10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2016

Commission file number 000-50448

MARLIN BUSINESS SERVICES CORP.

(Exact name of registrant as specified in its charter)

Pennsylvania	38-3686388
(State of incorporation)	(I.R.S. Employer Identification Number)

300 Fellowship Road, Mount Laurel, NJ 08054

(Address of principal executive offices)

(Zip code)

(888) 479-9111

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files.)    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  ☐    No  ☒

At October 25, 2016, 12,564,606 shares of Registrant’s common stock, $.01 par value, were outstanding.

MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES

Quarterly Report on Form 10-Q

for the Quarter Ended September 30, 2016

TABLE OF CONTENTS

		Page No.
Part I – Financial Information			3
Item 1	Condensed Consolidated Financial Statements (Unaudited)		3
	Condensed Consolidated Balance Sheets at September 30, 2016 and December 31, 2015		3
	Condensed Consolidated Statements of Operations for the three-and nine- month periods ended September 30, 2016 and 2015		4
	Condensed Consolidated Statements of Comprehensive Income for the three-and nine- month periods ended September 30, 2016 and 2015		5
	Condensed Consolidated Statements of Stockholders’ Equity for the nine-month period ended September 30, 2016 and the year ended December 31, 2015		6
	Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2016 and 2015		7
	Notes to Unaudited Condensed Consolidated Financial Statements		8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3	Quantitative and Qualitative Disclosures about Market Risk		53
Item 4	Controls and Procedures		53
Part II – Other Information			53
Item 1	Legal Proceedings		53
Item 1A	Risk Factors		53
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		54
Item 3	Defaults upon Senior Securities		54
Item 4	Mine Safety Disclosures		54
Item 5	Other Information		54
Item 6	Exhibits		55
Signatures			56
Certifications

PART I. Financial Information

Item 1. Condensed Consolidated Financial Statements

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
	2016			2015
	(Dollars in thousands, except per-share data)
ASSETS
Cash and due from banks	$	3,850		$	4,946
Interest-earning deposits with banks		73,775			55,183
Total cash and cash equivalents		77,625			60,129
Time deposits with banks		9,107			7,368
Restricted interest-earning deposits with banks		—			216
Securities available for sale (amortized cost of $6.1 million and $6.6 million at September 30, 2016 and December 31, 2015, respectively)		6,075			6,399
Net investment in leases and loans:
Net investment in leases and loans, excluding allowance for credit losses		769,495			690,845
Allowance for credit losses		(10,073	)		(8,413	)
Total net investment in leases and loans		759,422			682,432
Property and equipment, net		3,624			3,872
Property tax receivables		5,415			47
Other assets		7,733			12,521
Total assets	$	869,001		$	772,984
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	676,920		$	587,940
Other liabilities:
Sales and property taxes payable		5,137			2,686
Accounts payable and accrued expenses		13,814			15,371
Net deferred income tax liability		14,462			16,849
Total liabilities		710,333			622,846
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued		—			—
Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,564,761 and 12,410,899 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively		126			124
Additional paid-in capital		82,892			81,703
Stock subscription receivable		(2	)		(2	)
Accumulated other comprehensive loss		(5	)		(129	)
Retained earnings		75,657			68,442
Total stockholders’ equity		158,668			150,138
Total liabilities and stockholders’ equity	$	869,001		$	772,984

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

-3-

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(Dollars in thousands, except per-share data)
Interest income	$	18,803	$	16,690	$	54,521	$	49,665
Fee income		3,944		3,915		11,747		11,762
Interest and fee income		22,747		20,605		66,268		61,427
Interest expense		2,055		1,433		5,604		4,087
Net interest and fee income		20,692		19,172		60,664		57,340
Provision for credit losses		3,137		1,986		8,880		7,542
Net interest and fee income after provision for credit losses		17,555		17,186		51,784		49,798
Other income:
Insurance premiums written and earned		1,567		1,470		4,759		4,294
Other income		1,065		572		2,013		1,336
Other income		2,632		2,042		6,772		5,630
Other expense:
Salaries and benefits		7,817		7,058		23,829		21,290
General and administrative		4,980		4,357		14,073		12,780
Financing related costs		17		34		85		184
Other expenses		12,814		11,449		37,987		34,254
Income before income taxes		7,373		7,779		20,569		21,174
Income tax expense		3,028		2,982		8,105		8,173
Net income	$	4,345	$	4,797	$	12,464	$	13,001
Basic earnings per share	$	0.35	$	0.38	$	1.00	$	1.01
Diluted earnings per share	$	0.35	$	0.38	$	1.00	$	1.01
Cash dividends declared per share	$	0.14	$	2.14	$	0.42	$	2.39

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

-4-

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Net income	$	4,345		$	4,797		$	12,464		$	13,001
Other comprehensive income (loss):
Increase (decrease) in fair value of securities available for sale		28			78			200			(15	)
Tax effect		(11	)		(30	)		(76	)		5
Total other comprehensive income (loss)		17			48			124			(10	)
Comprehensive income	$	4,362		$	4,845		$	12,588		$	12,991

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

-5-

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

													Accumulated
				Common			Additional			Stock			Other						Total
	Common			Stock			Paid-In			Subscription			Comprehensive			Retained			Stockholders’
	Shares			Amount			Capital			Receivable			Income (Loss)			Earnings			Equity
	(Dollars in thousands)
Balance, December 31, 2014		12,838,449		$	128		$	89,130		$	(2	)	$	(17	)	$	84,725		$	173,964
Issuance of common stock		14,929			—			234			—			—			—			234
Repurchase of common stock		(659,903	)		(7	)		(11,313	)		—			—			—			(11,320	)
Exercise of stock options		61,937			1			585			—			—			—			586
Excess tax benefits from stock-based payment arrangements		—			—			333			—			—			—			333
Stock option compensation recognized		—			—			108			—			—			—			108
Restricted stock grant, net of forfeitures		155,487			2			(2	)		—			—			—			—
Restricted stock compensation recognized		—			—			2,628			—			—			—			2,628
Net change in unrealized gain/loss on securities available for sale, net of tax		—			—			—			—			(112	)		—			(112	)
Net income		—			—			—			—			—			15,966			15,966
Cash dividends declared		—			—			—			—			—			(32,249	)		(32,249	)
Balance, December 31, 2015		12,410,899		$	124		$	81,703		$	(2	)	$	(129	)	$	68,442		$	150,138
Issuance of common stock		7,981			—			122			—			—			—			122
Repurchase of common stock		(22,673	)		—			(330	)		—			—			—			(330	)
Exercise of stock options		6,880			—			71			—			—			—			71
(Deficit) tax benefits from stock-based payment arrangements		—			—			(86	)		—			—			—			(86	)
Restricted stock grant, net of forfeitures		161,674			2			(2	)		—			—			—			—
Restricted stock compensation recognized		—			—			1,414			—			—			—			1,414
Net change in unrealized gain/loss on securities available for sale, net of tax		—			—			—			—			124			—			124
Net income		—			—			—			—			—			12,464			12,464
Cash dividends declared		—			—			—			—			—			(5,249	)		(5,249	)
Balance, September 30, 2016		12,564,761		$	126		$	82,892		$	(2	)	$	(5	)	$	75,657		$	158,668

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

-6-

MARLIN BUSINESS SERVICES CORP.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	12,464		$	13,001
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,360			1,214
Stock-based compensation		1,414			1,548
Excess tax (benefits) deficit from stock-based payment arrangements		86			(323	)
Provision for credit losses		8,880			7,542
Net deferred income taxes		(2,482	)		(1,975	)
Amortization of deferred initial direct costs and fees		6,275			5,575
Deferred initial direct costs and fees		(8,539	)		(6,150	)
Loss on equipment disposed		574			300
Gain on leases sold		(198	)		—
Leases originated for sale		(625	)		—
Proceeds from sale of leases		6,775			—
Effect of changes in other operating items:
Other assets		(962	)		521
Other liabilities		898			2,011
Net cash provided by operating activities		25,920			23,264
Cash flows from investing activities:
Net change in time deposits with banks		(1,739	)		(7,368	)
Purchases of equipment for direct financing lease contracts and funds used to originate loans		(357,686	)		(276,915	)
Principal collections on leases and loans		265,450			237,671
Security deposits collected, net of refunds		(549	)		(281	)
Proceeds from the sale of equipment		2,651			2,512
Acquisitions of property and equipment		(800	)		(2,127	)
Change in restricted interest-earning deposits with banks		216			322
Purchases of securities available for sale, net		525			(341	)
Net cash (used in) investing activities		(91,932	)		(46,527	)
Cash flows from financing activities:
Net change in deposits		88,980			29,506
Issuances of common stock		122			121
Repurchases of common stock		(330	)		(7,706	)
Dividends paid		(5,249	)		(5,005	)
Exercise of stock options		71			586
Excess tax benefits (deficit) from stock-based payment arrangements		(86	)		323
Net cash provided by financing activities		83,508			17,825
Net (decrease) increase in total cash and cash equivalents		17,496			(5,438	)
Total cash and cash equivalents, beginning of period		60,129			110,656
Total cash and cash equivalents, end of period	$	77,625		$	105,218
Supplemental disclosures of cash flow information:
Cash paid for interest on deposits and borrowings	$	5,201		$	3,647
Net cash paid for income taxes	$	5,534		$	9,340

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

-7-

MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – The Company

Description

Marlin Business Services Corp. (the “Company”) is a bank holding company and a financial holding company regulated by the Federal Reserve Board under the Bank Holding Company Act. The Company was incorporated in the Commonwealth of Pennsylvania on August 5, 2003. Through its principal operating subsidiary, Marlin Leasing Corporation (“MLC”), the Company provides equipment financing solutions nationwide, primarily to small and mid-sized businesses in a segment of the equipment leasing market commonly referred to in the industry as the “small-ticket” segment. The Company finances over 100 categories of commercial equipment important to its end user customers, including copiers, security systems, computers, telecommunications equipment and certain commercial and industrial equipment. In May 2000, we established AssuranceOne, Ltd., a Bermuda-based, wholly-owned captive insurance subsidiary (“AssuranceOne”), which enables us to reinsure the property insurance coverage for the equipment financed by MLC and Marlin Business Bank (“MBB”) for our end user customers. Effective March 12, 2008, the Company opened MBB, a commercial bank chartered by the State of Utah and a member of the Federal Reserve System. MBB serves as the Company’s primary funding source through its issuance of Federal Deposit Insurance Corporation (“FDIC”)-insured deposits.

References to the “Company,” “Marlin,” “Registrant,” “we,” “us” and “our” herein refer to Marlin Business Services Corp. and its wholly-owned subsidiaries, unless the context otherwise requires.

NOTE 2 – Summary of Critical Accounting Policies

Basis of financial statement presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. MLC and MBB are managed together as a single business segment and are aggregated for financial reporting purposes as they exhibit similar economic characteristics, share the same leasing portfolio and have one product offering. All intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements present fairly the Company’s financial position at September 30, 2016 and the results of operations for the three-and nine-month periods ended September 30, 2016 and 2015, and cash flows for the nine-month periods ended September 30, 2016 and 2015. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and note disclosures included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 4, 2016. The consolidated results of operations for the three-and nine-month periods ended September 30, 2016 and 2015 and the consolidated statements of cash flows for the nine-month periods ended September 30, 2016 and 2015 are not necessarily indicative of the results of operations or cash flows for the respective full years or any other period.

Insurance Premiums Written and Earned

Insurance premiums written and earned are recognized over the term of the policy, which is month to month. Since the policy’s premiums are recognized month to month, there is no unearned premium on the Consolidated Balance Sheets as these are fully recognized through the Consolidated Statements of Operations in the month written. For all annual and interim periods, second quarter 2016 and prior, income and expense related to insurance premiums written and earned, insurance policy fees, deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses is recorded within the “Insurance premium written and earned” line on the Consolidated Statement of Operations. Effective third quarter 2016 on a prospective basis, only insurance premium written and earned was recorded to that line. Effective third quarter 2016, on a prospective basis, insurance policy fees were recorded to “Other income” and deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses were recorded in “General and administrative” expense. For the years ended December 31, 2015 and 2014, insurance premiums written and earned were $5.5 million and $5.0 million, respectively. For the nine months ended September 30, 2016, insurance premiums written and earned were $4.6 million.

-8-

Other Income

Other income includes various administrative transaction fees, insurance policy fees, fees received from referral of leases to third parties and gain on sale of leases, recognized as earned. Effective third quarter 2016, on a prospective basis, the insurance policy fees are recognized in the Consolidated Statements of Operations in “Other income” and for all previous annual and interim periods are recorded net in “Insurance premiums written and earned.”

Insurance Program Deferred Acquisition Costs

Deferred acquisitions costs represent the fees paid to a third-party insurance company. Effective third quarter 2016, on a prospective basis, the costs are recognized on the Consolidated Statements of Operations in “General and administrative” expense and for all previous annual and interim periods and were recognized net in “Insurance premiums written and earned.” For each of the years ended December 31, 2015, 2014 and 2013, the Company recognized deferred acquisition costs of less than $0.8 million. For the nine months ended September 30, 2016, the Company recognized $0.5 million of deferred acquisition costs. Since the policy’s premiums are recognized on a month to month basis, there is no deferred acquisition costs on the Consolidated Balance Sheets as these are fully recognized through the Consolidated Statements of Operations in the month written.

Provision for Unpaid Losses and Loss Adjustment Expenses

The Company records a provision for insurance losses and loss adjustment expenses. Effective third quarter 2016, on a prospective basis, the expense was recorded in “General and administrative” expense on the Consolidated Statement of Operations and for all previous annual and interim periods is recorded net in “Insurance premiums written and earned.” The liability for losses and loss adjustment expenses includes an amount determined from loss reports and individual cases and an amount, based on historical loss experience and industry statistics, for losses incurred but not reported (“IBNR”). These estimates are continually reviewed and are subject to the impact of future changes in such factors as claim severity and frequency. Loss and loss expenses are paid when advised by the third-party insurance company. Outstanding losses comprise estimates of the amount of reported losses and loss expenses received from the third-party insurance company plus a provision for losses IBNR. IBNR is determined with the assistance of a third-party actuary. For each of the years ended December 31, 2015, 2014, and 2013, the Company recognized provision for unpaid losses and loss adjustment expenses of less than $0.4 million. For the nine month period ended September 30, 2016, the Company recognized provision for unpaid loss and loss adjustment expense of less than $0.5 million.

There have been no other significant changes to our Critical Accounting Policies as described in our 2015 Annual Report on Form 10-K.

Recent Accounting Pronouncements.

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). The amendments in this Update provide guidance on eight specific cash flow issues. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will apply the amendments in this Update retrospectively to each period presented. The Company is evaluating the impact of this new requirement on the consolidated earnings, financial position and cash flows of the Company.

-9-

NOTE 3 – Net Investment in Leases and Loans

Net investment in leases and loans consists of the following:

	September 30,			December 31,
	2016			2015
	(Dollars in thousands)
Minimum lease payments receivable	$	832,507		$	761,694
Estimated residual value of equipment		26,908			27,364
Unearned lease income, net of initial direct costs and fees deferred		(111,536	)		(102,358	)
Security deposits		(1,659	)		(2,208	)
Commercial loans, net of origination costs and fees deferred
Funding Stream		16,253			5,115
Other (1)		7,022			1,238
Total commercial loans		23,275			6,353
Allowance for credit losses		(10,073	)		(8,413	)
	$	759,422		$	682,432

⁽¹⁾  Other loans are comprised of loans by MBB to satisfy its obligations under the Community Reinvestment Act of 1977 and other commercial loans.

At September 30, 2016, $31.1 million in net investment in leases are pledged as collateral for the secured borrowing capacity at the Federal Reserve Discount Window.

Initial direct costs net of fees deferred were $13.1 million and $11.0 million as of September 30, 2016 and December 31, 2015, respectively. Initial direct costs are netted in unearned income and are amortized to income using the effective interest method. Origination costs net of fees deferred were $0.3 million and $0.1 million as of September 30, 2016 and December 31, 2015, respectively. Origination costs are netted in commercial loans and are amortized to income using the effective interest method. At September 30, 2016 and December 31, 2015, $22.5 million and $22.7 million, respectively, of the estimated residual value of equipment retained on our Condensed Consolidated Balance Sheets was related to copiers.

Minimum lease payments receivable under lease contracts and the amortization of unearned lease income, including initial direct costs and fees deferred, are as follows as of September 30, 2016:

	Minimum Lease
	Payments		Income
	Receivable		Amortization
	(Dollars in thousands)
Period Ending December 31,
2016	$	90,463	$	17,028
2017		315,763		49,007
2018		213,328		26,904
2019		126,128		12,788
2020		66,113		4,841
Thereafter		20,712		968
	$	832,507	$	111,536

-10-

As of September 30, 2016 and December 31, 2015, the Company maintained total finance receivables which were on a non-accrual basis of $2.0 million and $1.7 million, respectively. As of September 30, 2016, there were $0.2 million of commercial loans on a non-accrual basis. As of December 31, 2015, there were no commercial loans on a non-accrual basis. As of September 30, 2016 and December 31, 2015, the Company had total finance receivables in which the terms of the original agreements had been renegotiated in the amount of $0.4 million and $0.5 million, respectively. As of September 30, 2016, there were less than $0.1 million of commercial loans that had been renegotiated. As of December 31, 2015, there were no commercial loans that had been renegotiated. (See Note 4 for income recognition on leases and loans and additional asset quality information.)

-11-

NOTE 4 – Allowance for Credit Losses

In accordance with the Contingencies Topic of the FASB ASC, we maintain an allowance for credit losses at an amount sufficient to absorb losses inherent in our existing lease and loan portfolios as of the reporting dates based on our estimate of probable net credit losses.

The table which follows provides activity in the allowance for credit losses and asset quality statistics.

			Three Months Ended						Nine Months Ended						Year Ended
			September 30,						September 30,						December 31,
			2016			2015			2016			2015			2015
			(Dollars in thousands)
Allowance for credit losses, beginning of period			$	9,430		$	8,567		$	8,413		$	8,537		$	8,537
Charge-offs				(3,062	)		(2,595	)		(9,060	)		(9,196	)		(12,453	)
Recoveries				568			630			1,840			1,705			2,334
Net charge-offs				(2,494	)		(1,965	)		(7,220	)		(7,491	)		(10,119	)
Provision for credit losses				3,137			1,986			8,880			7,542			9,995
Allowance for credit losses, end of period	(1	)	$	10,073		$	8,588		$	10,073		$	8,588		$	8,413
Annualized net charge-offs to average total finance receivables	(2	)		1.36	%		1.23	%		1.36	%		1.59	%		1.59	%
Allowance for credit losses to total finance receivables, end of period	(2	)		1.33	%		1.31	%		1.33	%		1.31	%		1.24	%
Average total finance receivables	(2	)	$	732,346		$	641,020		$	705,879		$	630,073		$	636,790
Total finance receivables, end of period	(2	)	$	756,144		$	657,143		$	756,144		$	657,143		$	679,738
Delinquencies greater than 60 days past due			$	3,885		$	3,186		$	3,885		$	3,186		$	3,163
Delinquencies greater than 60 days past due	(3	)		0.45	%		0.43	%		0.45	%		0.43	%		0.41	%
Allowance for credit losses to delinquent accounts greater than 60 days past due	(3	)		259.28	%		269.55	%		259.28	%		269.55	%		265.98	%
Non-accrual leases and loans, end of period			$	2,022		$	1,684		$	2,022		$	1,684		$	1,677
Renegotiated leases and loans, end of period			$	350		$	468		$	350		$	468		$	535

⁽¹⁾  At September 30, 2016, December 31, 2015, and September 30, 2015 the allowance for credit losses allocated to loans was $0.7 million, $0.2 million, and less than $0.1 million, respectively.

⁽²⁾  Total finance receivables include net investment in direct financing leases and loans. For purposes of asset quality and allowance calculations, the effects of (i) the allowance for credit losses and (ii) initial direct costs and fees deferred are excluded.

⁽³⁾  Calculated as a percent of total minimum lease payments receivable for leases and as a percent of principal outstanding for loans.

Net investments in finance receivables are generally charged-off when they are contractually past due for 120 days or more. Income recognition is discontinued on leases or loans when a default on monthly payment exists for a period of 90 days or more. Income recognition resumes when a lease or loan becomes less than 90 days delinquent. At September 30, 2016, December 31, 2015 and September 30, 2015, there were no finance receivables past due 90 days or more and still accruing.

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Net charge-offs for the three-month period ended September 30, 2016 were $2.5 million (1.36% of average total finance receivables on an annualized basis), compared to $2.4 million (1.38% of average total finance receivables on an annualized basis) for the three-month period ended June 30, 2016 and $2.0 million (1.23% of average total finance receivables on an annualized basis) for the three-month period ended September 30, 2015.

NOTE 5 – Other Assets

Other assets are comprised of the following:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Accrued fees receivable	$	2,554	$	2,500
Prepaid expenses		1,529		2,120
Income taxes receivable		—		4,427
Other		3,650		3,474
	$	7,733	$	12,521

NOTE 6 – Commitments and Contingencies

MBB is a member bank in a non-profit, multi-financial institution consortium serving as a catalyst for community development by offering flexible financing for affordable, quality housing to low- and moderate-income residents. Currently, MBB receives approximately 1.2% participation in each funded loan under the program. MBB records loans in its financial statements when they have been funded or become payable. Such loans help MBB satisfy its obligations under the Community Reinvestment Act of 1977. At September 30, 2016, MBB had an unfunded commitment of $0.9 million for this activity. Unless renewed prior to termination, MBB’s one-year commitment to the consortium will expire in September 2017.

The Company is involved in legal proceedings, which include claims, litigation and suits arising in the ordinary course of business. In the opinion of management, these actions will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

As of September 30, 2016, the Company leases all nine of its office locations including its executive offices in Mt. Laurel, New Jersey, and its offices in or near Atlanta, Georgia; Philadelphia, Pennsylvania; Salt Lake City, Utah; Portsmouth, New Hampshire; Highlands Ranch, Colorado; Aurora, Colorado; Denver, Colorado; and Plymouth, Michigan. These lease commitments are accounted for as operating leases. The Company has entered into several capital leases to finance corporate property and equipment.

-13-

The following is a schedule of future minimum lease payments for capital and operating leases as of September 30, 2016:

	Future Minimum Lease Payment Obligations
	Capital			Operating
Period Ending December 31,	Leases			Leases		Total
	(Dollars in thousands)
2016	$	25		$	396	$	421
2017		77			1,531		1,608
2018		—			1,472		1,472
2019		—			1,435		1,435
2020		—			687		687
Total minimum lease payments	$	102		$	5,521	$	5,623
Less: amount representing interest		(3	)
Present value of minimum lease payments	$	99

Rent expense was $0.8 million for each of the nine-month periods ended September 30, 2016 and September 30, 2015.

NOTE 7 – Deposits

MBB serves as the Company’s primary funding source. MBB issues fixed-rate FDIC-insured certificates of deposit raised nationally through various brokered deposit relationships and fixed-rate FDIC-insured deposits received from direct sources. On February 23, 2014, MBB began offering FDIC-insured money market deposit accounts (the “MMDA Product”) through participation in a partner bank’s insured savings account product. This brokered deposit product has a variable rate, no maturity date and is offered to the clients of the partner bank and recorded as a single deposit account at MBB. As of September 30, 2016, money market deposit accounts totaled $50.8 million.

As of September 30, 2016, the remaining scheduled maturities of certificates of deposits are as follows:

	Scheduled
	Maturities
	(Dollars in thousands)
Period Ending December 31,
2016	$	64,434
2017		238,491
2018		158,865
2019		82,659
2020		54,746
Thereafter		26,959
Total	$	626,154

Certificates of deposits issued by MBB are time deposits and are generally issued in denominations of $250,000 or less. The MMDA Product is also issued to customers in amounts less than $250,000. The FDIC insures deposits up to $250,000 per depositor. The weighted average all-in interest rate of deposits at September 30, 2016 was 1.24%.

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NOTE 8 – Fair Value Measurements and Disclosures about the Fair Value of Financial Instruments

Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB ASC establishes a framework for measuring fair value and requires certain disclosures about fair value measurements. Its provisions do not apply to fair value measurements for purposes of lease classification and measurement, which is addressed in the Leases Topic of the FASB ASC.

Fair value is defined in GAAP as the price that would be received to sell an asset or the price that would be paid to transfer a liability on the measurement date. GAAP focuses on the exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. A three-level valuation hierarchy is required for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The three levels are defined as follows:

• Level 1 – Inputs to the valuation are unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs to the valuation may include quoted prices for similar assets and liabilities in active or inactive markets, and inputs other than quoted prices, such as interest rates and yield curves, which are observable for the asset or liability for substantially the full term of the financial instrument.

• Level 3 – Inputs to the valuation are unobservable and significant to the fair value measurement. Level 3 inputs shall be used to measure fair value only to the extent that observable inputs are not available.

The Company characterizes active markets as those where transaction volumes are sufficient to provide objective pricing information, such as an exchange traded price. Inactive markets are typically characterized by low transaction volumes, and price quotations that vary substantially among market participants or are not based on current information.

The Company’s balances measured at fair value on a recurring basis include the following as of September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Fair Value Measurements Using				Fair Value Measurements Using
	Level 1		Level 2		Level 1		Level 2
	(Dollars in thousands)
Assets
Securities available for sale	$	3,439	$	2,636	$	3,332	$	3,067

At this time, the Company has not elected to report any assets or liabilities using the fair value option available under the Financial Instruments Topic of the FASB ASC. There have been no transfers between Level 1 and Level 2 of the fair value hierarchy.

