Sheet Assets Investment in Direct Financing Leases $411,989 $430,393 $451,844 $470,039 $482,948 Initial Direct Costs and Fees 14,725 15,299 15,684 16,127 15,973 Reserve for Credit Losses (5,016) (5,261) (5,569) (6,031) (6,062) -------- -------- -------- -------- -------- Net Investment in Leases $421,698 $440,431 $461,959 $480,135 $492,859 Cash and Cash Equivalents 29,435 7,528 12,686 66,774 16,092 Restricted Cash 15,672 18,566 18,257 19,505 20,454 Other Assets 9,495 14,446 10,580 11,521 11,535 -------- -------- -------- -------- -------- Total Assets $476,300 $480,971 $503,482 $577,935 $540,940 ======== ======== ======== ======== ======== Liabilities Total Debt $378,900 $375,769 $390,271 $459,681 $416,603 Other Liabilities 21,968 26,213 29,412 30,953 32,039 -------- -------- -------- -------- -------- Total Liabilities $400,868 $401,982 $419,683 $490,634 $448,642 SUPPLEMENTAL QUARTERLY DATA - continued (dollars in thousands, except per share amounts) Quarter Ended: 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 -------- ------- ------- ------- -------- Shareholders' Equity Common Stock $112 $114 $115 $115 $115 Paid-in Capital, net 71,655 72,042 73,304 73,822 74,298 Net gain (losses) on cash flow hedges -- -- -- (488) 374 Retained Earnings 3,665 6,833 10,380 13,852 17,511 ------ ------ ------ ------ ------ Total Shareholders' Equity $75,432 $78,989 $83,799 $87,301 $92,298 Total Liabilities and Shareholders' Equity $476,300 $480,971 $503,482 $577,935 $540,940 ======== ======== ======== ======== ======== Capital and Leverage: Tangible Equity $75,432 $78,989 $83,799 $87,301 $92,298 Debt to Tangible Equity 5.02 4.76 4.66 5.27 4.51 Expense Ratios: Salaries and Benefits Expense $2,790 $3,233 $3,428 $3,538 $4,249 Salaries and Benefits Expense annualized % of Avg. Net Investment 2.79% 3.07% 3.10% 3.06% 3.56% Total personnel end of quarter 237 248 264 265 273 General and Administrative Expense $2,458 $2,298 $2,742 $2,490 $2,532 General and Administrative Expense annualized % of Avg. Net Investment 2.46% 2.18% 2.48% 2.16% 2.12% Efficiency Ratio 45.11% 40.75% 41.32% 40.03% 42.51% Net Income: Net Income $1,604 $3,168 $3,547 $3,471 $3,659 Preferred Dividends (566) NA NA NA NA ------ ------ ------ ------ ------ Net Income attributable to common $1,038 $3,168 $3,547 $3,471 $3,659 Per Share Data: Number of Shares - Diluted 7,355,133 11,660,498 11,676,895 11,728,015 11,798,968 EPS- Diluted $0.14 $0.27 $0.30 $0.30 $0.31 Pro Forma Number of Shares - Diluted (a) 10,022,957 NA NA NA NA Pro Forma Diluted Earnings Per Share $0.26 NA NA NA NA (a) Pro forma shares outstanding assume conversion of convertible preferred stock and the exercise of warrants outstanding. The preferred stock and warrants were exercised into common shares in conjunction with the company's IPO in November 2003. MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES Pro Forma 2003 Financial Information (dollars in thousands, except per share amounts) Quarter Ended: 3/31/03 6/30/03 9/30/03 12/31/03 ------- ------- ------- -------- Net income (loss) attributable to common shareholders per GAAP $(198) $(36) $371 $1,038 Change in fair value of warrants 1,773 1,841 1,416 692 Preferred stock dividends 473 480 487 566 Unamortized discount expensed on payoff of subordinated debt, net of tax -- -- -- 270 ------ ------ ------ ------ Pro forma Net Income $2,048 $2,285 $2,274 $2,566 ====== ====== ====== ====== Pro forma average diluted shares outstanding 7,817,269 7,965,277 8,021,402 10,022,957 Pro forma diluted earnings per share $0.26 $0.29 $0.28 $0.26 In conjunction with its November 2003 IPO, Marlin's capital structure was simplified into one class of outstanding common stock. All previously outstanding warrants and convertible preferred stock were exercised and converted to common stock. Prior to the IPO, warrants outstanding were recorded as a liability and periodically marked to their fair market value with increases in value causing current period expense. This non-cash expense was $5.7 million for the year ended 2003. Upon the exercise of the warrants to common stock, the warrant liability was reclassified to shareholders equity. Similarly, all outstanding convertible preferred stock converted to common stock at the time of the IPO. The pro forma adjustments above reflect the exercise of the warrants and conversion of the preferred stock and the add back of the expenses and dividends associated with each in the pre-IPO periods. Pursuant to GAAP, these adjustments are anti-dilutive and, therefore, not reported in diluted earnings per share calculations. CONTACT: Marlin Business Services Corp. Bruce E. Sickel, 888-479-9111 x4108 -----END PRIVACY-ENHANCED MESSAGE-----