Disclosures about the Fair Value of Financial Instruments

The Financial Instruments Topic of the FASB ASC requires the disclosure of the estimated fair value of financial instruments including those financial instruments not measured at fair value on a recurring basis. This requirement excludes certain instruments, such as the net investment in leases and all nonfinancial instruments.

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The fair values shown below have been derived, in part, by management’s assumptions, the estimated amount and timing of future cash flows and estimated discount rates. Valuation techniques involve uncertainties and require assumptions and judgments regarding prepayments, credit risk and discount rates. Changes in these assumptions will result in different valuation estimates. The fair values presented would not necessarily be realized in an immediate sale. Derived fair value estimates cannot necessarily be substantiated by comparison to independent markets or to other companies’ fair value information.

-16-

The following summarizes the carrying amount and estimated fair value of the Company’s financial instruments:

	September 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(Dollars in thousands)
Financial Assets
Cash and cash equivalents	$	77,625	$	77,625	$	60,129	$	60,129
Time deposits with banks		9,107		9,129		7,368		7,356
Restricted interest-earning deposits with banks		—		—		216		216
Loans, net of allowance		22,530		22,683		6,179		6,152
Financial Liabilities
Deposits	$	676,920	$	677,476	$	587,940	$	586,898

The paragraphs which follow describe the methods and assumptions used in estimating the fair values of financial instruments.

Cash and Cash Equivalents

The carrying amounts of the Company’s cash and cash equivalents approximate fair value as of September 30, 2016 and December 31, 2015, because they bear interest at market rates and had maturities of less than 90 days at the time of purchase. This fair value measurement is classified as Level 1.

Time Deposits with Banks

Fair value of time deposits is estimated by discounting cash flows of current rates paid by market participants for similar time deposits of the same or similar remaining maturities. This fair value measurement is classified as Level 2.

Restricted Interest-Earning Deposits with Banks

The Company maintained interest-earning trust accounts related to our secured debt facility. The book value of such accounts is included in restricted interest-earning deposits with banks on the accompanying Consolidated Balance Sheet. These accounts earned a floating market rate of interest which resulted in a fair value approximating the carrying amount at December 31, 2015. This fair value measurement is classified as Level 1.

Securities Available for Sale

Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon various sources of market pricing. Securities are classified within the fair value hierarchy after giving consideration to the activity level in the market for the security type and the observability of the inputs used to determine the fair value. When available, the Company uses quoted prices in active markets and classifies such instruments within Level 1 of the fair value hierarchy. Level 1 securities include mutual funds. When instruments are traded in secondary markets and quoted market prices do not exist for such securities, the Company relies on prices obtained from third-party pricing vendors and classifies these instruments within Level 2 of the fair value hierarchy. The third-party vendors use a variety of methods when pricing securities that incorporate relevant market data to arrive at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. Level 2 securities include municipal bonds.

-17-

Loans

The loan balances are comprised of three types of loans. Participating interests acquired through membership in a non-profit, multi-financial institution consortium serving as a catalyst for community development by offering financing for affordable, quality housing to low- and moderate-income residents. Such loans help MBB satisfy its obligations under the Community Reinvestment Act of 1977. The fair value of these loans approximates the carrying amount at September 30, 2016 and December 31, 2015 as it is based on recent comparable sales transactions with consideration of current market rates. This fair value measurement is classified as Level 2. The Company also invests in a small business loan product tailored to the small business market. Fair value for these loans are estimated by discounting cash flows at an imputed market rate for similar loan products with similar characteristics. This fair value measurement is classified as Level 2. The Company invests in loans to our customers in the franchise finance channel. These loans may be secured by equipment being acquired, blanket liens on personal property, or specific equipment already owned by the customer. The fair value of loans is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit, collateral, and for the same remaining maturities. This fair value measurement is classified as Level 2.

Deposits

Deposit liabilities with no defined maturity such as MMDA deposits have a fair value equal to the amount payable on demand at the reporting date (i.e., their carrying amount). Fair value for certificates of deposits is estimated by discounting cash flows at current rates paid by the Company for similar certificates of deposit of the same or similar remaining maturities. This fair value measurement is classified as Level 2.

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NOTE 9 – Earnings Per Share

The Company’s restricted stock awards are paid non-forfeitable common stock dividends and thus meet the criteria of participating securities. Accordingly, EPS has been calculated using the two-class method, under which earnings are allocated to both common stock and participating securities.

Basic EPS has been computed by dividing net income allocated to common stock by the weighted average common shares used in computing basic EPS. For the computation of basic EPS, all shares of restricted stock have been deducted from the weighted average shares outstanding.

Diluted EPS has been computed by dividing net income allocated to common stock by the weighted average number of common shares used in computing basic EPS, further adjusted by including the dilutive impact of the exercise or conversion of common stock equivalents, such as stock options, into shares of common stock as if those securities were exercised or converted.

The following table provides net income and shares used in computing basic and diluted EPS:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(Dollars in thousands, except per-share data)
Basic EPS
Net income	$	4,345		$	4,797		$	12,464		$	13,001
Less: net income allocated to participating securities		(136	)		(136	)		(366	)		(377	)
Net income allocated to common stock	$	4,209		$	4,661		$	12,098		$	12,624
Weighted average common shares outstanding		12,543,818			12,773,653			12,507,898			12,815,679
Less: Unvested restricted stock awards considered participating securities		(397,091	)		(366,886	)		(373,081	)		(367,876	)
Adjusted weighted average common shares used in computing basic EPS		12,146,727			12,406,767			12,134,817			12,447,803
Basic EPS	$	0.35		$	0.38		$	1.00		$	1.01
Diluted EPS
Net income allocated to common stock	$	4,209		$	4,661		$	12,098		$	12,624
Adjusted weighted average common shares used in computing basic EPS		12,146,727			12,406,767			12,134,817			12,447,803
Add: Effect of dilutive stock options		10,629			6,730			8,025			18,342
Adjusted weighted average common shares used in computing diluted EPS		12,157,356			12,413,497			12,142,842			12,466,145
Diluted EPS	$	0.35		$	0.38		$	1.00		$	1.01

For the three-month periods ended September 30, 2016 and September 30, 2015, outstanding stock-based compensation awards in the amount of 21,789 and 12,502, respectively, were considered antidilutive and therefore were not considered in the computation of potential common shares for purposes of diluted EPS.

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For the nine-month periods ended September 30, 2016 and September 30, 2015, outstanding stock-based compensation awards in the amount of 8,829 and 14,258, respectively, were considered antidilutive and therefore were not considered in the computation of potential common shares for purposes of diluted EPS.

NOTE 10 – Stockholders’ Equity

Stockholders’ Equity

On July 29, 2014, the Company’s Board of Directors approved a new stock repurchase plan to replace the 2007 Repurchase Plan (the “2014 Repurchase Plan”). Under the 2014 Repurchase Plan, the Company is authorized to repurchase up to $15 million in value of its outstanding shares of common stock. This authority may be exercised from time to time and in such amounts as market conditions warrant. Any shares purchased under this plan are returned to the status of authorized but unissued shares of common stock. The repurchases may be made on the open market or in block trades. The program may be suspended or discontinued at any time. The repurchases are funded using the Company’s working capital.

During the three and nine month periods ended September 30, 2016, the Company did not repurchase any of its common stock under the 2014 Repurchase Plan in the open market. During the three- and nine-month periods ended September 30, 2015, the Company purchased 196,196 shares and 406,719 shares of its common stock under the 2014 Repurchase Plan at an average cost of $15.65 and $17.22, respectively. At September 30, 2016, the Company had $3.2 million remaining in the 2014 Repurchase Plan.

In addition to the repurchases described above, participants in the Company’s 2014 Equity Compensation Plan (approved by the Company’s shareholders on June 3, 2014) (the “2014 Plan”) may have shares withheld to cover income taxes. There were 735 and 22,673 shares repurchased to cover income tax withholding in connection with shares granted under the 2014 Plan during each of the three- and nine-month periods ended September 30, 2016, at average per-share costs of $17.98 and $14.56, respectively. There were 781 and 38,508 shares repurchased to cover income tax withholding in connection with shares granted under the 2014 Plan during the three- and nine-month periods ended September 30, 2015, at average per-share costs of $16.05 and $18.17, respectively.

Regulatory Capital Requirements

Through its issuance of FDIC-insured deposits, MBB serves as the Company’s primary funding source. Over time, MBB may offer other products and services to the Company’s customer base. MBB operates as a Utah state-chartered, Federal Reserve member commercial bank, insured by the FDIC. As a state-chartered Federal Reserve member bank, MBB is supervised by both the Federal Reserve Bank of San Francisco and the Utah Department of Financial Institutions.

The Company and MBB are subject to capital adequacy regulations issued jointly by the federal bank regulatory agencies. These risk-based capital and leverage guidelines make regulatory capital requirements more sensitive to differences in risk profiles among banking organizations and consider off-balance sheet exposures in determining capital adequacy. The federal bank regulatory agencies and/or the U.S. Congress may determine to increase capital requirements in the future due to the current economic environment. Under the capital adequacy regulation, at least half of a banking organization’s total capital is required to be “Tier 1 Capital” as defined in the regulations, comprised of common equity, retained earnings and a limited amount of non-cumulative perpetual preferred stock. The remaining capital, “Tier 2 Capital,” as defined in the regulations, may consist of other preferred stock, a limited amount of term subordinated debt or a limited amount of the reserve for possible credit losses. The regulations establish minimum leverage ratios for banking organizations, which are calculated by dividing Tier 1 Capital by total quarterly average assets. Recognizing that the risk-based capital standards principally address credit risk rather than interest rate, liquidity, operational or other risks, many banking organizations are expected to maintain capital in excess of the minimum standards.

On January 1, 2015, the Company and MBB became subject to new capital adequacy standards under the Basel III rules. The new standards require a minimum for Tier 1 leverage ratio of 4%. The new standards raised the required minimum Tier 1 risk-based ratio from 4% to 6%. The total risk-based capital ratio of 8% did not change. The new capital adequacy standards establish a new common equity Tier 1 risk-based capital ratio with a required 4.5% minimum (6.5% to be considered well-capitalized). The Company is required

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to have a level of regulatory capital in excess of the regulatory minimum and to have a capital buffer above 0.625% for 2016. If a banking organization does not maintain capital above the minimum plus the capital conservation buffer it may be subject to restrictions on dividends, share buybacks, and certain discretionary payments such as bonus payments.

The Company plans to provide the necessary capital to maintain MBB at “well-capitalized” status as defined by banking regulations and as required by an agreement entered into by and among MBB, MLC, Marlin Business Services Corp. and the FDIC in conjunction with the opening of MBB (the “FDIC Agreement”). MBB’s Tier 1 Capital balance at September 30, 2016 was $131.0 million, which met all capital requirements to which MBB is subject and qualified MBB for “well-capitalized” status. At September 30, 2016, the Company also exceeded its regulatory capital requirements and was considered “well-capitalized” as defined by federal banking regulations and as required by the FDIC Agreement.

-21-

The following table sets forth the Tier 1 leverage ratio, common equity Tier 1 risk-based capital ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio for Marlin Business Services Corp. and MBB at September 30, 2016.

						Minimum Capital					Well-Capitalized Capital
	Actual					Requirement					Requirement
	Ratio			Amount		Ratio (1)			Amount		Ratio			Amount
	(Dollars in thousands)
Tier 1 Leverage Capital
Marlin Business Services Corp.		18.53	%	$	158,661		4	%	$	34,258		5	%	$	42,823
Marlin Business Bank		16.05	%	$	130,982		5	%	$	40,812		5	%	$	40,812
Common Equity Tier 1 Risk-Based Capital
Marlin Business Services Corp.		19.77	%	$	158,661		4.5	%	$	36,111		6.5	%	$	52,161
Marlin Business Bank		16.73	%	$	130,982		6.5	%	$	50,899		6.5	%	$	50,899
Tier 1 Risk-based Capital
Marlin Business Services Corp.		19.77	%	$	158,661		6	%	$	48,148		8	%	$	64,198
Marlin Business Bank		16.73	%	$	130,982		8	%	$	62,645		8	%	$	62,645
Total Risk-based Capital
Marlin Business Services Corp.		21.02	%	$	168,692		8	%	$	64,198		10	%	$	80,247
Marlin Business Bank		17.98	%	$	140,773		15	%	$	117,460		10	%(1)	$	78,307

⁽¹⁾  MBB is required to maintain “well-capitalized” status and must also maintain a total risk-based capital ratio greater than 15% pursuant to the FDIC Agreement.

Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the federal regulators to take prompt corrective action against any undercapitalized institution. Five capital categories have been established under federal banking regulations: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Well-capitalized institutions significantly exceed the required minimum level for each relevant capital measure. Adequately capitalized institutions include depository institutions that meet but do not significantly exceed the required minimum level for each relevant capital measure. Undercapitalized institutions consist of those that fail to meet the required minimum level for one or more relevant capital measures. Significantly undercapitalized characterizes depository institutions with capital levels significantly below the minimum requirements for any relevant capital measure. Critically undercapitalized refers to depository institutions with minimal capital and at serious risk for government seizure.

Under certain circumstances, a well-capitalized, adequately capitalized or undercapitalized institution may be treated as if the institution were in the next lower capital category. A depository institution is generally prohibited from making capital distributions, including paying dividends, or paying management fees to a holding company if the institution would thereafter be undercapitalized. Institutions that are adequately capitalized but not well-capitalized cannot accept, renew or roll over brokered deposits except with a waiver from the FDIC and are subject to restrictions on the interest rates that can be paid on such deposits. Undercapitalized institutions may not accept, renew or roll over brokered deposits.

The federal bank regulatory agencies are permitted or, in certain cases, required to take certain actions with respect to institutions falling within one of the three undercapitalized categories. Depending on the level of an institution’s capital, the agency’s corrective powers include, among other things:

• prohibiting the payment of principal and interest on subordinated debt;

• prohibiting the holding company from making distributions without prior regulatory approval;

-22-

• placing limits on asset growth and restrictions on activities;

• placing additional restrictions on transactions with affiliates;

• restricting the interest rate the institution may pay on deposits;

• prohibiting the institution from accepting deposits from correspondent banks; and

• in the most severe cases, appointing a conservator or receiver for the institution.

A banking institution that is undercapitalized is required to submit a capital restoration plan, and such a plan will not be accepted unless, among other things, the banking institution’s holding company guarantees the plan up to a certain specified amount. Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy.

Pursuant to the FDIC Agreement entered into in conjunction with the opening of MBB, MBB must keep its total risk-based capital ratio above 15%. MBB’s total risk-based capital ratio of 17.98% at September 30, 2016 exceeded the threshold for “well capitalized” status under the applicable laws and regulations, and also exceeded the 15% minimum total risk-based capital ratio required in the FDIC Agreement.

Dividends. The Federal Reserve Board has issued policy statements requiring insured banks and bank holding companies to have an established assessment process for maintaining capital commensurate with their overall risk profile. Such assessment process may affect the ability of the organizations to pay dividends. Although generally organizations may pay dividends only out of current operating earnings, dividends may be paid if the distribution is prudent relative to the organization’s financial position and risk profile, after consideration of current and prospective economic conditions.

NOTE 11 – Stock-Based Compensation

Under the terms of the 2014 Plan, employees, certain consultants and advisors and non-employee members of the Company’s Board of Directors have the opportunity to receive incentive and nonqualified grants of stock options, stock appreciation rights, restricted stock and other equity-based awards as approved by the Company’s Board of Directors. These award programs are used to attract, retain and motivate employees and to encourage individuals in key management roles to retain stock. The Company has a policy of issuing new shares to satisfy awards under the 2014 Plan. The aggregate number of shares under the 2014 Plan that may be issued pursuant to stock options, restricted stock units or restricted stock awards is 1,200,000 with not more than 1,000,000 of such shares available for issuance as restricted stock awards. There were 636,594 shares available for future awards under the 2014 Plan as of September 30, 2016, of which 436,594 shares were available to be issued as restricted stock awards.

Total stock-based compensation expense was $0.4 million for each of the three-month periods ended September 30, 2016 and September 30, 2015. Total stock-based compensation expense was $1.4 million and $1.6 million for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively. An excess tax deficit from stock-based payment arrangements increased cash provided by operating activities and decreased cash provided by financing activities by $0.1 million for the nine-month period ended September 30, 2016. Excess tax benefits from stock-based payment arrangements increased cash provided by financing activities and decreased cash provided by operating activities by $0.3 million for the nine-month periods ended September 30, 2015.

Stock Options

Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of the grant and have 7- to 10-year contractual terms. All options issued contain service conditions based on the participant’s continued service with the Company and may provide for accelerated vesting if there is a change in control as defined in the Equity Compensation Plans. Employee stock options generally vest over four years.

The Company also issues stock options to non-employee independent directors. These options generally vest in one year.

There were no stock options granted during the three-month and nine-month periods ended September 30, 2016 and September 30, 2015.

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A summary of option activity for the nine-month period ended September 30, 2016 follows:

				Weighted
				Average
	Number of			Exercise Price
Options	Shares			Per Share
Outstanding, December 31, 2015		50,686		$	12.09
Granted		—			—
Exercised		(6,880	)		10.29
Forfeited		(1,666	)		12.41
Expired		—			—
Outstanding, September 30, 2016		42,140			12.37

During each of the three-month periods ended September 30, 2016 and September 30, 2015 the Company did not recognize compensation expense related to options. During each of the nine-month periods ended September 30, 2016 and September 30, 2015 the Company did not recognize compensation expense related to options.

There were 3,425 and 4,082 stock options exercised during the three-month periods ended September 30, 2016 and September 30, 2015, respectively. The total pretax intrinsic values of stock options exercised were less than $0.1 million for each of the three-month periods ended September 30, 2016 and September 30, 2015.

The total pretax intrinsic values of stock options exercised were less than $0.1 million and $0.6 million for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.

The following table summarizes information about the stock options outstanding and exercisable as of September 30, 2016:

Options Outstanding

Options Exercisable

Weighted

Weighted

Aggregate

Weighted

Weighted

Aggregate

Average

Average

Intrinsic

Average

Average

Intrinsic

Range of

Number

Remaining

Exercise

Value

Number

Remaining

Exercise

Value

Exercise Prices

Outstanding

Life (Years)

Price

(In thousands)

Exercisable

Life (Years)

Price

(In thousands)

$12.08 - 12.41

42,140

0.6

12.37

295

39,916

0.6

12.37

280

42,140

0.6

12.37

$

295

39,916

0.6

12.37

$

280

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $19.38 as of September 30, 2016, which would have been received by the option holders had all option holders exercised their options as of that date.

As of September 30, 2016, there was no future compensation cost related to non-vested stock options not yet recognized in the Consolidated Statements of Operations based on the most probable performance assumptions. As of September 30, 2016, $0.1 million of additional potential compensation cost related to non-vested stock options has not been recognized due to performance targets not being achieved. However, in certain circumstances, these options may be subject to vesting prior to their expiration dates. The weighted average remaining term of these options is approximately 0.6 years.

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Restricted Stock Awards

Restricted stock awards provide that, during the applicable vesting periods, the shares awarded may not be sold or transferred by the participant. The vesting period for restricted stock awards generally ranges from three to 10 years. All awards issued contain service conditions based on the participant’s continued service with the Company and may provide for accelerated vesting if there is a change in control as defined in the Equity Compensation Plans.

The vesting of certain restricted shares may be accelerated to a minimum of three years based on achievement of various individual performance measures. Acceleration of expense for awards based on individual performance factors occurs when the achievement of the performance criteria is determined.

In addition, the Company has issued certain shares under a Management Stock Ownership Program. Under this program, restrictions on the shares lapse at the end of 10 years but may lapse (vest) in a minimum of three years if the employee continues in service at the Company and owns a matching number of other common shares in addition to the restricted shares.

Of the total restricted stock awards granted during the nine-month period ended September 30, 2016, 74,207 shares may be subject to accelerated vesting based on individual performance factors; no shares have vesting contingent upon performance factors. Vesting was accelerated in 2015 and 2016 on certain awards based on the achievement of certain performance criteria determined annually, as described below.

The Company also issues restricted stock to non-employee independent directors. These shares generally vest in seven years from the grant date or six months following the director’s termination from Board of Directors service.

The following table summarizes the activity of the non-vested restricted stock during the nine months ended September 30, 2016:

Non-vested restricted stock	Shares			Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2015		313,236		$	16.65
Granted		181,156			15.25
Vested		(60,185	)		18.23
Forfeited		(19,482	)		18.02
Outstanding at September 30, 2016		414,725			15.74

During each of the three-month periods ended September 30, 2016 and September 30, 2015, the Company granted restricted stock awards with grant-date fair values totaling $0.4 million. During the nine-month periods ended September 30, 2016 and September 30, 2015, the Company granted restricted stock awards with grant-date fair values totaling $2.8 million and $3.0 million, respectively.

As vesting occurs, or is deemed likely to occur, compensation expense is recognized over the requisite service period and additional paid-in capital is increased. The Company recognized $0.3 million and $0.4 of compensation expense related to restricted stock for the three-month periods ended September 30, 2016 and September 30, 2015, respectively. The Company recognized $1.4 million and $1.6 million of compensation expense related to restricted stock for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.

Of the $1.4 million total compensation expense related to restricted stock for the nine-month period ended September 30, 2016, approximately $0.4 million related to accelerated vesting during the first quarter of 2016, based on achievement of certain performance criteria determined annually. Of the $1.6 million total compensation expense related to restricted stock for the nine-month period ended September 30, 2015, approximately $0.5 million related to accelerated vesting during the first quarter of 2015, which was also based on the achievement of certain performance criteria determined annually.

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As of September 30, 2016, there was $4.6 million of unrecognized compensation cost related to non-vested restricted stock compensation scheduled to be recognized over a weighted average period of 4.0 years. In the event individual performance targets are achieved, $1.5 million of the unrecognized compensation cost would accelerate to be recognized over a weighted average period of 1.3 years. In addition, certain of the awards granted may result in the issuance of 57,998 additional shares of stock if achievement of certain targets is greater than 100%. The expense related to the additional shares awarded will be dependent on the Company’s stock price when the achievement level is determined.

The fair value of shares that vested during each of the three-month periods ended September 30, 2016 and September 30, 2015 was $0.1 million. The fair value of shares that vested during the nine-month periods ended September 30, 2016 and September 30, 2015 was $0.9 million and $2.2 million, respectively.

Restricted Stock Units

Restricted stock units (“RSUs”) are granted with vesting conditions based on fulfillment of a service condition (generally four years from the grant date), and also require achievement of certain market based targets associated with the Company’s stock price. The market based target measurement period begins one year from the grant date and ends three years from the grant date. Expense for equity based awards with market and service conditions is recognized over the service period based on the grant-date fair value of the award.

The following tables summarize restricted stock unit activity for the nine-month period ended September 30, 2016:

Market-based RSUs	Number of RSUs		Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2015		—	$	—
Granted		120,000		9.47
Forfeited		—		—
Converted		—		—
Cancelled due to non-achievement of market condition		—		—
Outstanding at September 30, 2016		120,000		9.47

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In 2016, certain executives were awarded RSUs with market based vesting conditions with weighted average grant-date fair value of $9.47 per unit. The weighted average grant date fair value of these market based RSUs was estimated using a Monte Carlo simulation valuation model with the following assumptions:

	Nine Months Ended September 30,
	2016			2015
Grant date stock price	$	18.24			—
Risk-free interest rate		1.06	%		—
Expected volatility		35.16	%		—
Dividend yield		—			—

The risk free interest rate reflected the yield on zero coupon Treasury securities with a term approximating the expected life of the RSUs. The expected volatility was based on historical volatility of the Company’s common stock.

During both the three and nine-month periods ended September 30, 2016, the Company granted RSUs with grant-date fair values totaling $1.1 million, respectively. The Company recognized less than $0.1 million of compensation expense related to RSUs for both the three and nine-month periods ended September 30, 2016, respectively. As of September 30, 2016, there was $1.1 million of unrecognized compensation cost related to RSUs scheduled to be recognized over a weighted average period of 4.0 years.

NOTE 12 – Subsequent Events

The Company declared a dividend of $0.14 per share on October 27, 2016. The quarterly dividend, which is expected to result in a dividend payment of approximately $1.8 million, is scheduled to be paid on November 17, 2016 to shareholders of record on the close of business on November 7, 2016. It represents the Company’s twenty-first consecutive quarterly cash dividend. The payment of future dividends will be subject to approval by the Company’s Board of Directors.

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Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto in our Form 10-K for the year ended December 31, 2015 filed with the SEC. This discussion contains certain statements of a forward-looking nature that involve risks and uncertainties.

FORWARD-LOOKING STATEMENTS

Certain statements in this document may include the words or phrases “can be,” “expects,” “plans,” “may,” “may affect,” “may depend,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “if” and similar words and phrases that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “1933 Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “1934 Act”). Forward-looking statements are subject to various known and unknown risks and uncertainties and the Company cautions that any forward-looking information provided by or on its behalf is not a guarantee of future performance. Statements regarding the following subjects are forward-looking by their nature: (a) our business strategy; (b) our projected operating results; (c) our ability to obtain external deposits or financing; (d) our understanding of our competition; and (e) industry and market trends. The Company’s actual results could differ materially from those anticipated by such forward-looking statements due to a number of factors, some of which are beyond the Company’s control, including, without limitation:

• availability, terms and deployment of funding and capital;

• changes in our industry, interest rates, the regulatory environment or the general economy resulting in changes to our business strategy;

• the degree and nature of our competition;

• availability and retention of qualified personnel;

• general volatility of the capital markets; and

• the factors set forth in the section captioned “Risk Factors” in Item 1 of our Form 10-K for the year ended December 31, 2015 filed with the SEC.

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Forward-looking statements apply only as of the date made and the Company is not required to update forward-looking statements for subsequent or unanticipated events or circumstances.

Overview

Founded in 1997, we are a nationwide provider of equipment financing solutions, primarily to small and mid-sized businesses. We finance over 100 categories of commercial equipment important to the typical small and mid-sized business customer, including copiers, computers and software, security systems, telecommunications equipment and certain commercial and industrial equipment. We access our end user customers through origination sources comprised of our existing network of independent equipment dealers and national account programs, as well as through direct solicitation of our end user customers and through relationships with select lease brokers.

Our leases are fixed-rate transactions with terms generally ranging from 36 to 60 months. At September 30, 2016, our lease portfolio consisted of 84,335 accounts with an average original term of 48 months and average original transaction size of approximately $15,000.

During the first quarter of 2015, the Company launched Funding Stream, a new, flexible loan program of MBB. Funding Stream is tailored to the small business market to provide customers a convenient, hassle free alternative to traditional lenders and access to capital to help grow their businesses. As of September 30, 2016, the Company had approximately $16.3 million, not including the allowance for credit losses allocated to loans of $0.7 million, of small business loans on the balance sheet. Generally, these loans range from $5,000 to $100,000, have flexible 6 to 24 month terms, and have automated daily or weekly payback. Small business owners can apply online, in ten minutes or less, on www.Fundingstream.com. Approved borrowers can receive funds in as little as two days.

At September 30, 2016, we had $869.0 million in total assets. Our assets are substantially comprised of our net investment in leases and loans which totaled $759.4 million at September 30, 2016.

We generally reach our lessees through a network of independent equipment dealers and, to a much lesser extent, lease brokers. The number of dealers and brokers with whom we conduct business depends on, among other things, the number of sales account executives we have. Sales account executive staffing levels and the activity of our origination sources are shown below.

	As of or For the Nine Months Ended
	September 30, 2016		As of or For the Year Ended December 31,
			2015		2014		2013		2012		2011
Number of sales account executives		136		136		115		124		114		93
Number of originating sources(1)		1,110		1,093		1,117		1,173		1,117		827

⁽¹⁾  Monthly average of origination sources generating lease volume

Our revenue consists of interest and fees from our leases and loans and, to a lesser extent, income from our property insurance program and other fee income. Our expenses consist of interest expense and other expenses, which include salaries and benefits and other general and administrative expenses. As a credit lender, our earnings are also impacted by credit losses. For the quarter ended September 30, 2016, our annualized net credit losses were 1.36% of our average total finance receivables. We establish reserves for credit losses which require us to estimate inherent losses in our portfolio as of the reporting date.

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Our leases are classified under U.S. GAAP as direct financing leases, and we recognize interest income over the term of the lease. Direct financing leases transfer substantially all of the benefits and risks of ownership to the equipment lessee. Our net investment in direct finance leases is included in our consolidated financial statements in “net investment in leases and loans.” Net investment in direct financing leases consists of the sum of total minimum lease payments receivable and the estimated residual value of leased equipment, less unearned lease income. Unearned lease income consists of the excess of the total future minimum lease payments receivable plus the estimated residual value expected to be realized at the end of the lease term plus deferred net initial direct costs and fees less the cost of the related equipment. Approximately 69% of our lease portfolio at September 30, 2016 amortizes over the lease term to a $1 residual value. For the remainder of the portfolio, we must estimate end of term residual values for the leased assets. Failure to correctly estimate residual values could result in losses being realized on the disposition of the equipment at the end of the lease term.

We fund our business primarily through the issuance of fixed and variable-rate FDIC-insured deposits and money market demand accounts raised nationally by MBB. Historically, leases were funded through variable-rate facilities until they were refinanced through term note securitizations at fixed rates. All of our term note securitizations were accounted for as on-balance sheet transactions and, therefore, we did not recognize gains or losses from these transactions.

Since its opening in 2008, MBB has served as a funding source for a portion of the Company’s new originations primarily through the issuance of FDIC-insured deposits. We anticipate that FDIC-insured deposits issued by MBB will continue to represent our primary source of funds for the foreseeable future. As of September 30, 2016, total MBB deposits were $676.9 million, compared to $587.9 million at December 31, 2015. We had no outstanding secured borrowings as of both September 30, 2016 and December 31, 2015.

Historically, from time to time we use derivative financial instruments to manage exposure to the effects of changes in market interest rates and to fulfill certain covenants in our borrowing arrangements. All derivatives are recorded on the Consolidated Balance Sheets at their fair value as either assets or liabilities. The Company was not a party to any derivative agreements at September 30, 2016.

Through the issuance of FDIC-insured deposits, the Company’s wholly-owned subsidiary, MBB, serves as the Company’s primary funding source. In the future MBB may elect to offer other products and services to the Company’s customer base. As a Utah state-chartered Federal Reserve member bank, MBB is supervised by both the Federal Reserve Bank of San Francisco and the Utah Department of Financial Institutions.

On January 13, 2009, Marlin Business Services Corp. became a bank holding company and is subject to the Bank Holding Company Act and supervised by the Federal Reserve Bank of Philadelphia. On September 15, 2010, the Federal Reserve Bank of Philadelphia confirmed the effectiveness of Marlin Business Services Corp.’s election to become a financial holding company (while remaining a bank holding company) pursuant to Sections 4(k) and (l) of the Bank Holding Company Act and Section 225.82 of the Federal Reserve Board’s Regulation Y. Such election permits Marlin Business Services Corp. to engage in activities that are financial in nature or incidental to a financial activity, including the maintenance and expansion of the reinsurance activities conducted through its wholly-owned subsidiary, AssuranceOne, Ltd.

Critical Accounting Policies

Insurance Premiums Written and Earned

Insurance premiums written and earned are recognized over the term of the policy, which is month to month. Since the policy’s premiums are recognized month to month, there is no unearned premium on the Consolidated Balance Sheets as these are fully recognized through the Consolidated Statements of Operations in the month written. For all annual and interim periods, second quarter 2016 and prior, income and expense related to insurance premiums written and earned, insurance policy fees, deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses is recorded within the “Insurance premium written and earned” line on the Consolidated Statement of Operations. Effective third quarter 2016, on a prospective basis, only insurance premium written and earned was recorded to that line. Effective third quarter 2016, on a prospective basis, insurance policy fees were recorded as “Other income” and deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses were recorded in “General and administrative” expense. For the years ended December 31, 2015 and 2014, insurance premiums written and earned were $5.5 million and $5.0 million, respectively. For the nine months ended September 30, 2016, insurance premiums written and earned were $4.6 million.

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Other Income

Other income includes various administrative transaction fees, insurance policy fees, fees received from referral of leases to third parties and gain on sale of leases, recognized as earned. Effective third quarter 2016, on a prospective basis, the insurance policy fees are recognized in the Consolidated Statements of Operations in “Other income” and for all previous annual and interim periods are recorded net in “Insurance premiums written and earned.”

Insurance Program Deferred Acquisition Costs

Deferred acquisitions costs represent the fees paid to a third-party insurance company. Effective third quarter 2016, on a prospective basis, the costs are recognized on the Consolidated Statements of Operations in “General and administrative” expense and for all previous annual and interim periods were recognized net in “Insurance premiums written and earned.” For each of the years ended December 31, 2015, 2014 and 2013, the Company recognized deferred acquisition costs of less than $0.8 million. For the nine months ended September 30, 2016, the Company recognized $0.5 million of deferred acquisition costs. Since the policy’s premiums are recognized on a month to month basis, there is no deferred acquisition costs on the Consolidated Balance Sheets as these are fully recognized through the Consolidated Statements of Operations in the month written.

Provision for Unpaid Losses and Loss Adjustment Expenses

The Company records a provision for insurance losses and loss adjustment expenses. Effective third quarter 2016, on a prospective basis, the expense was recorded in “General and administrative” expense on the Consolidated Statement of Operations and for all previous annual and interim periods is recorded net in “Insurance premiums written and earned.” The liability for losses and loss adjustment expenses includes an amount determined from loss reports and individual cases and an amount, based on historical loss experience and industry statistics, for losses incurred but not reported (“IBNR”). These estimates are continually reviewed and are subject to the impact of future changes in such factors as claim severity and frequency. Loss and loss expenses are paid when advised by the third-party insurance company. Outstanding losses comprise estimates of the amount of reported losses and loss expenses received from the third-party insurance company plus a provision for losses IBNR. IBNR is determined with the assistance of a third-party actuary. For each of the years ended December 31, 2015, 2014, and 2013, the Company recognized provision for unpaid losses and loss adjustment expenses of less than $0.4 million. For the nine months ended September 30, 2016, the Company recognized provision for unpaid loss and loss adjustment expense of less than $0.5 million.

There have been no other significant changes to our Critical Accounting Policies as described in our 2015 Annual Report on Form 10-K.

RESULTS OF OPERATIONS

Comparison of the Three-Month Periods Ended September 30, 2016 and September 30, 2015

Net income. Net income of $4.3 million was reported for the three-month period ended September 30, 2016, resulting in diluted EPS of $0.35, compared to net income of $4.8 million and diluted EPS of $0.38 for the three-month period ended September 30, 2015.

Return on average assets was 2.05% for the three-month period ended September 30, 2016, compared to a return of 2.51% for the three-month period ended September 30, 2015. Return on average equity was 11.10% for the three-month period ended September 30, 2016, compared to a return of 10.95% for the three-month period ended September 30, 2015.

Overall, our average net investment in total finance receivables for the three-month period ended September 30, 2016 increased 14.2% to $732.3 million, compared to $641.0 million for the three-month period ended September 30, 2015. This change was primarily due to origination volume continuing to exceed lease repayments. The end-of-period net investment in total finance receivables at September 30, 2016 was $759.4 million, an increase of $77.0 million, or 11.3%, from $682.4 million at December 31, 2015.

During the three months ended September 30, 2016, we generated 6,606 new leases with equipment cost of $117.9 million, compared to 6,476 new leases with equipment cost of $99.7 million generated for the three months ended September 30, 2015. Sales staffing levels increased from 131 sales account executives at September 30, 2015 to 136 sales account executives at September 30, 2016. Approval rates decreased 10% to 56% for the quarter ended September 30, 2016, compared to 66% for the quarter ended September 30, 2015.

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For the three-month period ended September 30, 2016 compared to the three-month period ended September 30, 2015, net interest and fee income increased $1.5 million, or 7.8%, primarily due to a $2.1 million increase in interest income, partially offset by a $0.7 million increase in interest expense. The provision for credit losses increased $1.1 million, or 55.0%, to $3.1 million for the three-month period ended September 30, 2016 from $2.0 million for the same period in 2015, primarily due to growth in the portfolio.

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Average balances and net interest margin. The following table summarizes the Company’s average balances, interest income, interest expense and average yields and rates on major categories of interest-earning assets and interest-bearing liabilities for the three-month periods ended September 30, 2016 and September 30, 2015.

	Three Months Ended September 30,
	2016							2015
	(Dollars in thousands)
					Average							Average
	Average				Yields/			Average				Yields/
	Balance(1)		Interest		Rates(2)			Balance(1)		Interest		Rates(2)
Interest-earning assets:
Interest-earning deposits with banks	$	78,907	$	48		0.25	%	$	88,263	$	24		0.11	%
Time Deposits		9,107		28		1.21			7,368		21		1.15
Restricted interest-earning deposits with banks		18		—		0.11			502		—		0.01
Securities available for sale		6,120		34		2.22			6,080		33		2.17
Net investment in leases(3)		713,413		17,361		9.73			638,358		16,473		10.32
Loans receivable(3)		18,933		1,332		28.13			2,662		139		20.81
Total interest-earning assets		826,498		18,803		9.10			743,233		16,690		8.98
Non-interest-earning assets:
Cash and due from banks		2,532							2,295
Property and equipment, net		3,718							4,042
Property tax receivables		5,356							3,074
Other assets(4)		11,284							10,357
Total non-interest-earning assets		22,890							19,768
Total assets	$	849,388						$	763,001
Interest-bearing liabilities:
Certificate of Deposits(5)	$	610,912	$	1,971		1.29	%		510,160	$	1,399		1.10	%
Money Market Deposits(5)		52,027		84		0.64			46,755		34		0.29
Total interest-bearing liabilities		662,939		2,055		1.24			556,915		1,433		1.03
Non-interest-bearing liabilities:
Sales and property taxes payable		5,882							5,959
Accounts payable and accrued expenses		8,144							7,908
Net deferred income tax liability		15,907							16,944
Total non-interest-bearing liabilities		29,933							30,811
Total liabilities		692,872							587,726
Stockholders’ equity		156,516							175,275
Total liabilities and stockholders’ equity	$	849,388						$	763,001
Net interest income			$	16,748						$	15,257
Interest rate spread(6)						7.86	%						7.95	%
Net interest margin(7)						8.11	%						8.21	%
Ratio of average interest-earning assets to average interest-bearing liabilities						124.67	%						133.46	%

⁽¹⁾  Average balances were calculated using average daily balances.

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⁽²⁾  Annualized.

⁽³⁾  Average balances of leases and loans include non-accrual leases and loans, and are presented net of unearned income. The average balances of leases and loans do not include the effects of (i) the allowance for credit losses and (ii) initial direct costs and fees deferred.

⁽⁴⁾  Includes operating leases.

⁽⁵⁾ Includes effect of transaction costs. Amortization of transaction costs is on a straight-line basis, resulting in an increased average rate whenever average portfolio balances are at reduced levels.

⁽⁶⁾  Interest rate spread represents the difference between the average yield on interest-earning assets and the average rate on interest-bearing liabilities.

⁽⁷⁾  Net interest margin represents net interest income as an annualized percentage of average interest-earning assets.

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The following table presents the components of the changes in net interest income by volume and rate.

	Three Months Ended September 30, 2016 Compared To
	Three Months Ended September 30, 2015
	Increase (Decrease) Due To:
	Volume(1)			Rate(1)			Total
	(Dollars in thousands)
Interest income:
Interest-earning deposits with banks	$	(3	)	$	27		$	24
Time Deposits		5			2			7
Securities available for sale		—			1			1
Net investment in leases		1,863			(975	)		888
Loans receivable		1,129			64			1,193
Total interest income		1,892			221			2,113
Interest expense:
Certificate of Deposits		302			270			572
Money Market Deposits		4			46			50
Total interest expense		300			322			622
Net interest income		1,690			(199	)		1,491

⁽¹⁾  Changes due to volume and rate are calculated independently for each line item presented rather than presenting vertical subtotals for the individual volume and rate columns. Changes attributable to changes in volume represent changes in average balances multiplied by the prior period’s average rates. Changes attributable to changes in rate represent changes in average rates multiplied by the prior year’s average balances. Changes attributable to the combined impact of volume and rate have been allocated proportionately to the change due to volume and the change due to rate.

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Net interest and fee margin. The following table summarizes the Company’s net interest and fee income as an annualized percentage of average total finance receivables for the three-month periods ended September 30, 2016 and September 30, 2015.

	Three Months Ended September 30,
	2016			2015
	(Dollars in thousands)
Interest income	$	18,803		$	16,690
Fee income		3,944			3,915
Interest and fee income		22,747			20,605
Interest expense		2,055			1,433
Net interest and fee income	$	20,692		$	19,172
Average total finance receivables(1)	$	732,346		$	641,020
Annualized percent of average total finance receivables:
Interest income		10.27	%		10.41	%
Fee income		2.15			2.44
Interest and fee income		12.42			12.85
Interest expense		1.12			0.89
Net interest and fee margin		11.30	%		11.96	%

⁽¹⁾  Total finance receivables include net investment in direct financing leases and loans. For the calculations above, the effects of (i) the allowance for credit losses and (ii) initial direct costs and fees deferred are excluded.

Net interest and fee income increased $1.5 million, or 7.8%, to $20.7 million for the three months ended September 30, 2016 from $19.2 million for the three months ended September 30, 2015. The annualized net interest and fee margin decreased 66 basis points to 11.30% in the three-month period ended September 30, 2016 from 11.96% for the same period in 2015.

Interest income, net of amortized initial direct costs and fees, was $18.8 million and $16.7 million for the three-month periods ended September 30, 2016 and September 30, 2015, respectively. Average total finance receivables increased $91.3 million, or 14.2%, to $732.3 million at September 30, 2016 from $641.0 million at September 30, 2015. The increase in average total finance receivables was primarily due to origination volume continuing to exceed lease repayments. The average yield on the portfolio decreased, due to lower yields on the new leases compared to the yields on the leases repaying. The weighted average implicit interest rate on new finance receivables originated was 11.70% and 11.06% for the three-month periods ended September 30, 2016, and September 30, 2015, respectively.

Fee income was $3.9 million for each of the three-month periods ended September 30, 2016 and September 30, 2015. Fee income included approximately $1.1 million and $1.0 million of net residual income for the three-month periods ended September 30, 2016 and September 30, 2015, respectively.

Fee income also included approximately $2.4 million and $2.2 million in late fee income for the three-month periods ended September 30, 2016 and September 30, 2015, respectively.

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Fee income, as an annualized percentage of average total finance receivables, decreased 29 basis points to 2.15% for the three-month period ended September 30, 2016 from 2.44% for the same period in 2015. Late fees remained the largest component of fee income at 1.29% as an annualized percentage of average total finance receivables for the three-month period ended September 30, 2016, compared to 1.38% for the three-month period ended September 30, 2015. As an annualized percentage of average total finance receivables, net residual income was 0.58% for the three-month period ended September 30, 2016, compared to 0.65% for the three-month period ended September 30, 2015.

Interest expense increased $0.7 million to $2.1 million, or 1.24% as an annualized percentage of average deposits for, the three-month period ended September 30, 2016, from $1.4 million, or 1.03% as an annualized percentage of average deposits, for the three-month period ended September 30, 2015. The increase was primarily due to an increase in rate paid on interest bearing liabilities and to a lesser degree, the increase in the average balances of interest bearing liabilities. Interest expense, as an annualized percentage of average total finance receivables, increased 23 basis points to 1.12% for the three-month period ended September 30, 2016, from 0.89% for the same period in 2015. The average balance of deposits was $662.9 million and $556.9 million for the three-month periods ended September 30, 2016 and September 30, 2015, respectively.

There were no borrowings outstanding for each of the three months ended September 30, 2016, and September 30, 2015.

Our wholly-owned subsidiary, MBB, serves as our primary funding source. MBB raises fixed-rate and variable-rate FDIC-insured deposits via the brokered certificates of deposit market, on a direct basis, and through the brokered MMDA Product. At September 30, 2016, brokered certificates of deposit represented approximately 60% of total deposits, while approximately 32% of total deposits were obtained from direct channels, and 8% were in the brokered MMDA Product.

Insurance premiums written and earned. Insurance premiums written and earned increased $0.1 million to $1.6 million for the three-month period ended September 30, 2016 from $1.5 million for the three-month period ended September 30, 2015, primarily due to an increase in the number of contracts enrolled in the insurance program as well as higher average ticket size.

Other income. Other income was $1.1 million and $0.6 million for the three-month periods ended September 30, 2016 and September 30, 2015, respectively. Other income primarily includes various administrative transaction fees and fees received from referral of leases to third parties and gain on sale of leases, recognized as earned. Effective third quarter 2016, on a prospective basis, insurance policy fees of $0.4 million are recognized in the Consolidated Statements of Operations in “Other income” and for all previous quarters were recognized net in “Insurance premiums written and earned.”

Salaries and benefits expense. Salaries and benefits expense increased $0.7 million, or 9.9%, to $7.8 million for the three-month period ended September 30, 2016 from $7.1 million for the same period in 2015. The increase was primarily due to an increase in total personnel. Salaries and benefits expense, as an annualized percentage of average total finance receivables, was 4.27% for the three-month period ended September 30, 2016 compared with 4.40% for the same period in 2015. Total personnel increased to 318 at September 30, 2016 from 307 at September 30, 2015.

General and administrative expense. General and administrative expense increased $0.6 million, or 13.6%, to $5.0 million for the three months ended September 30, 2016 from $4.4 million for the same period in 2015. General and administrative expense as an annualized percentage of average total finance receivables was 2.72% for the three-month period ended September 30, 2016, compared to 2.72% for the three-month period ended September 30, 2015. Selected major components of general and administrative expense for the three-month period ended September 30, 2016 included $0.8 million of premises and occupancy expense, $0.3 million of audit and tax compliance expense, $0.6 million of data processing expense, $0.5 million of marketing expense, and $0.3 million of insurance related expenses which were recognized net in “Insurance premiums written and earned” in prior quarters. In comparison, selected major components of general and administrative expense for the three-month period ended September 30, 2015 included $0.8 million of premises and occupancy expense, $0.3 million of audit and tax compliance expense, $0.5 million of data processing expense, and $0.3 million of marketing expense.

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Financing related costs. Financing related costs primarily represent bank commitment fees paid to our financing sources on the unused portion of loan facilities. Financing related costs were less than $0.1 million for each of the three month periods ended September 30, 2016 and September 30, 2015.

Provision for credit losses. The provision for credit losses increased $1.1 million, or 55.0%, to $3.1 million for the three months ended September 30, 2016 from $2.0 million for the same period in 2015, primarily due to growth in the portfolio. Lease portfolio losses tend to follow patterns based on the mix of origination vintages comprising the portfolio. The anticipated credit losses from the inception of a particular lease origination vintage to charge-off generally follow a pattern of lower losses for the first few months, followed by increased losses in subsequent months, then lower losses during the later periods of the lease term. Therefore, the seasoning, or mix of origination vintages, of the portfolio affects the timing and amount of anticipated probable and estimable credit losses.

Net charge-offs were $2.5 million for the three-month periods ended September 30, 2016, compared to $2.0 million for the same period in 2015. Net charge-offs as an annualized percentage of average total finance receivables increased to 1.36% during the three-month period ended September 30, 2016, from 1.23% for the same period in 2015. The allowance for credit losses increased to approximately $10.1 million at September 30, 2016, an increase of $1.7 million from $8.4 million at December 31, 2015.

Additional information regarding asset quality is included herein in the subsequent section, “Finance Receivables and Asset Quality.”

Provision for income taxes. Income tax expense of $3.0 million was recorded for each of the three-month periods ended September 30, 2016 and September 30, 2015. Our effective tax rate, which is a combination of federal and state income tax rates, was approximately 41.1% and 38.3% for the three-month periods ended September 30, 2016 and September 30, 2015, respectively.

Comparison of the Nine-Month Periods Ended September 30, 2016 and September 30, 2015

Net income. Net income of $12.5 million was reported for the nine-month period ended September 30, 2016, resulting in diluted EPS of $1.00, compared to net income of $13.0 million and diluted EPS of $1.01 for the nine-month period ended September 30, 2015.

Return on average assets was 2.04% for the nine-month period ended September 30, 2016, compared to a return of 2.29% for the nine-month period ended September 30, 2015. Return on average equity was 10.84% for the nine-month period ended September 30, 2016, compared to a return of 9.92% for the nine-month period ended September 30, 2015.

Overall, our average net investment in total finance receivables for the nine-month period ended September 30, 2016 increased 12.0% to $705.9 million, compared to $630.1 million for the nine-month period ended September 30, 2015. This change was primarily due to origination volume continuing to exceed lease repayments. The end-of-period net investment in total finance receivables at September 30, 2016 was $759.4 million, an increase of $77.0 million, or 11.3%, from $682.4 million at December 31, 2015.

During the nine months ended September 30, 2016, we generated 19,603 new leases with equipment cost of $333.7 million, compared to 18,533 new leases with equipment cost of $273.7 million generated for the nine months ended September 30, 2015. Sales staffing levels increased from 131 sales account executives at September 30, 2015 to 136 sales account executives at September 30, 2016. Approval rates declined 5% to 59% for the nine-month period ended September 30, 2016, compared to 64% for the nine-month period ended September 30, 2015.

For the nine-month period ended September 30, 2016 compared to the nine-month period ended September 30, 2015, net interest and fee income increased $3.4 million, or 5.9%, primarily due to a $4.8 million increase in interest income, partially offset by a $1.5 million increase in interest expense. The provision for credit losses increased $1.4 million, or 18.7%, to $8.9 million for the nine-month period ended September 30, 2016 from $7.5 million for the same period in 2015, primarily due to growth in the portfolio.

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Average balances and net interest margin. The following table summarizes the Company’s average balances, interest income, interest expense and average yields and rates on major categories of interest-earning assets and interest-bearing liabilities for the nine-month periods ended September 30, 2016 and September 30, 2015.

	Nine Months Ended September 30,
	2016							2015
	(Dollars in thousands)
					Average							Average
	Average				Yields/			Average				Yields/
	Balance(1)		Interest		Rates(2)			Balance(1)		Interest		Rates(2)
Interest-earning assets:
Interest-earning deposits with banks	$	71,323	$	137		0.26	%	$	97,023	$	90		0.13	%
Time Deposits		8,662		78		1.21			4,563		38		1.10
Restricted interest-earning deposits with banks		82		—		0.08			785		—		0.01
Securities available for sale		6,232		104		2.24			5,764		93		2.14
Net investment in leases(3)		692,085		51,250		9.87			628,214		49,226		10.45
Loans receivable(3)		13,794		2,952		28.53			1,859		218		15.60
Total interest-earning assets		792,178		54,521		9.17			738,208		49,665		8.97
Non-interest-earning assets:
Cash and due from banks		2,805							1,960
Property and equipment, net		3,777							3,635
Property tax receivables		3,711							3,222
Other assets(4)		11,662							9,899
Total non-interest-earning assets		21,955							18,716
Total assets	$	814,133						$	756,924
Interest-bearing liabilities:
Certificate of Deposits(5)	$	580,631	$	5,386		1.24	%		505,937	$	3,990		1.05	%
Money Market Deposits(5)		52,168		218		0.56			47,069		98		0.28
Total interest-bearing liabilities		632,799		5,604		1.18			553,006		4,088		0.98
Non-interest-bearing liabilities:
Sales and property taxes payable		5,192							4,893
Accounts payable and accrued expenses		6,002							6,811
Net deferred income tax liability		16,833							17,524
Total non-interest-bearing liabilities		28,027							29,228
Total liabilities		660,826							582,234
Stockholders’ equity		153,307							174,690
Total liabilities and stockholders’ equity	$	814,133						$	756,924
Net interest income			$	48,917						$	45,577
Interest rate spread(6)						7.99	%						7.99	%
Net interest margin(7)						8.21	%						8.23	%
Ratio of average interest-earning assets to average interest-bearing liabilities						125.19	%						133.49	%

⁽¹⁾  Average balances were calculated using average daily balances.

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⁽²⁾  Annualized.

⁽³⁾  Average balances of leases and loans include non-accrual leases and loans, and are presented net of unearned income. The average balances of leases and loans do not include the effects of (i) the allowance for credit losses and (ii) initial direct costs and fees deferred.

⁽⁴⁾  Includes operating leases.

⁽⁵⁾ Includes effect of transaction costs. Amortization of transaction costs is on a straight-line basis, resulting in an increased average rate whenever average portfolio balances are at reduced levels.

⁽⁶⁾  Interest rate spread represents the difference between the average yield on interest-earning assets and the average rate on interest-bearing liabilities.

⁽⁷⁾  Net interest margin represents net interest income as an annualized percentage of average interest-earning assets.

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The following table presents the components of the changes in net interest income by volume and rate.

	Nine Months Ended September 30, 2016 Compared To
	Nine Months Ended September 30, 2015
	Increase (Decrease) Due To:
	Volume(1)			Rate(1)			Total
	(Dollars in thousands)
Interest income:
Interest-earning deposits with banks	$	(29	)	$	76		$	47
Time Deposits		37			3			40
Securities available for sale		8			3			11
Net investment in leases		4,826			(2,802	)		2,024
Loans receivable		2,422			312			2,734
Total interest income		3,694			1,162			4,856
Interest expense:
Certificate of Deposits		636			760			1,396
Money Market Deposits		12			108			120
Total interest expense		639			877			1,516
Net interest income		3,333			7			3,340

⁽¹⁾  Changes due to volume and rate are calculated independently for each line item presented rather than presenting vertical subtotals for the individual volume and rate columns. Changes attributable to changes in volume represent changes in average balances multiplied by the prior period’s average rates. Changes attributable to changes in rate represent changes in average rates multiplied by the prior year’s average balances. Changes attributable to the combined impact of volume and rate have been allocated proportionately to the change due to volume and the change due to rate.

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Net interest and fee margin. The following table summarizes the Company’s net interest and fee income as an annualized percentage of average total finance receivables for the nine-month periods ended September 30, 2016 and 2015.

	Nine Months Ended September 30,
	2016			2015
	(Dollars in thousands)
Interest income	$	54,521		$	49,665
Fee income		11,747			11,762
Interest and fee income		66,268			61,427
Interest expense		5,604			4,087
Net interest and fee income	$	60,664		$	57,340
Average total finance receivables(1)	$	705,879		$	630,073
Percent of average total finance receivables:
Interest income		10.30	%		10.51	%
Fee income		2.22			2.49
Interest and fee income		12.52			13.00
Interest expense		1.06			0.86
Net interest and fee margin		11.46	%		12.14	%

⁽¹⁾  Total finance receivables include net investment in direct financing leases and loans. For the calculations above, the effects of (i) the allowance for credit losses and (ii) initial direct costs and fees deferred are excluded.

Net interest and fee income increased $3.4 million, or 5.9%, to $60.7 million for the nine-month period ended September 30, 2016 from $57.3 million for the nine-month period ended September 30, 2015. The annualized net interest and fee margin decreased 68 basis points to 11.46% in the nine-month period ended September 30, 2016 from 12.14% for the same period in 2015.

Interest income, net of amortized initial direct costs and fees, increased $4.8 million, or 9.7%, to $54.5 million for the nine-month period ended September 30, 2016 from $49.7 million for the nine-month period ended September 30, 2015. The increase in interest income was principally due to a decrease in average yield of 21 basis points partially offset by a 12.0% increase in average total finance receivables, which increased $75.8 million to $705.9 million at September 30, 2016 from $630.1 million at September 30, 2015. The increase in average total finance receivables was primarily due to origination volume continuing to exceed lease repayments. The average yield on the portfolio decreased due to lower yields on the new leases compared to the yields on the leases repaying. The weighted average implicit interest rate on new finance receivables originated increased 70 basis points to 11.73% for the nine-month period ended September 30, 2016, compared to 11.03% for the nine-month period ended September 30, 2015.

Fee income decreased $0.1 million to $11.7 million for the nine-month period ended September 30, 2016, compared to $11.8 million for the nine-month period ended September 30, 2015. Fee income included approximately $3.2 million of net residual income for the nine-month period ended September 30, 2016 and $2.9 million for the nine-month period ended September 30, 2015.

Fee income also included approximately $7.0 million in late fee income for the nine-month period ended September 30, 2016, which decreased 1.4% from $7.1 million for the nine-month period ended September 30, 2015.

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Fee income, as an annualized percentage of average total finance receivables, decreased 27 basis points to 2.22% for the nine-month period ended September 30, 2016 from 2.49% for the nine-month period ended September 30, 2015. Late fees remained the largest component of fee income at 1.31% as an annualized percentage of average total finance receivables for the nine-month period ended September 30, 2016, compared to 1.50% for the nine-month period ended September 30, 2015. As an annualized percentage of average total finance receivables, net residual income was 0.61% for the nine-month period ended September 30, 2016, compared to 0.62% for the nine-month period ended September 30, 2015.

Interest expense increased $1.5 million to $5.6 million, or 1.18% as an annualized percentage of average deposits for, the nine-month period ended September 30, 2016, from $4.1 million, or 0.98% as an annualized percentage of average deposits, for the nine-month period ended September 30, 2015. The increase was primarily due to an increase in rate paid on interest bearing liabilities and to a lesser degree, the increase in the average balances of interest bearing liabilities. Interest expense, as an annualized percentage of average total finance receivables, increased 20 basis points to 1.06% for the nine-month period ended September 30, 2016, from 0.86% for the same period in 2015. The average balance of deposits was $632.8 million and $553.0 million for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.

There were no borrowings outstanding for each of the nine months ended September 30, 2016, and September 30, 2015.

Our wholly-owned subsidiary, MBB, serves as our primary funding source. MBB raises fixed-rate and variable-rate FDIC-insured deposits via the brokered certificates of deposit market, on a direct basis, and through the brokered MMDA Product. At September 30, 2016, brokered certificates of deposit represented approximately 60% of total deposits, while approximately 32% of total deposits were obtained from direct channels, and 8% were in the brokered MMDA Product.

Insurance premiums written and earned. Insurance premiums written and earned increased $0.5 million to $4.8 million for the nine-month period ended September 30, 2016 from $4.3 million for the nine-month period ended September 30, 2015, primarily due to an increase in the number of contracts enrolled in the insurance program as well as higher average ticket size.

Other income. Other income was $2.0 million and $1.3 million for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively. Other income primarily includes various administrative transaction fees and fees received from referral of leases to third parties and gain on sale of leases, recognized as earned. Effective third quarter 2016, on a prospective basis, insurance policy fees of $0.4 million are recognized in the Consolidated Statements of Operations in “Other income” and for all previous quarters were recognized net in “Insurance premiums written and earned.”

Salaries and benefits expense. Salaries and benefits expense increased $2.5 million, or 11.7%, to $23.8 million for the nine months ended September 30, 2016 from $21.3 million for the same period in 2015. The increase was primarily due to an increase in total personnel. Salaries and benefits expense, as an annualized percentage of average total finance receivables, was 4.49% for the nine-month period ended September 30, 2016 compared with 4.51% for the same period in 2015.

Total personnel increased to 318 at September 30, 2016 from 307 at September 30, 2015.

General and administrative expense. General and administrative expense increased $1.3 million, or 10.2%, to $14.1 million for the nine months ended September 30, 2016 from $12.8 million for the same period in 2015. General and administrative expense as an annualized percentage of average total finance receivables was 2.65% for the nine-month period ended September 30, 2016, compared to 2.70% for the nine-month period ended September 30, 2015. Selected major components of general and administrative expense for the nine-month period ended September 30, 2016 included $2.5 million of premises and occupancy expense, $1.0 million of audit and tax compliance expense, $1.7 million of data processing expense, $1.5 million of marketing expense, and $0.3 million of insurance related expenses which were recognized net in “Insurance premiums written and earned” in prior quarters.. In comparison, selected major components of general and administrative expense for the nine-month period ended September 30, 2015 included $2.5 million of premises and occupancy expense, $1.0 million of audit and tax compliance expense, $1.4 million of data processing expense, and $0.9 million of marketing expense.

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Financing related costs. Financing related costs primarily represent bank commitment fees paid to our financing sources on the unused portion of loan facilities. Financing related costs were $0.1 million for the nine months ended September 30, 2016, compared to $0.2 million for the same period in 2015.

Provision for credit losses. The provision for credit losses increased $1.4 million, or 18.7%, to $8.9 million for the nine-month period ended September 30, 2016 from $7.5 million for the same period in 2015, primarily due to growth in the portfolio. Lease portfolio losses tend to follow patterns based on the mix of origination vintages comprising the portfolio. The anticipated credit losses from the inception of a particular lease origination vintage to charge-off generally follow a pattern of lower losses for the first few months, followed by increased losses in subsequent months, then lower losses during the later periods of the lease term. Therefore, the seasoning, or mix of origination vintages, of the portfolio affects the timing and amount of anticipated probable and estimable credit losses.

Net charge-offs were $7.2 million for the nine-month period ended September 30, 2016, compared to $7.5 million for the same period in 2015. The decrease in net charge-offs was primarily due to the ongoing seasoning of the portfolio as reflected in the mix of origination vintages and the mix of credit profiles. Net charge-offs as an annualized percentage of average total finance receivables decreased to 1.36% during the nine-month period ended September 30, 2016, from 1.59% for the same period in 2015. The allowance for credit losses increased to approximately $10.1 million at September 30, 2016, an increase of $1.7 million from $8.4 million at December 31, 2015.

Additional information regarding asset quality is included herein in the subsequent section, “Finance Receivables and Asset Quality.”

Provision for income taxes. Income tax expense of $8.1 million was recorded for the nine-month period ended September 30, 2016, compared to an expense of $8.2 million for the same period in 2015. The change is primarily attributable to the change in pretax income recorded and a change in the effective tax rate due to changing demographics for the nine-month period ended September 30, 2016 compared to the nine-month period ended September 30, 2015. Our effective tax rate, which is a combination of federal and state income tax rates, was approximately 39.4% for the nine-month period ended September 30, 2016, compared to 38.6% for the nine-month period ended September 30, 2015.

FINANCE RECEIVABLES AND ASSET QUALITY

Our net investment in leases and loans increased $77.0 million, or 11.3%, to $759.4 million at September 30, 2016 from $682.4 million at December 31, 2015. We continue to monitor our credit underwriting guidelines in response to current economic conditions, and we continue to develop our sales organization to increase originations.

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The chart which follows provides our asset quality statistics for each of the three-and nine-month periods ended September 30, 2016 and September 30, 2015, and the year ended December 31, 2015:

			Three Months Ended September 30,						Nine Months Ended September 30,						Year Ended December 31,
			2016			2015			2016			2015			2015
			(Dollars in thousands)
Allowance for credit losses, beginning of period			$	9,430		$	8,567		$	8,413		$	8,537		$	8,537
Charge-offs				(3,062	)		(2,595	)		(9,060	)		(9,196	)		(12,453	)
Recoveries				568			630			1,840			1,705			2,334
Net charge-offs				(2,494	)		(1,965	)		(7,220	)		(7,491	)		(10,119	)
Provision for credit losses				3,137			1,986			8,880			7,542			9,995
Allowance for credit losses, end of period	(1	)	$	10,073		$	8,588		$	10,073		$	8,588		$	8,413
Annualized net charge-offs to average total finance receivables	(2	)		1.36	%		1.23	%		1.36	%		1.59	%		1.59	%
Allowance for credit losses to total finance receivables, end of period	(2	)		1.33	%		1.31	%		1.33	%		1.31	%		1.24	%
Average total finance receivables	(2	)	$	732,346		$	641,020		$	705,879		$	630,073		$	636,790
Total finance receivables, end of period	(2	)	$	756,144		$	657,143		$	756,144		$	657,143		$	679,738
Delinquencies greater than 60 days past due			$	3,885		$	3,186		$	3,885		$	3,186		$	3,163
Delinquencies greater than 60 days past due	(3	)		0.45	%		0.43	%		0.45	%		0.43	%		0.41	%
Allowance for credit losses to delinquent accounts greater than 60 days past due	(3	)		259.28	%		269.55	%		259.28	%		269.55	%		265.98	%
Non-accrual leases and loans, end of period			$	2,022		$	1,684		$	2,022		$	1,684		$	1,677
Renegotiated leases and loans, end of period			$	350		$	468		$	350		$	468		$	535
Accruing leases and loans past due 90 days or more			$	—		$	—		$	—		$	—		$	—
Interest income included on non-accrual leases and loans	(4	)	$	21		$	23		$	111		$	110		$	153
Interest income excluded on non-accrual leases and loans	(5	)	$	23		$	22		$	40		$	33		$	41

⁽¹⁾  At September 30, 2016, December 31, 2015, and September 30, 2015 the allowance for credit losses allocated to loans was $0.7 million, $0.2 million, and less than $0.1 million, respectively.

⁽²⁾  Total finance receivables include net investment in direct financing leases and loans. For purposes of asset quality and allowance calculations, the effects of (i) the allowance for credit losses and (ii) initial direct costs and fees deferred are excluded.

⁽³⁾  Calculated as a percent of total minimum lease payments receivable for leases and as a percent of principal outstanding for loans.

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⁽⁴⁾  Represents interest which was recognized during the period on non-accrual loans and leases, prior to non-accrual status.

⁽⁵⁾  Represents interest which would have been recorded on non-accrual loans and leases had they performed in accordance with their contractual terms during the period.

Net investments in finance receivables are generally charged-off when they are contractually past due for 120 days or more. Income recognition is discontinued on leases or loans when a default on monthly payment exists for a period of 90 days or more. Income recognition resumes when a lease or loan becomes less than 90 days delinquent.

Net charge-offs for the three months ended September 30, 2016 were $2.5 million (1.36% of average total finance receivables on an annualized basis), compared to $2.4 million (1.38% of average total finance receivables on an annualized basis) for the three months ended June 30, 2016 and $2.0 million (1.23% of average total finance receivables on an annualized basis) for the three months ended September 30, 2015. Lease portfolio losses tend to follow patterns based on the mix of origination vintages comprising the portfolio. The timing of credit losses from the inception of a particular lease origination vintage to charge-off generally follows a pattern of lower losses for the first few months, followed by increased losses in subsequent months, then lower losses during the later periods of the lease term. Therefore, the seasoning, or mix of origination vintages, of the portfolio affects the timing and amount of charge-offs.

Net charge-offs for the nine-month period ended September 30, 2016 were $7.2 million (1.36% of average total finance receivables on an annualized basis), compared to $7.5 million (1.59% of average total finance receivables on an annualized basis) for the nine-month period ended September 30, 2015. The decrease in charge-off rate is partially due to the ongoing seasoning of the portfolio as reflected in the mix of origination vintages and the mix of credit profiles, as discussed above.

Delinquent accounts 60 days or more past due (as a percentage of minimum lease payments receivable for leases and as a percentage of principal outstanding for loans) were 0.45% at September 30, 2016 and 0.41% at December 31, 2015, compared to 0.43% at September 30, 2015. Supplemental information regarding loss statistics and delinquencies is available on the investor relations section of Marlin’s website at www.marlincorp.com.

In accordance with the Contingencies and Receivables Topics of the FASB ASC, we maintain an allowance for credit losses at an amount sufficient to absorb losses inherent in our existing lease and loan portfolios as of the reporting dates based on our projection of probable net credit losses. The factors and trends discussed above were included in the Company’s analysis to determine its allowance for credit losses. (See “Critical Accounting Policies.”)

RESIDUAL PERFORMANCE

Our leases offer our end user customers the option to own the equipment at lease expiration. As of September 30, 2016, approximately 69% of our leases were one dollar purchase option leases, 31% were fair market value leases and less than 1% were fixed purchase option leases, the latter of which typically contain an end-of-term purchase option equal to 10% of the original equipment cost. As of September 30, 2016, there were $26.9 million of residual assets retained on our Consolidated Balance Sheet, of which $22.5 million, or 83.5%, were related to copiers. As of December 31, 2015, there were $27.4 million of residual assets retained on our Consolidated Balance Sheet, of which $22.7 million, or 83.1%, were related to copiers. No other group of equipment represented more than 10% of equipment residuals as of September 30, 2016 and December 31, 2015. Improvements in technology and other market changes, particularly in copiers, could adversely impact our ability to realize the recorded residual values of this equipment.

Fee income included approximately $1.1 million and $1.0 million of net residual income for the three-month periods ended September 30, 2016 and September 30, 2015, respectively. Fee income included approximately $3.2 million and $2.9 million of net residual income for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively. Net residual income includes income from lease renewals and gains and losses on the realization of residual values of leased equipment disposed at the end of term as further described below.

Our leases generally include renewal provisions and many leases continue beyond their initial contractual term. Based on the Company’s experience, the amount of ultimate realization of the residual value tends to relate more to the customer’s election at the end of the lease term to enter into a renewal period, purchase the leased equipment or return the leased equipment than it does to the equipment type.

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We consider renewal income a component of residual performance. Renewal income net of depreciation totaled approximately $1.3 million and $1.1 million for the three-month periods ended September 30, 2016 and September 30, 2015, respectively. Renewal income net of depreciation totaled approximately $3.8 million and $3.2 million for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.

For the three months ended September 30, 2016 and September 30, 2015, the net loss on residual values disposed at end of term totaled $0.2 million and $0.1 million, respectively. For the nine months ended September 30, 2016, the net loss on residual values disposed at end of term totaled $0.6 million, compared to a net loss of $0.3 million for the nine months ended September 30, 2015. The primary driver of the changes was a shift in the mix of the amounts, types and age of equipment disposed at the end of the applicable lease term. Historically, our net residual income has exceeded 100% of the residual recorded on such leases. Management performs periodic reviews of the estimated residual values and historical realization statistics no less frequently than quarterly. There was no impairment recognized on estimated residual values during the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Our business requires a substantial amount of cash to operate and grow. Our primary liquidity need is to fund new originations. In addition, we need liquidity to pay interest and principal on our deposits and borrowings, to pay fees and expenses incurred in connection with our financing transactions, to fund infrastructure and technology investment, to pay dividends and to pay administrative and other operating expenses.

We are dependent upon the availability of financing from a variety of funding sources to satisfy these liquidity needs. Historically, we have relied upon four principal types of external funding sources for our operations:

• FDIC-insured deposits issued by our wholly-owned subsidiary, MBB;

• borrowings under various bank facilities;

• financing of leases and loans in various warehouse facilities (all of which have since been repaid in full); and

• financing of leases through term note securitizations (all of which have been repaid in full).

With the opening of MBB in 2008, we began to fund increasing amounts of new originations through the issuance of FDIC-insured deposits. Deposits issued by MBB represent our primary funding source for new originations.

On February 23, 2014, MBB added the FDIC-insured MMDA Product as another source of deposit funding. This product is offered through participation in a partner bank’s insured savings account product to clients of that bank. It is a brokered account with a variable interest rate, recorded as a single deposit account at MBB. Over time, MBB may offer other products and services to the Company’s customer base. MBB is a Utah state-chartered, Federal Reserve member commercial bank. As such, MBB is supervised by both the Federal Reserve Bank of San Francisco and the Utah Department of Financial Institutions.

On January 13, 2009, Marlin Business Services Corp. became a bank holding company and is subject to the Bank Holding Company Act and supervised by the Federal Reserve Bank of Philadelphia. On September 15, 2010, the Federal Reserve Bank of Philadelphia confirmed the effectiveness of Marlin Business Services Corp.’s election to become a financial holding company (while remaining a bank holding company) pursuant to Sections 4(k) and (l) of the Bank Holding Company Act and Section 225.82 of the Federal Reserve Board’s Regulation Y. Such election permits Marlin Business Services Corp. to engage in activities that are financial in nature or incidental to a financial activity, including the maintenance and expansion of our reinsurance activities conducted through our wholly-owned subsidiary, AssuranceOne.

On October 9, 2009, Marlin Business Services Corp.’s affiliate, Marlin’s Receivables Corp. (“MRC”), closed on a $75.0 million, three-year committed loan facility with the Lender Finance division of Wells Fargo Capital Finance. The facility is secured by a lien on MRC’s assets and is supported by guaranties from Marlin Business Services Corp. and MLC. Advances under the facility are made pursuant to a borrowing base formula, and the proceeds are used to fund lease originations. On April 8, 2015, the facility was amended to change the amount under the loan facility from $75.0 million to $50.0 million. On May 4, 2016, the facility was amended to extend the maturity date to August 4, 2016. On August 5, 2016, the facility was terminated.

The Company declared a dividend of $0.14 per share on July 28, 2016. The quarterly dividend was paid on August 18, 2016 to shareholders of record on the close of business on August 8, 2016, which resulted in a dividend payment of approximately $1.8 million. It represented the Company’s twentieth consecutive quarterly cash dividend.

-47-

At September 30, 2016, we had approximately $25.0 million of available borrowing capacity from a federal funds line of credit with a correspondent bank in addition to available cash and cash equivalents of $77.6 million. This amount excludes additional liquidity that may be provided by the issuance of insured deposits through MBB.

Net cash used in investing activities was $91.9 million for the nine-month period ended September 30, 2016, compared to net cash used in investing activities of $46.5 million for the nine-month period ended September 30, 2015. The decrease in cash flows from investing activities is primarily due to $80.8 million more of purchases of equipment for direct financing lease contracts and funds used to originate loans partially offset by $5.7 million less in time deposits with banks and $27.8 million more of principal collections on leases and loans due to higher average finance receivables. Investing activities primarily relate to leasing activities.

Net cash provided by financing activities was $83.5 million for the nine-month period ended September 30, 2016, compared to net cash provided by financing activities of $17.8 million for the nine-month period ended September 30, 2015. The increase in cash flows from financing activities is primarily due to a $59.5 million increase in deposits. Financing activities include net advances and repayments on our various deposit and borrowing sources and transactions related to the Company’s common stock, such as repurchasing common stock and paying dividends.

Additional liquidity is provided by or used by our cash flow from operations. Net cash provided by operating activities was $25.9 million for the nine-month period ended September 30, 2016, compared to net cash provided by operating activities of $23.3 million for the nine-month period ended September 30, 2015. Net cash provided by operating activities for the nine-month period ended September 30, 2016 includes $6.8 million of proceeds from the sale of leases which represents cash received for leases which were originated by the Company and subsequently sold to third parties.

We expect cash from operations, additional borrowings on existing and future credit facilities and funds from deposits issued through brokers, direct deposit sources, and the MMDA Product to be adequate to support our operations and projected growth for the next 12 months and the foreseeable future.

Total Cash and Cash Equivalents. Our objective is to maintain an adequate level of cash, investing any free cash in leases. We primarily fund our originations and growth using FDIC- insured deposits issued through MBB. Total cash and cash equivalents available as of September 30, 2016 totaled $77.6 million, compared to $60.1 million at December 31, 2015.

Time Deposits with Banks. Time deposits with banks are primarily composed of FDIC insured certificates of deposits that have original maturity dates of greater than 90 days. Generally, the certificates of deposits have the ability to redeem early, however, early redemption penalties may be incurred. Total time deposits as of September 30, 2016 and December 31, 2015 totaled $9.1 million and $7.4 million, respectively.

Restricted Interest-earning Deposits with Banks. As of September 30, 2016, no cash was classified as restricted interest-earning deposits with banks, compared to $0.2 million at December 31, 2015. Restricted interest-earning deposits with banks consisted primarily of trust accounts related to our secured debt facility.

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Borrowings. Our primary borrowing relationship requires the pledging of eligible lease and loan receivables to secure amounts advanced. We had no outstanding secured borrowings at September 30, 2016 and December 31, 2015. Information pertaining to our borrowing facilities is as follows:

	For the Nine Months Ended September 30, 2016									As of September 30, 2016
			Maximum
	Maximum		Month End		Average		Weighted					Weighted
	Facility		Amount		Amount		Average			Amount		Average			Unused
	Amount		Outstanding		Outstanding		Rate (2)			Outstanding		Rate (2)			Capacity(1)
	(Dollars in thousands)
Federal funds purchased	$	25,000	$	—	$	—		—	%	$	—		—	%	$	25,000
	$	25,000			$	—		—	%	$	—		—	%	$	25,000

⁽¹⁾  Does not include MBB’s access to the Federal Reserve Discount Window, which is based on the amount of assets MBB chooses to pledge. Based on assets pledged at September 30, 2016, MBB had $27.6 million in unused, secured borrowing capacity at the Federal Reserve Discount Window. Additional liquidity that may be provided by the issuance of insured deposits is also excluded from this table.

⁽²⁾  Does not include transaction costs.

Federal Funds Line of Credit with Correspondent Bank

MBB has established a federal funds line of credit with a correspondent bank. This line allows for both selling and purchasing of federal funds. The amount that can be drawn against the line is limited to $25.0 million.

Federal Reserve Discount Window

In addition, MBB has received approval to borrow from the Federal Reserve Discount Window based on the amount of assets MBB chooses to pledge. MBB had $27.6 million in unused, secured borrowing capacity at the Federal Reserve Discount Window, based on $31.1 million of net investment in leases pledged at September 30, 2016.

Long-term Loan Facilities

On October 9, 2009, Marlin Business Services Corp.’s affiliate, MRC, closed on a $75.0 million, three-year committed loan facility with the Lender Finance division of Wells Fargo Capital Finance. The facility is secured by a lien on MRC’s assets and is supported by guaranties from Marlin Business Services Corp. and MLC. Advances under the facility are made pursuant to a borrowing base formula, and the proceeds are used to fund lease originations. In contrast to previous facilities, this long-term loan facility does not require annual refinancing. On April 8, 2015, the facility was amended to change the amount under the loan facility from $75.0 million to $50.0 million. On May 4, 2016, the facility was amended to extend the maturity date to August 4, 2016. On August 5, 2016, the facility was terminated.

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Bank Capital and Regulatory Oversight

On January 13, 2009, we became a bank holding company by order of the Federal Reserve Board and are subject to regulation under the Bank Holding Company Act. All of our subsidiaries may be subject to examination by the Federal Reserve Board even if not otherwise regulated by the Federal Reserve Board. On September 15, 2010, the Federal Reserve Bank of Philadelphia confirmed the effectiveness of our election to become a financial holding company (while remaining a bank holding company) pursuant to Sections 4(k) and (l) of the Bank Holding Company Act and Section 225.82 of the Federal Reserve Board’s Regulation Y. Such election permits us to engage in activities that are financial in nature or incidental to a financial activity, including the maintenance and expansion of our reinsurance activities conducted through our wholly-owned subsidiary, AssuranceOne.

MBB is also subject to comprehensive federal and state regulations dealing with a wide variety of subjects, including minimum capital standards, reserve requirements, terms on which a bank may engage in transactions with its affiliates, restrictions as to dividend payments and numerous other aspects of its operations. These regulations generally have been adopted to protect depositors and creditors rather than shareholders.

There are a number of restrictions on bank holding companies that are designed to minimize potential loss to depositors and the FDIC insurance funds. If an FDIC-insured depository subsidiary is “undercapitalized,” the bank holding company is required to ensure (subject to certain limits) the subsidiary’s compliance with the terms of any capital restoration plan filed with its appropriate banking agency. Also, a bank holding company is required to serve as a source of financial strength to its depository institution subsidiaries and to commit resources to support such institutions in circumstances where it might not do so absent such policy. Under the Bank Holding Company Act, the Federal Reserve Board has the authority to require a bank holding company to terminate any activity or to relinquish control of a non-bank subsidiary upon the Federal Reserve Board’s determination that such activity or control constitutes a serious risk to the financial soundness and stability of a depository institution subsidiary of the bank holding company.

Capital Adequacy. New capital adequacy standards adopted by the federal bank regulatory agencies establish new minimum capital requirements for the Company and MBB effective on January 1, 2015. Under the risk-based capital requirements applicable to them, bank holding companies must maintain a ratio of total capital to risk-weighted assets (including the asset equivalent of certain off-balance sheet activities such as acceptances and letters of credit) of not less than 8% (10% in order to be considered “well-capitalized”). The new requirements include a 6% minimum Tier 1 risk-based ratio (8% to be considered well-capitalized). Tier 1 Capital consists of common stock, related surplus, retained earnings, qualifying perpetual preferred stock and minority interests in the equity accounts of certain consolidated subsidiaries, after deducting goodwill and certain other intangibles. The remainder of total capital (“Tier 2 Capital”) may consist of certain perpetual debt securities, mandatory convertible debt securities, hybrid capital instruments and limited amounts of subordinated debt, qualifying preferred stock, allowance for credit losses on loans and leases, allowance for credit losses on off-balance-sheet credit exposures and unrealized gains on equity securities.

The new capital standards require a minimum Tier 1 leverage ratio of 4%. The capital requirements also now require a new common equity Tier 1 risk-based capital ratio with a required minimum of 4.5% (6.5% to be considered well-capitalized). The Federal Reserve Board’s guidelines also provide that bank holding companies experiencing internal growth or making acquisitions are expected to maintain capital positions substantially above the minimum supervisory levels without significant reliance on intangible assets. Furthermore, the guidelines indicate that the Federal Reserve Board will continue to consider a “tangible tier 1 leverage ratio” (i.e., after deducting all intangibles) in evaluating proposals for expansion or new activities. MBB is subject to similar capital standards.

The Company is required to have a level of regulatory capital in excess of the regulatory minimum and to have a capital buffer above 0.625% for 2016. If a banking organization does not maintain capital above the minimum plus the capital conservation buffer it may be subject to restrictions on dividends, share buybacks, and certain discretionary payments such as bonus payments.

At September 30, 2016, MBB’s Tier 1 leverage ratio, common equity Tier 1 risk-based ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio were 16.05%, 16.73%, 16.73% and 17.98%, respectively, which exceeds requirements for well-capitalized status of 5%, 6.5%, 8% and 10%, respectively. At September 30, 2016, Marlin Business Services Corp.’s Tier 1 leverage ratio, common equity Tier 1 risk based ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio were 18.53%, 19.77%, 19.77% and 21.02%, respectively, which exceeds requirements for well-capitalized status of 5%, 6.5%, 8% and 10%, respectively.

Pursuant to the FDIC Agreement entered into in conjunction with the opening of MBB, MBB is required to keep its total risk-based capital ratio above 15%. MBB’s Tier 1 Capital balance at September 30, 2016 was $131.0 million, which exceeds the regulatory threshold for “well capitalized” status. Until March 12, 2011, MBB operated in accordance with its original de novo three-year business plan as required by the original order issued by the FDIC when the Company opened MBB. Following the expiration of MBB’s three-year de novo period, the Company provided MBB with additional capital to support growth of $25 million in 2011, $10 million in 2012, and $10 million in 2013. Additional capital was not required from the Company in 2014, 2015 or 2016 as MBB is able to support future growth.

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Information on Stock Repurchases

Information on Stock Repurchases is provided in “Part II. Other Information, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds” herein.

Items Subsequent to September 30, 2016

The Company declared a dividend of $0.14 per share on October 27, 2016. The quarterly dividend, which is expected to result in a dividend payment of approximately $1.8 million, is scheduled to be paid on November 17, 2016 to shareholders of record on the close of business on November 7, 2016. It represents the Company’s twenty-first consecutive quarterly cash dividend. The payment of future dividends will be subject to approval by the Company’s Board of Directors.

Contractual Obligations

In addition to scheduled maturities on our deposits and credit facilities, we have future cash obligations under various types of contracts. We lease office space and office equipment under long-term operating leases. The contractual obligations under our certificates of deposits, credit facilities, operating leases, agreements and commitments under non-cancelable contracts as of September 30, 2016 were as follows:

	Contractual Obligations as of September 30, 2016
	Certificates		Contractual
	of		Interest		Operating		Leased		Capital
Period Ending December 31,	Deposits (1)		Payments(2)		Leases		Facilities		Leases		Total
	(Dollars in thousands)
2016	$	64,434	$	973	$	1	$	395	$	25	$	65,828
2017		238,491		5,710		4		1,527		77		245,809
2018		158,865		3,461		4		1,468		—		163,798
2019		82,659		1,760		4		1,431		—		85,854
2020		54,746		762		1		686		—		56,195
Thereafter		26,959		991		—		—		—		27,950
Total	$	626,154	$	13,657	$	14	$	5,507	$	102	$	645,434

⁽¹⁾  Money market deposit accounts are not included. As of September 30, 2016, money market deposit accounts totaled $50.8 million.

⁽²⁾  Includes interest on certificates of deposits and borrowings.

There were no off-balance sheet arrangements requiring disclosure at September 30, 2016.

MARKET INTEREST RATE RISK AND SENSITIVITY

Market risk is the risk of losses arising from changes in values of financial instruments. We engage in transactions in the normal course of business that expose us to market risks. We attempt to mitigate such risks through prudent management practices and strategies such as attempting to match the expected cash flows of our assets and liabilities.

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We are exposed to market risks associated with changes in interest rates and our earnings may fluctuate with changes in interest rates. The lease assets we originate are almost entirely fixed-rate. Accordingly, we generally seek to finance these assets primarily with fixed interest certificates of deposit issued by MBB, and to a lesser extent through the variable rate MMDA Product at MBB.

RECENTLY ISSUED ACCOUNTING STANDARDS

Information on recently issued accounting pronouncements and the expected impact on our financial statements is provided in Note 2, Summary of Significant Accounting Policies in the accompanying Notes to Consolidated Financial Statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information appearing in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Interest Rate Risk and Sensitivity” under Item 2 of Part I of this Form 10-Q is incorporated herein by reference.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.

Based on that evaluation, the CEO and CFO concluded that our disclosure controls and procedures as of the end of the period covered by this report are designed and operating effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the 1934 Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with management’s evaluation that occurred during the Company’s third fiscal quarter of 2016 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. Other Information

Item 1. Legal Proceedings

We are party to various legal proceedings, which include claims and litigation arising in the ordinary course of business. In the opinion of management, these actions will not have a material impact on our business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Information on Stock Repurchases

During the three months ended September 30, 2016, the Company did not repurchase any of its common stock under the 2014 Repurchase Plan in the open market.

In addition to the repurchases described above, pursuant to the 2014 Equity Plan, participants may have shares withheld to cover income taxes. There were 735 shares repurchased to cover income tax withholding in connection with the shares granted under the 2014 Equity Plan during the three-month period ended September 30, 2016, at an average cost of $17.98 per share.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None

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Item 6. Exhibits

Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation (1)
3.2	Bylaws (2)
31.1	Certification of the Chief Executive Officer of Marlin Business Services Corp. required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. (Filed herewith)
31.2	Certification of the Chief Financial Officer of Marlin Business Services Corp. required by Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. (Filed herewith)
32.1	Certification of the Chief Executive Officer and Chief Financial Officer of Marlin Business Services Corp. required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.) (Furnished herewith)
101	Financial statements from the Quarterly Report on Form 10-Q of the Company for the period ended September 30, 2016, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements. (Submitted electronically with this report)

⁽¹⁾  Previously filed with the SEC as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 filed on March 5, 2008, and incorporated by reference herein.

⁽²⁾  Previously filed with the SEC as an exhibit to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-108530), filed on October 14, 2003 and incorporated by reference herein.

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SIGNATURES

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 thereunto duly authorized.

MARLIN BUSINESS SERVICES CORP.
(Registrant)
By:	/s/ Jeff Hilzinger	Chief Executive Officer
	Jeff Hilzinger	(Chief Executive Officer)
By:	/s/ W. Taylor Kamp
	W. Taylor Kamp	Chief Financial Officer & Senior Vice President
		(Principal Financial Officer)

Date: October 31, 2016

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EX-31.1

Exhibit 31.1

CERTIFICATION REQUIRED BY RULE 13a-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Jeff Hilzinger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marlin Business Services Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the periods in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the periods covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 31, 2016

/s/ Jeff Hilzinger

Jeff Hilzinger

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION REQUIRED BY RULE 13a-14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, W. Taylor Kamp, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marlin Business Services Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the periods in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the periods covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 31, 2016

/s/ W. Taylor Kamp

W. Taylor Kamp

Chief Financial Officer & Senior Vice President

Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of Marlin Business Services Corp. for the quarter ended September 30, 2016 (the “Quarterly Report”), Jeff Hilzinger, as Chief Executive Officer, and W. Taylor Kamp, Chief Financial Officer of the Company, each hereby certifies, that pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Quarterly Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Marlin Business Services Corp.

Date: October 31, 2016

/s/ Jeff Hilzinger

Jeff Hilzinger

Chief Executive Officer

/s/ W. Taylor Kamp

W. Taylor Kamp

Chief Financial Officer & Senior Vice President

(Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 25, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Document period end date	Sep. 30, 2016
Amendment flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Current fiscal year end date	--12-31
Entity central index key	0001260968
Entity current reporting status	Yes
Entity filer category	Accelerated Filer
Entity registrant name	MARLIN BUSINESS SERVICES CORP.
Entity voluntary filers	No
Entity well known seasoned issuer	No
Entity common stock shares outstanding		12,564,606
Trading Symbol	MRLN

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)		Sep. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks		$ 3,850,000	$ 4,946,000
Interest-earning deposits with banks		73,775,000	55,183,000
Total cash and cash equivalents		77,625,000	60,129,000
Time deposits		9,107,000	7,368,000
Restricted interest-earning deposits with banks		0	216,000
Securities available for sale (amortized cost of $6.1 million and $6.6 million at September 30, 2016 and December 31, 2015, respectively)		6,075,000	6,399,000
Net investment in leases and loans, excluding allowance for credit losses		769,495,000	690,845,000
Allowance for Credit Losses	[1]	(10,073,000)	(8,413,000)
Net investment in leases and loans		759,422,000	682,432,000
Property and equipment, net		3,624,000	3,872,000
Property tax receivable		5,415,000	47,000
Other assets		7,733,000	12,521,000
Total assets		869,001,000	772,984,000
LIABILITIES AND STOCKHOLDERS EQUITY
Deposits		676,920,000	587,940,000
Other liabilities:
Sales and property taxes payable		5,137,000	2,686,000
Accounts payable and accrued expenses		13,814,000	15,371,000
Net deferred income tax liability		14,462,000	16,849,000
Total liabilities		710,333,000	622,846,000
Stockholders equity:
Common Stock, $0.01 par value; 75,000,000 shares authorized; 12,564,761 and 12,410,899 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively		126,000	124,000
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued		0	0
Additional paid-in capital		82,892,000	81,703,000
Stock subscription receivable		(2,000)	(2,000)
Accumulated other comprehensive income (loss)		(5,000)	(129,000)
Retained earnings		75,657,000	68,442,000
Total stockholders equity		158,668,000	150,138,000
Total liabilities and stockholders equity		$ 869,001,000	$ 772,984,000

[1] (1) At September 30, 2016 , December 31, 2015 , and September 30, 2015 the allowance for credit losses allocated to loans was $ 0 . 7 million, $ 0 . 2 million, and less than $ 0 . 1 million , respectively.

XML

Condensed Consolidated Balance Sheets (Parentheticals) (Unaudited) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Condensed Consolidated Balance Sheets [Abstract]
Available-for-sale securities, amortized cost	$ 6.1	$ 6.6
Common stock par value	$ 0.01	$ 0.01
Common stock shares authorized	75,000,000	75,000,000
Common stock shares issued	12,564,761	12,410,899
Common stock shares outstanding	12,564,761	12,410,899
Preferred stock - par or stated value	$ 0.01	$ 0.01
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares issued	0	0

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Condensed Consolidated Statements of Operations (Unaudited)
Interest income	$ 18,803	$ 16,690	$ 54,521	$ 49,665
Fee income	3,944	3,915	11,747	11,762
Interest and fee income	22,747	20,605	66,268	61,427
Interest expense	2,055	1,433	5,604	4,087
Net interest and fee income	20,692	19,172	60,664	57,340
Provision for credit losses	3,137	1,986	8,880	7,542
Net interest and fee income after provision for credit losses	17,555	17,186	51,784	49,798
Other income:
Insurance premiums written and earned	1,567	1,470	4,759	4,294
Other income	1,065	572	2,013	1,336
Other income	2,632	2,042	6,772	5,630
Other expense:
Salaries and benefits	7,817	7,058	23,829	21,290
General and administrative	4,980	4,357	14,073	12,780
Financing related costs	17	34	85	184
Other expense	12,814	11,449	37,987	34,254
Income before income taxes	7,373	7,779	20,569	21,174
Income tax expense	3,028	2,982	8,105	8,173
Net income	$ 4,345	$ 4,797	$ 12,464	$ 13,001
Basic earnings per share	$ 0.35	$ 0.38	$ 1	$ 1.01
Diluted earnings per share	0.35	0.38	1	1.01
Cash dividends declared and paid per share	$ 0.14	$ 2.14	$ 0.42	$ 2.39

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Comprehensive Income
Net income	$ 4,345	$ 4,797	$ 12,464	$ 13,001
Other Comprehensive Income (Loss)
Increase (decrease) in fair value of securities available for sale	28	78	200	(15)
Tax effect	(11)	(30)	(76)	5
Total other comprehensive income (loss)	17	48	124	(10)
Comprehensive Income	$ 4,362	$ 4,845	$ 12,588	$ 12,991

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid In Capital [Member]	Stock Subscription Receivable [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]
Balance at Dec. 31, 2014	$ 173,964	$ 128	$ 89,130	$ (2)	$ (17)	$ 84,725
Balance, Shares at Dec. 31, 2014		12,838,449
Issuance of common stock	234		234
Issuance of common stock, shares		14,929
Repurchase of common stock	(11,320)	$ (7)	(11,313)
Repurchase of common stock, shares		(659,903)
Exercise of stock options	586	$ 1	585
Exercise of stock options, shares		61,937
Excess tax benefits from stock-based payment arrangements	333		333
Stock option compensation recognized	108		108
Restricted stock grant, net of forfeitures		$ 2	(2)
Restricted stock grant, shares, net of forfeitures		155,487
Restricted stock compensation recognized	2,628		2,628
Net change in unrealized gain/loss on securities available for sale, net of tax	(112)				(112)
Net income	15,966					15,966
Cash dividends paid	(32,249)					(32,249)
Balance at Dec. 31, 2015	$ 150,138	$ 124	81,703	(2)	(129)	68,442
Balance, Shares at Dec. 31, 2015	12,410,899	12,410,899
Issuance of common stock	$ 122		122
Issuance of common stock, shares		7,981
Repurchase of common stock	(330)	$ 0	(330)
Repurchase of common stock, shares		(22,673)
Exercise of stock options	$ 71	$ 0	71
Exercise of stock options, shares	6,880	6,880
Excess tax benefits from stock-based payment arrangements	$ (86)		(86)
Stock option compensation recognized	0		0
Restricted stock grant, net of forfeitures		$ 2	(2)
Restricted stock grant, shares, net of forfeitures		161,674
Restricted stock compensation recognized	1,414		1,414
Net change in unrealized gain/loss on securities available for sale, net of tax	124				124
Net income	12,464					12,464
Cash dividends paid	(5,249)					(5,249)
Balance at Sep. 30, 2016	$ 158,668	$ 126	$ 82,892	$ (2)	$ (5)	$ 75,657
Balance, Shares at Sep. 30, 2016	12,564,761	12,564,761

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 12,464	$ 13,001
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,360	1,214
Stock-based compensation	1,414	1,548
Excess tax (benefits) deficit from stock-based payment arrangements	86	(323)
Provision for credit losses	8,880	7,542
Net deferred income taxes	(2,482)	(1,975)
Amortization of deferred initial direct costs and fees	6,275	5,575
Deferred initial direct costs and fees	(8,539)	(6,150)
Loss on equipment disposed	574	300
Gain on leases sold	(198)	0
Leases originated for sale	(625)	0
Proceeds from sale of leases	6,775	0
Effect of changes in other operating items:
Other assets	(962)	521
Other liabilities	898	2,011
Net cash provided by operating activities	25,920	23,264
Cash flows from investing activities:
Net change in time deposits with banks	(1,739)	(7,368)
Purchases of equipment for direct financing lease contracts and funds used to originate loans	(357,686)	(276,915)
Principal collections on leases and loans	265,450	237,671
Security deposits collected, net of refunds	(549)	(281)
Proceeds from the sale of equipment	2,651	2,512
Acquisitions of property and equipment	(800)	(2,127)
Change in restricted interest-earning deposits with banks	216	322
Purchases of securities available for sale	525	(341)
Net cash provided by (used in) investing activities	(91,932)	(46,527)
Cash flows from financing activities:
Net change in deposits	88,980	29,506
Issuances of common stock	122	121
Repurchases of common stock	(330)	(7,706)
Dividends paid	(5,249)	(5,005)
Exercise of stock options	71	586
Excess tax benefit (deficit) from stock-based payment arrangements	(86)	323
Net cash provided by (used in) financing activities	83,508	17,825
Net increase (decrease) in total cash and cash equivalents	17,496	(5,438)
Total cash and cash equivalents, beginning of period	60,129	110,656
Total cash and cash equivalents, end of period	77,625	105,218
Supplemental disclosures of cash flow information:
Cash paid for interest on deposits and borrowings	5,201	3,647
Net cash paid (received) for income taxes	$ 5,534	$ 9,340

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The Company

9 Months Ended

Sep. 30, 2016

The Company [Abstract]

Organization

NOTE 1 – The Company

Description

Marlin Business Services Corp. (the “Company”)is a bank holding company and a financial holding company regulated by the Federal Reserve Board under the Bank Holding Company Act. The Company was incorporated in the Commonwealth of Pennsylvania on August 5, 2003. Through its principal operating subsidiary, Marlin Leasing Corporation (“MLC”), the Company provides equipment financing solutions nationwide, primarily to small and mid-sized businesses in a segment of the equipment leasing market commonly referred to in the industry as the “small-ticket” segment. The Company finances over 100 categories of commercial equipment important to its end user customers, including copiers, security systems, computers, telecommunications equipment and certain commercial and industrial equipment. In May 2000, we established AssuranceOne, Ltd., a Bermuda-based, wholly-owned captive insurance subsidiary (“Assurance One”),which enables us to reinsure the property insurance coverage for the equipment financed by MLC and Marlin Business Bank (“MBB”) for our end user customers.Effective March 12, 2008, the Company opened MBB, a commercial bank chartered by the State of Utah and a member of the Federal Reserve System. MBB serves as the Company’s primary funding source through its issuance of Federal Deposit Insurance Corporation (“FDIC”)-insured deposits.

References to the “Company,” “Marlin,” “Registrant,” “we,” “us” and “our” herein refer to Marlin Business Services Corp. and its wholly-owned subsidiaries, unless the context otherwise requires.

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Summary of Critical Accounting Policies

9 Months Ended

Sep. 30, 2016

Summary of Critical Accounting Policies [Abstract]

Summary of Critical Accounting Policies

NOTE 2 – Summary of Critical Accounting Policies

Basis of financial statement presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. MLC and MBB are managed together as a single business segment and are aggregated for financial reporting purposes as they exhibit similar economic characteristics, share the same leasing portfolio and have one product offering. All intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements present fairly the Company’s financial position at September 30, 2016 and the results of operations for the three-and nine-month periods ended September 30, 2016 and 2015, and cash flows for the nine-month periods ended September 30, 2016 and 2015. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and note disclosures included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 4, 2016. The consolidated results of operations for the three-and nine-month periods ended September 30, 2016 and 2015 and the consolidated statements of cash flows for the nine-month periods ended September 30, 2016 and 2015 are not necessarily indicative of the results of operations or cash flows for the respective full years or any other period.

Insurance Premiums Written and Earned

Insurance premiums written and earned are recognized over the term of the policy, which is month to month. Since the policy’s premiums are recognized month to month, there is no unearned premium on the Consolidated Balance Sheets as these are fully recognized through the Consolidated Statements of Operations in the month written. For all annual and interim periods, second quarter 2016 and prior, income and expense related to insurance premiums written and earned, insurance policy fees, deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses is recorded within the“Insurance premiums written and earned” line on the Consolidated Statement of Operations. Effective third quarter 2016, on a prospective basis, onlyinsurance premium written and earned was recorded to that line.Effective third quarter 2016, on a prospective basis, insurance policy fees were recorded to “Other income” and deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses were recorded in“General and administrative” expense. For the years ended December 31, 2015 and 2014, insurance premiums written and earned were $5.5 million and $5.0 million, respectively. For the nine-months ended September 30, 2016, insurance premiums written and earned were $4.6 million.

Other Income

Other income includes various administrative transaction fees, insurance policy fees, fees received from referral of leases to third parties and gain on sale of leases, recognized as earned. Effective third quarter 2016, on a prospective basis, the insurance policy fees are recognized in the Consolidated Statements of Operations in “Other income” and for all previous annual and interim periodsare recorded net in “Insurance premiums written and earned.”

Insurance Program Deferred Acquisition Costs

Deferred acquisitions costs represent the fees paid to a third-party insurance company. Effective third quarter 2016, on a prospective basis, the costs are recognized on the Consolidated Statements of Operations in “General and administrative” expense and for all previous interim and annual periods are recognized net in “Insurance premiums written and earned.” For each of the years ended December 31, 2015, 2014 and 2013, the Company recognized deferred acquisition costs of less than $0.8 million.For the nine-months ended September 30, 2016, the company recognized $0.5 million of deferred acquisition costs. Since the policy’s premiums are recognized on a month to month basis, there is no deferred acquisition costs on the Consolidated Balance Sheet as these are fully recognized through the Consolidated Statements of Operations in the month written.

Provision for Unpaid Losses and Loss Adjustment Expenses

The Company records a provision for insurance losses and loss adjustment expenses. Effective third quarter 2016, on a prospective basis, the expense was recorded in “General and administrative” expense on the Consolidated Statements of Operations and for all previous annual and interim periods is recorded net in “Insurance premiums written and earned.” The liability for losses and loss adjustment expenses includes an amount determined from loss reports and individual cases and an amount, based on historical loss experience and industry statistics, for losses incurred but not reported (“IBNR”). These estimates are continually reviewed and are subject to the impact of future changes in such factors as claim severity and frequency. Loss and loss expenses are paid when advised by the third-party insurance company. Outstanding losses comprise estimates of the amount of reported losses and loss expenses received from the third-party insurance company plus a provision for losses IBNR. IBNR is determined with the assistance of a third-party actuary. For each of the years ended December 31, 2015, 2014, and 2013, the Company recognized provision for unpaid losses and loss adjustment expenses of less than $0.4 million.For the nine-month period ended September 30, 2016, the company recognized provision for unpaid losses and loss adjustment expenses of less than $0.5 million.

There have been no other significant changes to our Critical Accounting Policies as described in our 2015 Annual Report on Form 10-K.

Recent Accounting Pronouncements.

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).The amendments in this Update provide guidance on eight specific cash flow issues.The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.The Company will apply the amendments in this Update retrospectivelyto each period presented. The Company is evaluating the impact of this new requirement on the consolidated earnings, financial position and cash flows of the Company. 

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Net Investment in Leases and Loans

9 Months Ended

Sep. 30, 2016

Net Investment in Leases and Loans [Abstract]

Net Investment in Leases and Loans

NOTE 3 – Net Investment in Leases and Loans

Net investment in leases and loans consists of the following:

		September 30,		December 31,
		2016		2015
		(Dollars in thousands)
Minimum lease payments receivable		$	832,507	$	761,694
Estimated residual value of equipment			26,908		27,364
Unearned lease income, net of initial direct costs and fees deferred			(111,536)		(102,358)
Security deposits			(1,659)		(2,208)
Commercial loans, net of origination costs and fees deferred
	Funding Stream		16,253		5,115
	Other (1)		7,022		1,238
Total commercial loans			23,275		6,353
Allowance for credit losses			(10,073)		(8,413)
		$	759,422	$	682,432

________________________

• Other loans are comprised of loans by MBB to satisfy its obligations under the Community Reinvestment Act of 1977 and other commercial loans.

At September 30, 2016, $31.1 million in net investment in leases are pledged as collateral for the secured borrowing capacity at the Federal Reserve Discount Window.

Initial direct costs net of fees deferred were $13.1 million and $11.0 million as of September 30, 2016 and December 31, 2015, respectively. Initial direct costs are netted in unearned income and are amortized to income using the effective interest method. Origination costs net of fees deferred were $0.3 million and $0.1 million as of September 30, 2016 and December 31, 2015, respectively. Origination costs are netted in commercial loansand are amortized to income using the effective interest method. At September 30, 2016 and December 31, 2015, $22.5 million and $22.7 million, respectively, of the estimated residual value of equipment retained on our Condensed Consolidated Balance Sheets was related to copiers.

Minimum lease payments receivable under lease contracts and the amortization of unearned lease income, including initial direct costs and fees deferred, are as follows as of September 30, 2016:

	Minimum Lease
	Payments		Income
	Receivable		Amortization
	(Dollars in thousands)
Period Ending December 31,
2016	$	90,463	$	17,028
2017		315,763		49,007
2018		213,328		26,904
2019		126,128		12,788
2020		66,113		4,841
Thereafter		20,712		968
	$	832,507	$	111,536

As of September 30, 2016 and December 31, 2015, the Company maintained total finance receivables which were on a non-accrual basis of $2.0 million and $1.7 million, respectively. As of September 30, 2016, there were $0.2 million of commercial loans on a non-accrual basis. As of December 31, 2015, there were no commercial loans on a non-accrual basis. As of September 30, 2016and December 31, 2015, the Company had total finance receivables in which the terms of the original agreements had been renegotiated in the amount of $0.4 million and $0.5 million, respectively. As of September 30, 2016, there were less than $0.1 million of commercial loans that had been renegotiated. As of December 31, 2015, there were no commercial loans that had been renegotiated. (See Note 4 for income recognition on leases and loans and additional asset quality information.)

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Allowance for Credit Losses

9 Months Ended

Sep. 30, 2016

Allowance For Credit Losses [Abstract]

Allowance For Credit Losses

NOTE 4– Allowance for Credit Losses

In accordance with the Contingencies Topic of the FASB ASC, we maintain an allowance for credit losses at an amount sufficient to absorb losses inherent in our existing lease and loan portfolios as of the reporting dates based on our estimate of probable net credit losses.

The table which follows provides activity in the allowance for credit losses and asset quality statistics.

		Three Months Ended				Nine Months Ended				Year Ended
		September 30,				September 30,				December 31,
		2016		2015		2016		2015		2015
		(Dollars in thousands)
Allowance for credit losses, beginning of period		$	9,430	$	8,567	$	8,413	$	8,537	$	8,537
Charge-offs			(3,062)		(2,595)		(9,060)		(9,196)		(12,453)
Recoveries			568		630		1,840		1,705		2,334
Net charge-offs			(2,494)		(1,965)		(7,220)		(7,491)		(10,119)
Provision for credit losses			3,137		1,986		8,880		7,542		9,995
Allowance for credit losses, end of period	(1)	$	10,073	$	8,588	$	10,073	$	8,588	$	8,413
Annualized net charge-offs to average total
finance receivables	(2)		1.36%		1.23%		1.36%		1.59%		1.59%
Allowance for credit losses to total
finance receivables, end of period	(2)		1.33%		1.31%		1.33%		1.31%		1.24%
Average total finance receivables	(2)	$	732,346	$	641,020	$	705,879	$	630,073	$	636,790
Total finance receivables, end of period	(2)	$	756,144	$	657,143	$	756,144	$	657,143	$	679,738
Delinquencies greater than 60 days past due		$	3,885	$	3,186	$	3,885	$	3,186	$	3,163
Delinquencies greater than 60 days past due	(3)		0.45%		0.43%		0.45%		0.43%		0.41%
Allowance for credit losses to delinquent
accounts greater than 60 days past due	(3)		259.28%		269.55%		259.28%		269.55%		265.98%
Non-accrual leases and loans, end of period		$	2,022	$	1,684	$	2,022	$	1,684	$	1,677
Renegotiated leases and loans, end of period		$	350	$	468	$	350	$	468	$	535

__________________

⁽¹⁾At September 30, 2016, December 31, 2015, and September 30, 2015 the allowance for credit losses allocated to loans was $0.7million, $0.2million, and less than $0.1million, respectively.

⁽²⁾Total finance receivables include net investment in direct financing leases and loans. For purposes of asset quality and allowance calculations, the effects of (i) the allowance for credit losses and (ii) initial direct costs and fees deferred are excluded.

⁽³⁾Calculated as a percent of total minimum lease payments receivable for leases and as a percent of principal outstanding for loans.

Net investments in finance receivables are generally charged-off when they are contractually past due for 120 days or more. Income recognition is discontinued on leases or loans when a default on monthly payment exists for a period of 90 days or more. Income recognition resumes when a lease or loan becomes less than 90 days delinquent. At September 30, 2016, December 31, 2015 and September 30, 2015, there were no finance receivables past due 90 days or more and still accruing.

Net charge-offs for the three-month period ended September 30, 2016were $2.5million (1.36% of average total finance receivables on an annualized basis), compared to $2.4million(1.38%of average total finance receivables on an annualized basis) for the three-month period ended June 30, 2016 and $2.0 million(1.23%of average total finance receivables on an annualized basis) for the three-month period ended September 30, 2015.

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Other Assets

9 Months Ended

Sep. 30, 2016

Other Assets [Abstract]

Other Assets

NOTE 5– Other Assets

Other assets are comprised of the following:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Accrued fees receivable	$	2,554	$	2,500
Prepaid expenses		1,529		2,120
Income taxes receivable		—		4,427
Other		3,650		3,474
	$	7,733	$	12,521

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies [Abstract]

Commitments And Contingencies

NOTE 6 – Commitments and Contingencies

MBB is a member bank in a non-profit, multi-financial institution consortium serving as a catalyst for community development by offering flexible financing for affordable, quality housing to low- and moderate-income residents. Currently,MBB receives approximately 1.2% participation in each funded loan under the program.MBB records loans in its financial statements when they have been funded or become payable. Such loans help MBB satisfy its obligations under the Community Reinvestment Act of 1977. At September 30, 2016, MBB had an unfunded commitment of $0.9million for this activity.Unless renewed prior to termination, MBB’s one-year commitment to the consortiumwill expirein September 2017.

The Company is involved in legal proceedings, which include claims, litigation and suits arising in the ordinary course of business. In the opinion of management, these actions will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

As of September 30, 2016, the Company leases all nine of its office locations including its executive offices in Mt. Laurel, New Jersey, and its offices in or near Atlanta, Georgia; Philadelphia, Pennsylvania; Salt Lake City, Utah; Portsmouth, New Hampshire; Highlands Ranch, Colorado; Aurora, Colorado; Denver, Colorado; and Plymouth, Michigan. These lease commitments are accounted for as operating leases. The Company has entered into several capital leases to finance corporate property and equipment.

The following is a schedule of future minimum lease payments for capital and operating leases as of September 30, 2016:

	Future Minimum Lease Payment Obligations
		Capital		Operating
Period Ending December 31,		Leases		Leases		Total
	(Dollars in thousands)
2016		$	25	$	396	$	421
2017			77		1,531		1,608
2018			—		1,472		1,472
2019			—		1,435		1,435
2020			—		687		687
Total minimum lease payments		$	102	$	5,521	$	5,623
Less: amount representing interest			(3)
Present value of minimum lease payments		$	99

Rent expense was $0.8 millionfor each of the nine-month periods ended September 30, 2016 and September 30, 2015.

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Deposits

9 Months Ended

Sep. 30, 2016

Deposits [Abstract]

Deposits

NOTE 7 – Deposits

MBB serves as the Company’s primary funding source. MBB issues fixed-rate FDIC-insured certificates of deposit raised nationally through various brokered deposit relationships and fixed-rate FDIC-insured deposits received from direct sources. On February 23, 2014, MBB began offering FDIC-insured money market deposit accounts (the “MMDA Product”) through participation in a partner bank’s insured savings account product. This brokered deposit product has a variable rate, no maturity date and is offered to the clients of the partner bank and recorded as a single deposit account at MBB. As of September 30, 2016, money market deposit accounts totaled $50.8 million.

As of September 30, 2016, the remaining scheduled maturities of certificates of deposits are as follows:

		Scheduled
		Maturities
		(Dollars in thousands)
Period Ending December 31,
2016		$	64,434
2017			238,491
2018			158,865
2019			82,659
2020			54,746
Thereafter			26,959
	Total	$	626,154

Certificates of deposits issued by MBB are time deposits and are generally issued in denominations of $250,000 or less. The MMDA Product is also issued to customers in amounts less than $250,000. The FDIC insures deposits up to $250,000 per depositor. The weighted average all-in interest rate of deposits at September 30, 2016 was 1.24%.

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Fair Value Measurements and Disclosures about the Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Measurements And Disclosures About Fair Value Of Financial Instruments [Abstract]

Fair Value Measurements and Disclosures about the Fair Value of Financial Instruments

NOTE 8 – Fair Value Measurements and Disclosures about the Fair Value of Financial Instruments

Fair Value Measurements

The Fair Value Measurements and Disclosures Topic of the FASB ASC establishes a framework for measuring fair value and requires certain disclosures about fair value measurements. Its provisions do not apply to fair value measurements for purposes of lease classification and measurement, which is addressed in the Leases Topic of the FASB ASC.

Fair value is defined in GAAP as the price that would be received to sell an asset or the price that would be paid to transfer a liability on the measurement date. GAAP focuses on the exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. A three-level valuation hierarchy is required for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The three levels are defined as follows:

• Level 1 – Inputs to the valuation are unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2 – Inputs to the valuation may include quoted prices for similar assets and liabilities in active or inactive markets, and inputs other than quoted prices, such as interest rates and yield curves, which are observable for the asset or liability for substantially the full term of the financial instrument.
• Level 3 – Inputs to the valuation are unobservable and significant to the fair value measurement. Level 3 inputs shall be used to measure fair value only to the extent that observable inputs are not available.

The Company characterizes active markets as those where transaction volumes are sufficient to provide objective pricing information, such as an exchange traded price. Inactive markets are typically characterized by low transaction volumes, and price quotations that vary substantially among market participants or are not based on current information.

The Company’s balances measured at fair value on a recurring basis include the following as of September 30, 2016 and December 31, 2015:

		September 30, 2016				December 31, 2015
		Fair Value Measurements Using				Fair Value Measurements Using
		Level 1		Level 2		Level 1		Level 2
		(Dollars in thousands)
Assets
	Securities available for sale	$	3,439	$	2,636	$	3,332	$	3,067

At this time, the Company has not elected to report any assets or liabilities using the fair value option available under the Financial Instruments Topic of the FASB ASC. There have been no transfers between Level 1 and Level 2 of the fair value hierarchy.

Disclosures about the Fair Value of Financial Instruments

The Financial Instruments Topic of the FASB ASC requires the disclosure of the estimated fair value of financial instruments including those financial instruments not measured at fair value on a recurring basis. This requirement excludes certain instruments, such as the net investment in leases and all nonfinancial instruments.

The fair values shown below have been derived, in part, by management’s assumptions, the estimated amount and timing of future cash flows and estimated discount rates. Valuation techniques involve uncertainties and require assumptions and judgments regarding prepayments, credit risk and discount rates. Changes in these assumptions will result in different valuation estimates. The fair values presented would not necessarily be realized in an immediate sale. Derived fair value estimates cannot necessarily be substantiated by comparison to independent markets or to other companies’ fair value information.

The following summarizes the carrying amount and estimated fair value of the Company’s financial instruments:

		September 30, 2016				December 31, 2015
		Carrying		Fair		Carrying		Fair
		Amount		Value		Amount		Value
		(Dollars in thousands)
Financial Assets
	Cash and cash equivalents	$	77,625	$	77,625	$	60,129	$	60,129
	Time deposits with banks		9,107		9,129		7,368		7,356
	Restricted interest-earning deposits with banks		—		—		216		216
	Loans, net of allowance		22,530		22,683		6,179		6,152
Financial Liabilities
	Deposits	$	676,920	$	677,476	$	587,940	$	586,898

The paragraphs which follow describe the methods and assumptions used in estimating the fair values of financial instruments.

Cash and Cash Equivalents

The carrying amounts of the Company’s cash and cash equivalents approximate fair value as of September 30, 2016 and December 31, 2015, because they bear interest at market rates and had maturities of less than 90 days at the time of purchase. This fair value measurement is classified as Level 1.

Time Deposits with Banks

Fair value of time deposits is estimated by discounting cash flows of current rates paid by market participants for similar time deposits of the same or similar remaining maturities. This fair value measurement is classified as Level 2.

Restricted Interest-Earning Deposits with Banks

The Company maintained interest-earning trust accounts related to our secured debt facility. The book value of such accounts is included in restricted interest-earning deposits with banks on the accompanying Consolidated Balance Sheet. These accounts earned a floating market rate of interest which resulted in a fair value approximating the carrying amount at December 31, 2015. This fair value measurement is classified as Level 1.

Securities Available for Sale

Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon various sources of market pricing. Securities are classified within the fair value hierarchy after giving consideration to the activity level in the market for the security type and the observability of the inputs used to determine the fair value. When available, the Company uses quoted prices in active markets and classifies such instruments within Level 1 of the fair value hierarchy. Level 1 securities include mutual funds. When instruments are traded in secondary markets and quoted market prices do not exist for such securities, the Company relies on prices obtained from third-party pricing vendors and classifies these instruments within Level 2 of the fair value hierarchy. The third-party vendors use a variety of methods when pricing securities that incorporate relevant market data to arrive at an estimate of what a buyer in the marketplace would pay for a security under current market conditions. Level 2 securities include municipal bonds.

Loans

The loan balances are comprised of three types of loans. Participating interests acquired through membership in a non-profit, multi-financial institution consortium serving as a catalyst for community development by offering financing for affordable, quality housing to low- and moderate-income residents. Such loans help MBB satisfy its obligations under the Community Reinvestment Act of 1977. The fair value of these loans approximates the carrying amount at September 30, 2016 and December 31, 2015as it is based on recent comparable sales transactions with consideration of current market rates.This fair value measurement is classified as Level 2. The Company also invests in a small business loan product tailored to the small business market. Fair value for these loans are estimated by discounting cash flows at an imputed market rate for similar loan products with similar characteristics. This fair value measurement is classified as Level 2.The Company invests in loans to our customers in the franchise finance channel. These loans may be secured by equipment being acquired, blanket liens on personal property, or specific equipment already owned by the customer. The fair value of loans is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit, collateral, and for the same remaining maturities. This fair value measurement is classified as Level 2.

Deposits

Deposit liabilities with no defined maturity such as MMDA deposits have a fair value equal to the amount payable on demand at the reporting date (i.e., their carrying amount). Fair value for certificates of deposits is estimated by discounting cash flows at current rates paid by the Company for similar certificates of deposit of the same or similar remaining maturities. This fair value measurement is classified as Level 2.

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Earnings Per Common Share ("EPS")

9 Months Ended

Sep. 30, 2016

Earnings Per Common Share ("EPS") [Abstract]

Earnings Per Common Share ("EPS")

NOTE 9– Earnings Per Share

The Company’s restricted stock awards are paid non-forfeitable common stock dividends and thus meet the criteria of participating securities. Accordingly, EPS has been calculated using the two-class method, under which earnings are allocated to both common stock and participating securities.

Basic EPS has been computed by dividing net income allocated to common stock by the weighted average common shares used in computing basic EPS. For the computation of basic EPS, all shares of restricted stock have been deducted from the weighted average shares outstanding.

Diluted EPS has been computed by dividing net income allocated to common stock by the weighted average number of common shares used in computing basic EPS, further adjusted by including the dilutive impact of the exercise or conversion of common stock equivalents, such as stock options, into shares of common stock as if those securities were exercised or converted.

The following table provides net income and shares used in computing basic and diluted EPS:

			Three Months Ended September 30,				Nine Months Ended September 30,
			2016		2015		2016		2015
			(Dollars in thousands, except per-share data)
Basic EPS
Net income			$	4,345	$	4,797	$	12,464	$	13,001
	Less: net income allocated to participating securities			(136)		(136)		(366)		(377)
Net income allocated to common stock			$	4,209	$	4,661	$	12,098	$	12,624
Weighted average common shares outstanding				12,543,818		12,773,653		12,507,898		12,815,679
	Less: Unvested restricted stock awards considered participating
		securities		(397,091)		(366,886)		(373,081)		(367,876)
Adjusted weighted average common shares used in computing
		basic EPS		12,146,727		12,406,767		12,134,817		12,447,803
Basic EPS			$	0.35	$	0.38	$	1.00	$	1.01
Diluted EPS
Net income allocated to common stock			$	4,209	$	4,661	$	12,098	$	12,624
Adjusted weighted average common shares used in computing
		basic EPS		12,146,727		12,406,767		12,134,817		12,447,803
	Add: Effect of dilutive stock options			10,629		6,730		8,025		18,342
Adjusted weighted average common shares used in computing
		diluted EPS		12,157,356		12,413,497		12,142,842		12,466,145
Diluted EPS			$	0.35	$	0.38	$	1.00	$	1.01

For the three-month periods ended September 30, 2016 and September 30, 2015, outstanding stock-based compensation awards in the amount of 21,789 and 12,502,respectively, were considered antidilutive and therefore were not considered in the computation of potential common shares for purposes of diluted EPS.

For the nine-month periods ended September 30, 2016 and September 30, 2015, outstanding stock-based compensation awards in the amount of8,829 and 14,258,respectively, were considered antidilutive and therefore were not considered in the computation of potential common shares for purposes of diluted EPS.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2016

Stockholders' Equity [Abstract]

Stockholders' Equity

NOTE 10 – Stockholders’ Equity

Stockholders’ Equity

On July 29, 2014, the Company’s Board of Directors approved a new stock repurchase plan to replace the 2007 Repurchase Plan (the “2014 Repurchase Plan”). Under the 2014 Repurchase Plan, the Company is authorized to repurchase up to $15 million in value of its outstanding shares of common stock. This authority may be exercised from time to time and in such amounts as market conditions warrant. Any shares purchased under this plan are returned to the status of authorized but unissued shares of common stock. The repurchases may be made on the open market or in block trades. The program may be suspended or discontinued at any time. The repurchases are funded using the Company’s working capital.

During the three and nine month periods ended September 30, 2016, the Company did not repurchase any of its common stock under the 2014 Repurchase Plan in the open market.During the three- and nine-month periods ended September 30, 2015, the Company purchased 196,196 shares and 406,719 shares of its common stock under the 2014 Repurchase Plan at an average cost of $ 15.65 and $ 17.22, respectively. At September 30, 2016, the Company had $ 3.2 million remaining in the 2014 Repurchase Plan.

In addition to the repurchases described above, participants in the Company’s 2014 Equity Compensation Plan (approved by the Company’s shareholders on June 3, 2014) (the “2014 Plan”) may have shares withheld to cover income taxes. There were 735 and 22,673 shares repurchased to cover income tax withholding in connection with shares granted under the 2014 Plan during each of the three- and nine-month periods ended September 30, 2016, at average per-share costs of $ 17.98 and $ 14.56, respectively. There were 781and 38,508 shares repurchased to cover income tax withholding in connection with shares granted under the 2014 Plan during the three- and nine-month periods ended September 30, 2015, at average per-share costs of $ 16.05 and $ 18.17, respectively.

Regulatory Capital Requirements

Through its issuance of FDIC-insured deposits, MBB serves as the Company’s primary funding source. Over time, MBB may offer other products and services to the Company’s customer base. MBB operates as a Utah state-chartered, Federal Reserve member commercial bank, insured by the FDIC. As a state-chartered Federal Reserve member bank, MBB is supervised by both the Federal Reserve Bank of San Francisco and the Utah Department of Financial Institutions.

The Company and MBB are subject to capital adequacy regulations issued jointly by the federal bank regulatory agencies. These risk-based capital and leverage guidelines make regulatory capital requirements more sensitive to differences in risk profiles among banking organizations and consider off-balance sheet exposures in determining capital adequacy. The federal bank regulatory agencies and/or the U.S. Congress may determine to increase capital requirements in the future due to the current economic environment. Under the capital adequacy regulation, at least half of a banking organization’s total capital is required to be "Tier 1 Capital" as defined in the regulations, comprised of common equity, retained earnings and a limited amount of non-cumulative perpetual preferred stock. The remaining capital, "Tier 2 Capital," as defined in the regulations, may consist of other preferred stock, a limited amount of term subordinated debt or a limited amount of the reserve for possible credit losses. The regulations establish minimum leverage ratios for banking organizations, which are calculated by dividing Tier 1 Capital by total quarterly average assets. Recognizing that the risk-based capital standards principally address credit risk rather than interest rate, liquidity, operational or other risks, many banking organizations are expected to maintain capital in excess of the minimum standards.

On January 1, 2015, the Company and MBB became subject to new capital adequacy standards under the Basel III rules. The new standards require a minimum for Tier 1 leverage ratio of 4%. The new standards raised the required minimum Tier 1 risk-based ratio from 4% to 6%. The total risk-based capital ratio of 8% did not change. The new capital adequacy standards establish a new common equity Tier 1 risk-based capital ratio with a required 4.5% minimum (6.5% to be considered well-capitalized). The Company is required to have a level of regulatory capital in excess of the regulatory minimum and to have a capital buffer above 0.625% for 2016. If a banking organization does not maintain capital above the minimum plus the capital conservation buffer it may be subject to restrictions on dividends, share buybacks, and certain discretionary payments such as bonus payments.

The Company plans to provide the necessary capital to maintain MBB at “well-capitalized” status as defined by banking regulations and as required by an agreement entered into by and among MBB, MLC, Marlin Business Services Corp. and the FDIC in conjunction with the opening of MBB (the “FDIC Agreement”). MBB’s Tier 1 Capital balance at September 30, 2016 was $131.0 million, which met all capital requirements to which MBB is subject and qualified MBB for “well-capitalized” status. At September 30, 2016, the Company also exceeded its regulatory capital requirements and was considered “well-capitalized” as defined by federal banking regulations and as required by the FDIC Agreement.

The following table sets forth the Tier 1 leverage ratio, common equity Tier 1 risk-based capital ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio for Marlin Business Services Corp. and MBB at September 30, 2016.

				Minimum Capital				Well-Capitalized Capital
	Actual			Requirement				Requirement
	Ratio		Amount	Ratio	(1)	Amount		Ratio		Amount
	(Dollars in thousands)
Tier 1 Leverage Capital
Marlin Business Services Corp.	18.53%	$	158,661	4%		$	34,258	5%		$	42,823
Marlin Business Bank	16.05%	$	130,982	5%		$	40,812	5%		$	40,812
Common Equity Tier 1 Risk-Based Capital
Marlin Business Services Corp.	19.77%	$	158,661	4.5%		$	36,111	6.5%		$	52,161
Marlin Business Bank	16.73%	$	130,982	6.5%		$	50,899	6.5%		$	50,899
Tier 1 Risk-based Capital
Marlin Business Services Corp.	19.77%	$	158,661	6%		$	48,148	8%		$	64,198
Marlin Business Bank	16.73%	$	130,982	8%		$	62,645	8%		$	62,645
Total Risk-based Capital
Marlin Business Services Corp.	21.02%	$	168,692	8%		$	64,198	10%		$	80,247
Marlin Business Bank	17.98%	$	140,773	15%		$	117,460	10%	(1)	$	78,307

__________________

⁽¹⁾MBB is required to maintain “well-capitalized” status and must also maintain a total risk-based capital ratio greater than 15% pursuant to the FDIC Agreement.

Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the federal regulators to take prompt corrective action against any undercapitalized institution. Five capital categories have been established under federal banking regulations: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Well-capitalized institutions significantly exceed the required minimum level for each relevant capital measure. Adequately capitalized institutions include depository institutions that meet but do not significantly exceed the required minimum level for each relevant capital measure. Undercapitalized institutions consist of those that fail to meet the required minimum level for one or more relevant capital measures. Significantly undercapitalized characterizes depository institutions with capital levels significantly below the minimum requirements for any relevant capital measure. Critically undercapitalized refers to depository institutions with minimal capital and at serious risk for government seizure.

Under certain circumstances, a well-capitalized, adequately capitalized or undercapitalized institution may be treated as if the institution were in the next lower capital category. A depository institution is generally prohibited from making capital distributions, including paying dividends, or paying management fees to a holding company if the institution would thereafter be undercapitalized. Institutions that are adequately capitalized but not well-capitalized cannot accept, renew or roll over brokered deposits except with a waiver from the FDIC and are subject to restrictions on the interest rates that can be paid on such deposits. Undercapitalized institutions may not accept, renew or roll over brokered deposits.

The federal bank regulatory agencies are permitted or, in certain cases, required to take certain actions with respect to institutions falling within one of the three undercapitalized categories. Depending on the level of an institution’s capital, the agency’s corrective powers include, among other things:

• prohibiting the payment of principal and interest on subordinated debt;

• prohibiting the holding company from making distributions without prior regulatory approval;

• placing limits on asset growth and restrictions on activities;

• placing additional restrictions on transactions with affiliates;

• restricting the interest rate the institution may pay on deposits;

• prohibiting the institution from accepting deposits from correspondent banks; and

• in the most severe cases, appointing a conservator or receiver for the institution.

A banking institution that is undercapitalized is required to submit a capital restoration plan, and such a plan will not be accepted unless, among other things, the banking institution’s holding company guarantees the plan up to a certain specified amount. Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy.

Pursuant to the FDIC Agreement entered into in conjunction with the opening of MBB, MBB must keep its total risk-based capital ratio above 15%. MBB’s total risk-based capital ratio of 17.98% at September 30, 2016exceeded the threshold for“well capitalized” status under the applicable laws and regulations, and also exceeded the 15% minimum total risk-based capital ratio required in the FDIC Agreement.

Dividends. The Federal Reserve Board has issued policy statements requiring insured banks and bank holding companies to have an established assessment process for maintaining capital commensurate with their overall risk profile.Such assessment process may affect the ability of the organizations to pay dividends. Although generally organizations may pay dividends only out of current operating earnings, dividends may be paid if the distribution is prudent relative to the organization’s financial position and risk profile, after consideration of current and prospective economic conditions.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 11– Stock-Based Compensation

Under the terms of the 2014 Plan, employees, certain consultants and advisors and non-employee members of the Company’s Board of Directors have the opportunity to receive incentive and nonqualified grants of stock options, stock appreciation rights, restricted stock and other equity-based awards as approved by the Company’s Board of Directors. These award programs are used to attract, retain and motivate employees and to encourage individuals in key management roles to retain stock. The Company has a policy of issuing new shares to satisfy awards under the 2014 Plan. The aggregate number of shares under the 2014 Plan that may be issued pursuant to stock options, restricted stock units or restricted stock awardsis1,200,000 withnot more than1,000,000 of such shares available for issuance as restricted stock awards. There were 636,594 shares available for future awards under the 2014 Plan as of September 30, 2016, of which 436,594 shares were available to be issued as restricted stock awards.

Total stock-based compensation expense was $0.4 million for each of the three-month periods ended September 30, 2016 andSeptember 30, 2015. Total stock-based compensation expense was $1.4 million and$1.6 million for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.An excess tax deficit from stock-based payment arrangements increased cash provided by operating activities and decreased cash provided by financing activities by $0.1 million for the nine-month period ended September 30, 2016. Excess tax benefits from stock-based payment arrangements increased cash provided by financing activities and decreased cash provided by operating activities by $0.3million for the nine-month periods ended September 30, 2015.

Stock Options

Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of the grant and have 7- to 10-year contractual terms. All options issued contain service conditions based on the participant’s continued service with the Company and may provide for accelerated vesting if there is a change in control as defined in the Equity Compensation Plans. Employee stock options generally vest over four years.

The Company also issues stock options to non-employee independent directors. These options generally vest in one year.

There were no stock options granted during the three-month and nine-month periods ended September 30, 2016 and September 30, 2015.

A summary of option activity for the nine-month period ended September 30, 2016 follows:

		Weighted
		Average
	Number of	Exercise Price
Options	Shares	Per Share
Outstanding, December 31, 2015	50,686	$	12.09
Granted	—		—
Exercised	(6,880)		10.29
Forfeited	(1,666)		12.41
Expired	—		—
Outstanding, September 30, 2016	42,140		12.37

During each of the three-month periods ended September 30, 2016andSeptember 30, 2015 the Company did not recognize compensation expense related to options. During each of the nine-month periods ended September 30, 2016 and September 30, 2015 the Company did not recognize compensation expense related to options.

There were 3,425 and 4,082stock options exercised during the three-month periods ended September 30, 2016 and September 30, 2015, respectively. The total pretax intrinsic values of stock options exercised were less than $0.1 million for each of the three-month periods ended September 30, 2016 and September 30, 2015.

The total pretax intrinsic values of stock options exercised were less than $0.1 million and$0.6 millionfor the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.

The following table summarizes information about the stock options outstanding and exercisable as of September 30, 2016:

Options Outstanding

Options Exercisable

Weighted

Weighted

Aggregate

Weighted

Weighted

Aggregate

Average

Average

Intrinsic

Average

Average

Intrinsic

Range of

Number

Remaining

Exercise

Value

Number

Remaining

Exercise

Value

Exercise Prices

Outstanding

Life (Years)

Price

(In thousands)

Exercisable

Life (Years)

Price

(In thousands)

$

12.08 - 12.41

42,140

0.6

12.37

295

39,916

0.6

12.37

280

42,140

0.6

12.37

$

295

39,916

0.6

12.37

$

280

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $19.38 as of September 30, 2016, which would have been received by the option holders had all option holders exercised their options as of that date.

As of September 30, 2016, there was no future compensation cost related to non-vested stock options not yet recognized in the Consolidated Statements of Operations based on the most probable performance assumptions. As of September 30, 2016, $0.1million of additional potential compensation cost related to non-vested stock options has not been recognized due to performance targets not being achieved. However, in certain circumstances, these options may be subject to vesting prior to their expiration dates. The weighted average remaining term of these options is approximately 0.6 years.

Restricted Stock Awards

Restricted stock awards provide that, during the applicable vesting periods, the shares awarded may not be sold or transferred by the participant. The vesting period for restricted stock awards generally ranges from three to 10 years. All awards issued contain service conditions based on the participant’s continued service with the Company and may provide for accelerated vesting if there is a change in control as defined in the Equity Compensation Plans.

The vesting of certain restricted shares may be accelerated to a minimum of three years based on achievement of various individual performance measures. Acceleration of expense for awards based on individual performance factors occurs when the achievement of the performance criteria is determined.

In addition, the Company has issued certain shares under a Management Stock Ownership Program. Under this program, restrictions on the shares lapse at the end of 10 years but may lapse (vest) in a minimum of three years if the employee continues in service at the Company and owns a matching number of other common shares in addition to the restricted shares.

Of the total restricted stock awards granted during the nine-month period ended September 30, 2016, 74,207 shares may be subject to accelerated vesting based on individual performance factors; no shares have vesting contingent upon performance factors. Vesting was accelerated in 2015 and 2016 on certain awards based on the achievement of certain performance criteria determined annually, as described below.

The Company also issues restricted stock to non-employee independent directors. These shares generally vest in seven years from the grant date or six months following the director’s termination from Board of Directors service.

The following table summarizes the activity of the non-vested restricted stock during the nine months ended September 30, 2016:

		Weighted
		Average
		Grant-Date
Non-vested restricted stock	Shares	Fair Value
Outstanding at December 31, 2015	313,236	$	16.65
Granted	181,156		15.25
Vested	(60,185)		18.23
Forfeited	(19,482)		18.02
Outstanding at September 30, 2016	414,725		15.74

During each of the three-month periods ended September 30, 2016 and September 30, 2015, the Company granted restricted stock awards with grant-date fair values totaling $0.4 million. During the nine-month periods ended September 30, 2016 and September 30, 2015, the Company granted restricted stock awards with grant-date fair values totaling $2.8 million and $3.0 million, respectively.

As vesting occurs, or is deemed likely to occur, compensation expense is recognized over the requisite service period and additional paid-in capital is increased. The Company recognized $0.3 million and $0.4 of compensation expense related to restricted stock for the three-month periods ended September 30, 2016 and September 30, 2015, respectively. The Company recognized $1.4 million and $1.6 million of compensation expense related to restricted stock for the nine-month periods ended September 30, 2016 and September 30, 2015, respectively.

Of the $1.4 million total compensation expense related to restricted stock for the nine-month period ended September 30, 2016, approximately $0.4 million related to accelerated vesting during the first quarter of 2016, based on achievement of certain performance criteria determined annually.Of the $1.6 million total compensation expense related to restricted stock for the nine-month period ended September 30, 2015, approximately $0.5 million related to accelerated vesting during the first quarter of 2015, which was also based on the achievement of certain performance criteria determined annually.

As of September 30, 2016, there was $4.6 million of unrecognized compensation cost related to non-vested restricted stock compensation scheduled to be recognized over a weighted average period of 4.0 years. In the event individual performance targets are achieved, $1.5 million of the unrecognized compensation cost would accelerate to be recognized over a weighted average period of 1.3 years. In addition, certain of the awards granted may result in the issuance of 57,998 additional shares of stock if achievement of certain targets is greater than 100%. The expense related to the additional shares awarded will be dependent on the Company’s stock price when the achievement level is determined.

The fair value of shares that vested during each of the three-month periods ended September 30, 2016 and September 30, 2015 was $0.1 million. The fair value of shares that vested during the nine-month periods ended September 30, 2016 and September 30, 2015 was $0.9 million and $2.2 million, respectively.

Restricted Stock Units

Restricted stock units (“RSUs”) are granted with vesting conditions based on fulfillment of a service condition (generally four years from the grant date), and also require achievement of certain market based targets associated with the Company’s stock price. The market based target measurement period begins one year from the grant date and ends three years from the grant date. Expense for equity based awards with market and service conditions is recognized over the service period based on the grant-date fair value of the award.

The following tables summarize restricted stock unit activity for the nine-month period ended September 30, 2016:

		Weighted
		Average
	Number of	Grant-Date
Market-based RSUs	RSUs	Fair Value
Outstanding at December 31, 2015	—	$	—
Granted	120,000		9.47
Forfeited	—		—
Converted	—		—
Cancelled due to non-achievement of market condition	—		—
Outstanding at September 30, 2016	120,000		9.47

In 2016, certain executives were awarded RSUs with market based vesting conditions with weighted average grant- date fair value of $9.47 per unit. The weighted average grant date fair value of these market based RSUs was estimated using a Monte Carlo simulation valuation model with the following assumptions:

		Nine Months Ended September 30,
		2016		2015
Grant date stock price	$	18.24		—
Risk-free interest rate		1.06	%	—
Expected volatility		35.16	%	—
Dividend yield		—		—

The risk free interest rate reflected the yield on zero coupon Treasury securities with a term approximating the expected life of the RSUs. The expected volatility was based on historical volatility of the Company’s common stock.

During both the three and nine-month periods ended September 30, 2016, the Company granted RSUs with grant-date fair values totaling $1.1million, respectively. The Company recognized less than $0.1 million of compensation expense related to RSUs for both the three and nine-month periods ended September 30, 2016, respectively. As of September 30, 2016, there was $1.1million of unrecognized compensation cost related to RSUs scheduled to be recognized over a weighted average period of 4.0 years.

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Events Subsequent to Year-End

NOTE 12 – Subsequent Events

The Company declared a dividend of $0.140 per share on October 27, 2016. The quarterly dividend, which is expected to result in a dividend payment of approximately $1.8 million, is scheduled to be paid on November 17, 2016 to shareholders of record on the close of business on November 7, 2016. It represents the Company’s twenty-first consecutive quarterly cash dividend. The payment of future dividends will be subject to approval by the Company’s Board of Directors.

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Summary of Critical Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Summary of Critical Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of financial statement presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. MLC and MBB are managed together as a single business segment and are aggregated for financial reporting purposes as they exhibit similar economic characteristics, share the same leasing portfolio and have one product offering. All intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements present fairly the Company’s financial position at September 30, 2016 and the results of operations for the three-and nine-month periods ended September 30, 2016 and 2015, and cash flows for the nine-month periods ended September 30, 2016 and 2015. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and note disclosures included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 4, 2016. The consolidated results of operations for the three-and nine-month periods ended September 30, 2016 and 2015 and the consolidated statements of cash flows for the nine-month periods ended September 30, 2016 and 2015 are not necessarily indicative of the results of operations or cash flows for the respective full years or any other period.

Fee Income and Other Income, Policy [Policy Text Block]

Other Income

Other income includes various administrative transaction fees, insurance policy fees, fees received from referral of leases to third parties and gain on sale of leases, recognized as earned. Effective third quarter 2016, on a prospective basis, the insurance policy fees are recognized in the Consolidated Statements of Operations in “Other income” and for all previous annual and interim periodsare recorded net in “Insurance premiums written and earned.”

Insurance Income Recognition, Policy [Policy Text Block]

Insurance Premiums Written and Earned

Insurance premiums written and earned are recognized over the term of the policy, which is month to month. Since the policy’s premiums are recognized month to month, there is no unearned premium on the Consolidated Balance Sheets as these are fully recognized through the Consolidated Statements of Operations in the month written. For all annual and interim periods, second quarter 2016 and prior, income and expense related to insurance premiums written and earned, insurance policy fees, deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses is recorded within the“Insurance premiums written and earned” line on the Consolidated Statement of Operations. Effective third quarter 2016, on a prospective basis, onlyinsurance premium written and earned was recorded to that line.Effective third quarter 2016, on a prospective basis, insurance policy fees were recorded to “Other income” and deferred acquisition costs, premium taxes and provision for losses and loss adjustment expenses were recorded in“General and administrative” expense. For the years ended December 31, 2015 and 2014, insurance premiums written and earned were $5.5 million and $5.0 million, respectively. For the nine-months ended September 30, 2016, insurance premiums written and earned were $4.6 million.

Recent Accounting Pronouncements

Recent Accounting Pronouncements.

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).The amendments in this Update provide guidance on eight specific cash flow issues.The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.The Company will apply the amendments in this Update retrospectivelyto each period presented. The Company is evaluating the impact of this new requirement on the consolidated earnings, financial position and cash flows of the Company. 

Provision for Unpaid Losses and Loss Adjustment Expenses, Policy [Policy Text Block]

Provision for Unpaid Losses and Loss Adjustment Expenses

The Company records a provision for insurance losses and loss adjustment expenses. Effective third quarter 2016, on a prospective basis, the expense was recorded in “General and administrative” expense on the Consolidated Statements of Operations and for all previous annual and interim periods is recorded net in “Insurance premiums written and earned.” The liability for losses and loss adjustment expenses includes an amount determined from loss reports and individual cases and an amount, based on historical loss experience and industry statistics, for losses incurred but not reported (“IBNR”). These estimates are continually reviewed and are subject to the impact of future changes in such factors as claim severity and frequency. Loss and loss expenses are paid when advised by the third-party insurance company. Outstanding losses comprise estimates of the amount of reported losses and loss expenses received from the third-party insurance company plus a provision for losses IBNR. IBNR is determined with the assistance of a third-party actuary. For each of the years ended December 31, 2015, 2014, and 2013, the Company recognized provision for unpaid losses and loss adjustment expenses of less than $0.4 million.For the nine-month period ended September 30, 2016, the company recognized provision for unpaid losses and loss adjustment expenses of less than $0.5 million.

Insurance Program Deferred Acquisition Costs, Policy [Policy Text Block]

Insurance Program Deferred Acquisition Costs

Deferred acquisitions costs represent the fees paid to a third-party insurance company. Effective third quarter 2016, on a prospective basis, the costs are recognized on the Consolidated Statements of Operations in “General and administrative” expense and for all previous interim and annual periods are recognized net in “Insurance premiums written and earned.” For each of the years ended December 31, 2015, 2014 and 2013, the Company recognized deferred acquisition costs of less than $0.8 million.For the nine-months ended September 30, 2016, the company recognized $0.5 million of deferred acquisition costs. Since the policy’s premiums are recognized on a month to month basis, there is no deferred acquisition costs on the Consolidated Balance Sheet as these are fully recognized through the Consolidated Statements of Operations in the month written.

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Net Investment in Leases and Loans (Tables)

9 Months Ended

Sep. 30, 2016

Net Investment in Leases and Loans [Abstract]

Components of Net Investment in Leases and Loans [Table Text Block]

		September 30,		December 31,
		2016		2015
		(Dollars in thousands)
Minimum lease payments receivable		$	832,507	$	761,694
Estimated residual value of equipment			26,908		27,364
Unearned lease income, net of initial direct costs and fees deferred			(111,536)		(102,358)
Security deposits			(1,659)		(2,208)
Commercial loans, net of origination costs and fees deferred
	Funding Stream		16,253		5,115
	Other (1)		7,022		1,238
Total commercial loans			23,275		6,353
Allowance for credit losses			(10,073)		(8,413)
		$	759,422	$	682,432

Schedule of Future Minimum Lease Payments Receivable and Amortization of Unearned Lease Income [Table Text Block]

	Minimum Lease
	Payments		Income
	Receivable		Amortization
	(Dollars in thousands)
Period Ending December 31,
2016	$	90,463	$	17,028
2017		315,763		49,007
2018		213,328		26,904
2019		126,128		12,788
2020		66,113		4,841
Thereafter		20,712		968
	$	832,507	$	111,536

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Allowance for Credit Losses (Tables)

9 Months Ended

Sep. 30, 2016

Allowance For Credit Losses [Abstract]

Allowance for Credit Losses on Finance Receivables [Table Text Block]

		Three Months Ended				Nine Months Ended				Year Ended
		September 30,				September 30,				December 31,
		2016		2015		2016		2015		2015
		(Dollars in thousands)
Allowance for credit losses, beginning of period		$	9,430	$	8,567	$	8,413	$	8,537	$	8,537
Charge-offs			(3,062)		(2,595)		(9,060)		(9,196)		(12,453)
Recoveries			568		630		1,840		1,705		2,334
Net charge-offs			(2,494)		(1,965)		(7,220)		(7,491)		(10,119)
Provision for credit losses			3,137		1,986		8,880		7,542		9,995
Allowance for credit losses, end of period	(1)	$	10,073	$	8,588	$	10,073	$	8,588	$	8,413
Annualized net charge-offs to average total
finance receivables	(2)		1.36%		1.23%		1.36%		1.59%		1.59%
Allowance for credit losses to total
finance receivables, end of period	(2)		1.33%		1.31%		1.33%		1.31%		1.24%
Average total finance receivables	(2)	$	732,346	$	641,020	$	705,879	$	630,073	$	636,790
Total finance receivables, end of period	(2)	$	756,144	$	657,143	$	756,144	$	657,143	$	679,738
Delinquencies greater than 60 days past due		$	3,885	$	3,186	$	3,885	$	3,186	$	3,163
Delinquencies greater than 60 days past due	(3)		0.45%		0.43%		0.45%		0.43%		0.41%
Allowance for credit losses to delinquent
accounts greater than 60 days past due	(3)		259.28%		269.55%		259.28%		269.55%		265.98%
Non-accrual leases and loans, end of period		$	2,022	$	1,684	$	2,022	$	1,684	$	1,677
Renegotiated leases and loans, end of period		$	350	$	468	$	350	$	468	$	535

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Other Assets (Tables)

9 Months Ended

Sep. 30, 2016

Prepaid Expense and Other Assets [Abstract]

Schedule of Other Assets [Table Text Block]

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Accrued fees receivable	$	2,554	$	2,500
Prepaid expenses		1,529		2,120
Income taxes receivable		—		4,427
Other		3,650		3,474
	$	7,733	$	12,521

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2016

Capital And Operating Leases Future Minimum Payments Due Table [Abstract]

Schedule Of Future Minimum Rental Payments For Capital And Operating Leases [Table Text Block]

	Future Minimum Lease Payment Obligations
		Capital		Operating
Period Ending December 31,		Leases		Leases		Total
	(Dollars in thousands)
2016		$	25	$	396	$	421
2017			77		1,531		1,608
2018			—		1,472		1,472
2019			—		1,435		1,435
2020			—		687		687
Total minimum lease payments		$	102	$	5,521	$	5,623
Less: amount representing interest			(3)
Present value of minimum lease payments		$	99

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Deposits (Tables)

9 Months Ended

Sep. 30, 2016

Contractual Maturities of Time Deposits [Abstract]

Contractual Maturities Of Time Deposits [Table Text Block]

		Scheduled
		Maturities
		(Dollars in thousands)
Period Ending December 31,
2016		$	64,434
2017			238,491
2018			158,865
2019			82,659
2020			54,746
Thereafter			26,959
	Total	$	626,154

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Fair Value Measurements and Disclosures about the Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Measurements And Disclosures About Fair Value Of Financial Instruments [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on a Recurring Basis [Table Text Block]

		September 30, 2016				December 31, 2015
		Fair Value Measurements Using				Fair Value Measurements Using
		Level 1		Level 2		Level 1		Level 2
		(Dollars in thousands)
Assets
	Securities available for sale	$	3,439	$	2,636	$	3,332	$	3,067

Schedule of Carrying Amount and Estimated Fair Value of Financial Instruments [Table Text Block]

		September 30, 2016				December 31, 2015
		Carrying		Fair		Carrying		Fair
		Amount		Value		Amount		Value
		(Dollars in thousands)
Financial Assets
	Cash and cash equivalents	$	77,625	$	77,625	$	60,129	$	60,129
	Time deposits with banks		9,107		9,129		7,368		7,356
	Restricted interest-earning deposits with banks		—		—		216		216
	Loans, net of allowance		22,530		22,683		6,179		6,152
Financial Liabilities
	Deposits	$	676,920	$	677,476	$	587,940	$	586,898

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Common Share ("EPS") [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

			Three Months Ended September 30,				Nine Months Ended September 30,
			2016		2015		2016		2015
			(Dollars in thousands, except per-share data)
Basic EPS
Net income			$	4,345	$	4,797	$	12,464	$	13,001
	Less: net income allocated to participating securities			(136)		(136)		(366)		(377)
Net income allocated to common stock			$	4,209	$	4,661	$	12,098	$	12,624
Weighted average common shares outstanding				12,543,818		12,773,653		12,507,898		12,815,679
	Less: Unvested restricted stock awards considered participating
		securities		(397,091)		(366,886)		(373,081)		(367,876)
Adjusted weighted average common shares used in computing
		basic EPS		12,146,727		12,406,767		12,134,817		12,447,803
Basic EPS			$	0.35	$	0.38	$	1.00	$	1.01
Diluted EPS
Net income allocated to common stock			$	4,209	$	4,661	$	12,098	$	12,624
Adjusted weighted average common shares used in computing
		basic EPS		12,146,727		12,406,767		12,134,817		12,447,803
	Add: Effect of dilutive stock options			10,629		6,730		8,025		18,342
Adjusted weighted average common shares used in computing
		diluted EPS		12,157,356		12,413,497		12,142,842		12,466,145
Diluted EPS			$	0.35	$	0.38	$	1.00	$	1.01

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2016

Stockholders' Equity [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

				Minimum Capital				Well-Capitalized Capital
	Actual			Requirement				Requirement
	Ratio		Amount	Ratio	(1)	Amount		Ratio		Amount
	(Dollars in thousands)
Tier 1 Leverage Capital
Marlin Business Services Corp.	18.53%	$	158,661	4%		$	34,258	5%		$	42,823
Marlin Business Bank	16.05%	$	130,982	5%		$	40,812	5%		$	40,812
Common Equity Tier 1 Risk-Based Capital
Marlin Business Services Corp.	19.77%	$	158,661	4.5%		$	36,111	6.5%		$	52,161
Marlin Business Bank	16.73%	$	130,982	6.5%		$	50,899	6.5%		$	50,899
Tier 1 Risk-based Capital
Marlin Business Services Corp.	19.77%	$	158,661	6%		$	48,148	8%		$	64,198
Marlin Business Bank	16.73%	$	130,982	8%		$	62,645	8%		$	62,645
Total Risk-based Capital
Marlin Business Services Corp.	21.02%	$	168,692	8%		$	64,198	10%		$	80,247
Marlin Business Bank	17.98%	$	140,773	15%		$	117,460	10%	(1)	$	78,307

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Stock-Based Compensation [Abstract]

Schedule of Stock-based Compensation, Stock Options Activity [Table Text Block]

		Weighted
		Average
	Number of	Exercise Price
Options	Shares	Per Share
Outstanding, December 31, 2015	50,686	$	12.09
Granted	—		—
Exercised	(6,880)		10.29
Forfeited	(1,666)		12.41
Expired	—		—
Outstanding, September 30, 2016	42,140		12.37

Schedule of Stock-based Compensation, Options Outstanding and Exercisable under Stock Option Plans, by Exercise Price Range [Table Text Block]

Options Outstanding

Options Exercisable

Weighted

Weighted

Aggregate

Weighted

Weighted

Aggregate

Average

Average

Intrinsic

Average

Average

Intrinsic

Range of

Number

Remaining

Exercise

Value

Number

Remaining

Exercise

Value

Exercise Prices

Outstanding

Life (Years)

Price

(In thousands)

Exercisable

Life (Years)

Price

(In thousands)

$

12.08 - 12.41

42,140

0.6

12.37

295

39,916

0.6

12.37

280

42,140

0.6

12.37

$

295

39,916

0.6

12.37

$

280

Schedule of Stock-based Compensation, Restricted Stock Activity [Table Text Block]

		Weighted
		Average
		Grant-Date
Non-vested restricted stock	Shares	Fair Value
Outstanding at December 31, 2015	313,236	$	16.65
Granted	181,156		15.25
Vested	(60,185)		18.23
Forfeited	(19,482)		18.02
Outstanding at September 30, 2016	414,725		15.74

Schedule of Stock-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

		Weighted
		Average
	Number of	Grant-Date
Market-based RSUs	RSUs	Fair Value
Outstanding at December 31, 2015	—	$	—
Granted	120,000		9.47
Forfeited	—		—
Converted	—		—
Cancelled due to non-achievement of market condition	—		—
Outstanding at September 30, 2016	120,000		9.47

Schedule of Stock-Based Payment Award, Restricted Stock Units Valuation Assumptions [Table Text Block[

		Nine Months Ended September 30,
		2016		2015
Grant date stock price	$	18.24		—
Risk-free interest rate		1.06	%	—
Expected volatility		35.16	%	—
Dividend yield		—		—

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The Company (Narrative) (Details)	9 Months Ended
	Sep. 30, 2016 Number
More than [Member]
Entity Information [Line Items]
Categories of commercial equipment	100
Assurance One Ltd [Member]
Entity Information [Line Items]
Entity Incorporation, State Country Name	Bermuda
Entity Incorporation, Date of Incorporation	May 31, 2000
Marlin Business Bank [Member]
Entity Information [Line Items]
Entity Incorporation, State Country Name	Utah
Entity Incorporation, Date of Incorporation	Mar. 12, 2008
Marlin Business Services Corp [Member]
Entity Information [Line Items]
Entity Incorporation, State Country Name	Pennsylvania
Entity Incorporation, Date of Incorporation	Aug. 05, 2003

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Accounting Policies (Narratives) (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenue Recognition [Abstract]
Net Premiums Written And Earned	$ 4.6	$ 5.5	$ 5.0
Deferred Acquisition Costs	0.5	0.8	0.8	$ 0.8
Liability For Unpaid Claims And Claims Adjustment Expense Incurred But Not Reported IBNR Claims Amount	$ 0.5	$ 0.4	$ 0.4	$ 0.4

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Net Investment in Leases and Loans (Narratives) (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Net Investment in Leases and Loans [Abstract]
Net Investment in Leases, Initial Direct Costs	$ 13,100,000	$ 11,000,000
Net Investment in Loans, Origination Costs	300,000	100,000
Product Information [Line Items]
Estimated Residual Value of Equipment	26,908,000	27,364,000
Loans and Leases Receivable, Collateral for Secured Borrowings	0
Non-accrual leases and loans, end of period	2,022,000	1,677,000	$ 1,684,000
Renegotiated leases and loans, end of period	350,000	535,000	$ 468,000
Debt Instrument, Unused Borrowing Capacity, Amount	0
Debt Instrument, Debt Default, Amount	0
Leases Pledged as Collateral [Member]
Product Information [Line Items]
Loans and Leases Receivable, Collateral for Secured Borrowings	31,100,000
Commercial Loan [Member]
Product Information [Line Items]
Non-accrual leases and loans, end of period	200,000	0
Renegotiated leases and loans, end of period	100,000	0
Copier Product [Member]
Product Information [Line Items]
Estimated Residual Value of Equipment	$ 22,500,000	$ 22,700,000

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Net Investment in Leases and Loans (Net Investment Components) (Details) - USD ($) $ in Thousands		Sep. 30, 2016		Jun. 30, 2016	Dec. 31, 2015		Sep. 30, 2015	[2]	Jun. 30, 2015	Dec. 31, 2014
Net Investment in Leases and Loans [Abstract]
Minimum lease payments receivable		$ 832,507			$ 761,694
Estimated Residual Value of Equipment		26,908			27,364
Unearned Lease Income, Net Of Initial Direct Costs and Fees Deferred		(111,536)			(102,358)
Security Deposits		(1,659)			(2,208)
Funding Stream loans		16,253			5,115
Other commercial loans	[1]	7,022			1,238
Total commercial loans, net of origination costs and fees deferred		23,275			6,353
Allowance for Credit Losses		(10,073)	[2]	$ (9,430)	(8,413)	[2]	$ (8,588)		$ (8,567)	$ (8,537)
Net investment in leases and loans		$ 759,422			$ 682,432

[1] Other loans are comprised of loans by MBB to satisfy its obligations under the Community Reinvestment Act of 1977 and other commercial loans .

[2] (1) At September 30, 2016 , December 31, 2015 , and September 30, 2015 the allowance for credit losses allocated to loans was $ 0 . 7 million, $ 0 . 2 million, and less than $ 0 . 1 million , respectively.

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Net Investment in Leases and Loans (Future Minimum Lease Payments Receivable Schedule) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Future Minimum Lease Payments Receivable Schedule [Abstract]
2016	$ 90,463
2017	315,763
2018	213,328
2019	126,128
2020	66,113
Thereafter	20,712
Minimum Lease Payments Receivable	832,507	$ 761,694
Future Scheduled Income Amortization [Abstract]
2016	17,028
2017	49,007
2018	26,904
2019	12,788
2020	4,841
Thereafter	968
Unearned Lease Income, Including Initial Direct Costs and Fees Deferred	$ 111,536	$ 102,358

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Allowance for Credit Losses (Narratives) (Details) - USD ($) $ in Thousands		3 Months Ended					9 Months Ended				12 Months Ended
		Sep. 30, 2016		Jun. 30, 2016	Sep. 30, 2015		Sep. 30, 2016		Sep. 30, 2015		Dec. 31, 2015		Jun. 30, 2015	Dec. 31, 2014
Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Allowance		$ 10,073	[1]	$ 9,430	$ 8,588	[1]	$ 10,073	[1]	$ 8,588	[1]	$ 8,413	[1]	$ 8,567	$ 8,537
Net charge-offs		$ (2,494)		$ (2,429)	$ (1,965)		$ (7,220)		$ (7,491)		$ (10,119)
Annualized net charge-offs to average total finance receivables	[2]	1.36%		1.38%	1.23%		1.36%		1.59%		1.59%
Threshold Period Past Due for Write-off of Financing Receivable		120 days
Threshold Period Past Due For Recognition Of Interest Income		90 days
Commercial Loan [Member]
Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Allowance		$ 700			$ 100		$ 700		$ 100		$ 200

[1] (1) At September 30, 2016 , December 31, 2015 , and September 30, 2015 the allowance for credit losses allocated to loans was $ 0 . 7 million, $ 0 . 2 million, and less than $ 0 . 1 million , respectively.

[2] (2) Total finance r e ceivables include net investment in direct financing leases and loans. For purposes of asset quality and allowance calculations, the effects of ( i ) the allowance for credit losses and ( ii ) initial direct costs and fees deferred are excluded.

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Allowance for Credit Losses (Details) - USD ($) $ in Thousands		3 Months Ended					9 Months Ended				12 Months Ended
		Sep. 30, 2016		Jun. 30, 2016	Sep. 30, 2015		Sep. 30, 2016		Sep. 30, 2015		Dec. 31, 2015
Allowance for Credit Losses [Roll Forward]
Allowance for credit losses, beginning of period		$ 9,430			$ 8,567		$ 8,413	[1]	$ 8,537		$ 8,537
Charge-offs		(3,062)			(2,595)		(9,060)		(9,196)		(12,453)
Recoveries		568			630		1,840		1,705		2,334
Net charge-offs		(2,494)		$ (2,429)	(1,965)		(7,220)		(7,491)		(10,119)
Provision for credit losses		3,137			1,986		8,880		7,542		9,995
Allowance for credit losses, end of period		$ 10,073	[1]	$ 9,430	$ 8,588	[1]	$ 10,073	[1]	$ 8,588	[1]	$ 8,413	[1]
Annualized net charge-offs to average total finance receivables	[2]	1.36%		1.38%	1.23%		1.36%		1.59%		1.59%
Allowance for credit losses to total finance receivables, end of period	[2]	1.33%			1.31%		1.33%		1.31%		1.24%
Average total finance receivables	[2]	$ 732,346			$ 641,020		$ 705,879		$ 630,073		$ 636,790
Total finance receivables, end of period	[2]	756,144			657,143		756,144		657,143		679,738
Delinquencies greater than 60 days past due		$ 3,885			$ 3,186		$ 3,885		$ 3,186		$ 3,163
Delinquencies greater than 60 days past due as a percentage of total finance receivables	[3]	0.45%			0.43%		0.45%		0.43%		0.41%
Allowance for credit losses to delinquent accounts greater than 60 days past due	[3]	259.28%			269.55%		259.28%		269.55%		265.98%
Non-accrual leases and loans, end of period		$ 2,022			$ 1,684		$ 2,022		$ 1,684		$ 1,677
Renegotiated leases and loans, end of period		$ 350			$ 468		$ 350		$ 468		$ 535

[1] (1) At September 30, 2016 , December 31, 2015 , and September 30, 2015 the allowance for credit losses allocated to loans was $ 0 . 7 million, $ 0 . 2 million, and less than $ 0 . 1 million , respectively.

[2] (2) Total finance r e ceivables include net investment in direct financing leases and loans. For purposes of asset quality and allowance calculations, the effects of ( i ) the allowance for credit losses and ( ii ) initial direct costs and fees deferred are excluded.

[3] (3) Calculated as a percent o f total minimum lease payments receivable for leases and as a percent of principal outstanding for loans.

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Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Prepaid Expense and Other Assets [Abstract]
Accrued fees receivable	$ 2,554	$ 2,500
Prepaid expenses	1,529	2,120
Income taxes receivable	0	4,427
Other assets, miscellaneous	3,650	3,474
Other assets, total	$ 7,733	$ 12,521

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Commitments and Contingencies (Narratives) (Details) $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($) Number	Sep. 30, 2015 USD ($)
Entity Location [Line Items]
Number Of Offices | Number	9
Operating Leases, Rent Expense	$ 0.8	$ 0.8
Membership Expiration Date, Extended	Sep. 30, 2017
Marlin Business Bank [Member]
Entity Location [Line Items]
Loan Participation Ownership Percentage	1.20%
Unfunded Loan Commitments	$ 0.9

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Commitments and Contingencies (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Capital Leases, Future Minimum Payments, Present Value of Net Minimum Payments [Abstract]
2016, capital lease payments due	$ 25
2017, capital lease payments due	77
2018, capital lease payments due	0
2019, capital lease payments due	0
2020, capital lease payments due	0
Thereafter, capital lease payments due	0
Total minimum lease payments due, capital leases	102
Less: amount representing interest	(3)
Present value of minimum lease payments, capital leases	99
Operating Leases, Future Minimum Payments Due [Abstract]
2016, operating lease payments due	396
2017, operating lease payments due	1,531
2018, operating lease payments due	1,472
2019, operating lease payments due	1,435
2020, operating lease payments due	687
Thereafter, operating lease payments due	0
Total minimum lease payments due, operating leases	5,521
Capital And Operating Leases Future Minimum Payments Due [Abstract]
2016, total lease payments due	421
2017, total lease payments due	1,608
2018, total lease payments due	1,472
2019, total lease payments due	1,435
2020, total lease payments due	687
Thereafter, total lease payments due	0
Total minimum lease payments due	$ 5,623

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Deposits (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Contractual Maturities of Time Deposits [Abstract]
2016	$ 64,434,000
2017	238,491,000
2018	158,865,000
2019	82,659,000
2020	54,746,000
Thereafter	26,959,000
Total	626,154,000	$ 587,940,000
Maximum time deposit liability denomination	250,000
Cash FDIC Insured Amount	$ 250,000
Weighted average all-in interest rate of all deposit liabilities outstanding	1.24%
Marlin Business Bank [Member]
Contractual Maturities of Time Deposits [Abstract]
Money market deposit accounts	$ 50,800,000

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Fair Value Measurements and Disclosures about the Fair Value of Financial Instruments (Balances Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	$ 6,075	$ 6,399
Fair Value Assets Level 1 To Level 2 Transfers Amount	0	0
Fair Value Assets Level 2 To Level 1 Transfers Amount	0	0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	3,439	3,332
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available for sale	$ 2,636	$ 3,067

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Fair Value Measurements and Disclosures about the Fair Value of Financial Instruments (Estimated Fair Values and Carrying Amounts) (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Assets, Fair Value Disclosure [Abstract]
Total cash and cash equivalents	$ 77,625	$ 60,129	$ 105,218	$ 110,656
Restricted interest-earning deposits with banks	0	216
Securities available for sale	6,075	6,399
Time deposits with banks	9,107	7,368
Total commercial loans, net of origination costs and fees deferred	23,275	6,353
Liabilities, Fair Value Disclosure [Abstract]
Deposits	676,920	587,940
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets, Fair Value Disclosure [Abstract]
Total cash and cash equivalents	77,625	60,129
Restricted interest-earning deposits with banks	0	216
Time deposits with banks	9,107	7,368
Loans, net of allowance	22,530	6,179
Liabilities, Fair Value Disclosure [Abstract]
Deposits	676,920	587,940
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Total cash and cash equivalents	77,625	60,129
Restricted interest-earning deposits with banks	0	216
Estimate of Fair Value, Fair Value Disclosure [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Time deposits with banks	9,129	7,356
Loans, net of allowance	22,683	6,152
Liabilities, Fair Value Disclosure [Abstract]
Deposits	$ 677,476	$ 586,898

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Earnings Per Common Share (EPS Basic) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Earnings Per Share, Basic [Abstract]
Net Income	$ 4,345	$ 4,797	$ 12,464	$ 13,001	$ 15,966
Less: net income allocated to participating securities	(136)	(136)	(366)	(377)
Net income allocated to common stock	$ 4,209	$ 4,661	$ 12,098	$ 12,624
Weighted average common shares outstanding	12,543,818	12,773,653	12,507,898	12,815,679
Less: Unvested restricted stock awards considered participating securities	(397,091)	(366,886)	(373,081)	(367,876)
Adjusted weighted average common shares used in computing basic EPS	12,146,727	12,406,767	12,134,817	12,447,803
Basic earnings per share	$ 0.35	$ 0.38	$ 1	$ 1.01

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Earnings Per Common Share (EPS Diluted) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share, Diluted [Abstract]
Net income allocated to common stock	$ 4,209	$ 4,661	$ 12,098	$ 12,624
Adjusted weighted average common shares used in computing basic EPS	12,146,727	12,406,767	12,134,817	12,447,803
Add: Effect of dilutive stock options	10,629	6,730	8,025	18,342
Adjusted weighted average common shares used in computing diluted EPS	12,157,356	12,413,497	12,142,842	12,466,145
Diluted earnings per share	$ 0.35	$ 0.38	$ 1	$ 1.01
Antidilutive securities excluded from computation of earnings per share amount	21,789	12,502	8,829	14,258

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Stockholders' Equity (Narratives) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Jul. 29, 2014
Dividends Paid [Line Items]
Cash dividends paid			$ 5,249		$ 32,249
Stock Repurchase [Line Items]
Stock Repurchase Program, Authorized Amount						$ 15,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 3,200		3,200
Marlin Business Services Corp. [Member]
Regulatory Capital Requirements Miscellaneous Information [Line Items]
Total stockholders equity (regulatory)	$ 158,661		$ 158,661
Total Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%		8.00%
Tier One Risk Based Capital to Risk Weighted Assets	19.77%		19.77%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%		4.00%
Total Risk Based Capital to Risk Weighted Assets	21.02%		21.02%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%		6.00%
Common Equity Tier One Risk Based Capital Required For Capital Adequacy To Risk Weighted Assets	4.50%		4.50%
Common Equity Tier One Risk Based Capital Required To Be Well Capitalized To Risk Weighted Assets	6.50%		6.50%
New Capital Conservation Buffer	0.625%		0.625%
Marlin Business Bank [Member]
Regulatory Capital Requirements Miscellaneous Information [Line Items]
Total stockholders equity (regulatory)	$ 130,982		$ 130,982
Total Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	15.00%		15.00%
Tier One Risk Based Capital to Risk Weighted Assets	16.73%		16.73%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	5.00%		5.00%
FDIC Agreement Capital Required To Be Well Capitalized To Risk Weighted Assets	15.00%		15.00%
Total Risk Based Capital to Risk Weighted Assets	17.98%		17.98%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%		8.00%
Common Equity Tier One Risk Based Capital Required For Capital Adequacy To Risk Weighted Assets	6.50%		6.50%
Common Equity Tier One Risk Based Capital Required To Be Well Capitalized To Risk Weighted Assets	6.50%		6.50%
New Capital Conservation Buffer	0.625%		0.625%
Instrument Stock Repurchase Plan [Member]
Stock Repurchase [Line Items]
Stock Repurchased During Period, Shares		196,196		406,719
Stock Repurchased During Period, Average Cost Per Share		$ 15.65		$ 17.22
Instrument Equity Compensation Plan [Member]
Stock Repurchase [Line Items]
Stock Repurchased During Period, Shares	735	781	22,673	38,508
Stock Repurchased During Period, Average Cost Per Share	$ 17.98	$ 16.05	$ 14.56	$ 18.17

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Stockholders' Equity (Regulatory Capital Ratios) (Details)	Sep. 30, 2016 USD ($)
Marlin Business Services Corp. [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier One Leverage Capital	$ 158,661,000
Tier One Leverage Capital Required for Capital Adequacy	34,258,000
Tier One Leverage Capital Required to be Well Capitalized	42,823,000
Common Equity Tier One Risk Based Capital	158,661,000
Common Equity Tier One Risk Based Capital Required For Capital Adequacy	36,111,285
Common Equity Tier One Risk Based Capital Required To Be Well Capitalized	52,160,745
Tier One Risk Based Capital	158,661,000
Tier One Risk Based Capital Required for Capital Adequacy	48,148,000
Tier One Risk Based Capital Required to be Well Capitalized	64,198,000
Total Risk Based Capital	168,692,000
Total Risk Based Capital Required for Capital Adequacy	64,198,000
Total Risk Based Capital Required to be Well Capitalized	$ 80,247,000
Tier One Leverage Capital to Average Assets	18.53%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%
Common Equity Tier One Risk Based Capital To Risk Weighted Assets	19.77%
Common Equity Tier One Risk Based Capital Required For Capital Adequacy To Risk Weighted Assets	4.50%
Common Equity Tier One Risk Based Capital Required To Be Well Capitalized To Risk Weighted Assets	6.50%
Tier One Risk Based Capital to Risk Weighted Assets	19.77%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%
Total Risk Based Capital to Risk Weighted Assets	21.02%
Total Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%
Total Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%
Marlin Business Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier One Leverage Capital	$ 130,982,000
Tier One Leverage Capital Required for Capital Adequacy	40,812,000
Tier One Leverage Capital Required to be Well Capitalized	40,812,000
Common Equity Tier One Risk Based Capital	130,982,000
Common Equity Tier One Risk Based Capital Required For Capital Adequacy	50,899,000
Common Equity Tier One Risk Based Capital Required To Be Well Capitalized	50,899,000
Tier One Risk Based Capital	130,982,000
Tier One Risk Based Capital Required for Capital Adequacy	62,645,000
Tier One Risk Based Capital Required to be Well Capitalized	62,645,000
Total Risk Based Capital	140,773,000
Total Risk Based Capital Required for Capital Adequacy	117,460,000
Total Risk Based Capital Required to be Well Capitalized	$ 78,307,000
Tier One Leverage Capital to Average Assets	16.05%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	5.00%
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%
Common Equity Tier One Risk Based Capital To Risk Weighted Assets	16.73%
Common Equity Tier One Risk Based Capital Required For Capital Adequacy To Risk Weighted Assets	6.50%
Common Equity Tier One Risk Based Capital Required To Be Well Capitalized To Risk Weighted Assets	6.50%
Tier One Risk Based Capital to Risk Weighted Assets	16.73%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%
Total Risk Based Capital to Risk Weighted Assets	17.98%
Total Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	15.00%
Total Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	[1]

[1] (1 ) MBB is required to maintain “well-capitalized” status and must also maintain a total risk-based capital ratio greater than 15% pursuant to the FDIC Agreement.

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Stock-Based Compensation (Narratives) (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Stock-based Compensation Arrangements [Line Items]
Equity Compensation Plan, Aggregate Number of Shares Authorized	1,200,000		1,200,000
Equity Compensation Plan, Number of Shares Available for Grant	636,594		636,594
Number of Shares, Stock Options Granted			0
Stock-based Compensation Expense	$ 400,000	$ 400,000	$ 1,400,000	$ 1,600,000
Stock Options Exercised, Number of Shares			6,880
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 15.25
Excess tax benefits from stock-based payment arrangements			$ (86,000)	$ 323,000	$ 333,000
Common Stock Closing Price Per Share	$ 19.38		$ 19.38
Stock Options [Member]
Stock-based Compensation Arrangements [Line Items]
Number of Shares, Stock Options Granted	0	0	0	0
Stock-based Compensation Expense	$ 0	$ 0	$ 0	$ 0
Stock Options Exercised, Number of Shares	3,425	4,082
Stock Options Exercised, Total Intrinsic Value	$ 100,000	$ 100,000	100,000	600,000
Total Compensation Cost Not yet Recognized on Nonvested Stock-based Awards, Incremental Cost at Maximum Performance	0		$ 0
Stock-based Awards, Vesting Period in Years			4 years
Total Compensation Cost Not yet Recognized on Nonvested Stock-based Awards, Portion Subject to Pre-expiration Vesting	$ 100,000		$ 100,000
Total Compensation Cost Not yet Recognized on Nonvested Stock-based Awards, Portion Subject to Pre-expiration Vesting, Period for Recognition, in Years			7 months
Stock Options [Member] | Director [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			1 year
Stock Options [Member] | Minimum [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			7 years
Stock Options [Member] | Maximum [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			10 years
Restricted Stock [Member]
Stock-based Compensation Arrangements [Line Items]
Equity Compensation Plan, Aggregate Number of Shares Authorized	1,000,000		1,000,000
Equity Compensation Plan, Number of Shares Available for Grant	436,594		436,594
Stock-based Compensation Expense	$ 300,000	400,000	$ 1,400,000	1,600,000
Total Compensation Cost Not yet Recognized on Nonvested Stock-based Awards	4,600,000		$ 4,600,000
Compensation Cost Not yet Recognized on Nonvested Stock-based Awards, Period for Recognition in Years			4 years
Stock-based Awards Other Than Options, Subject to Performance Acceleration, Grants in Period			74,207
Stock-based Awards Other Than Options, Contingent on Performance, Grants in Period			0
Stock-based Awards, Grants in Period, Aggregate Grant Date Fair Value	400,000	400,000	$ 2,800,000	3,000,000
Stock-based Compensation Expense Due to Performance Acceleration			400,000	508,000
Total Compensation Cost Not yet Recognized on Nonvested Stock-based Awards, Portion Subject to Acceleration	1,500,000		$ 1,500,000
Total Compensation Cost Not yet Recognized on Nonvested Stock-based Awards, Portion Subject to Pre-expiration Vesting, Period for Recognition, in Years			1 year 4 months
Stock-based Awards Other Than Options, Additional Grants Contingently Issuable			57,998
Stock-based Awards Other Than Options, Additional Grants Contingently Issuable Achievement Threshold			100.00%
Stock-based Awards Other than Options, Vested in Period, Total Fair Value	100,000	$ 100,000	$ 900,000	$ 2,200,000
Restricted Stock [Member] | Minimum [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			3 years
Restricted Stock [Member] | Minimum [Member] | Director [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			6 months
Restricted Stock [Member] | Maximum [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			10 years
Restricted Stock [Member] | Maximum [Member] | Director [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			7 years
Market-Based RSUs [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Compensation Expense	100,000		$ 100,000
Total Compensation Cost Not yet Recognized on Nonvested Stock-based Awards	1,100,000		$ 1,100,000
Compensation Cost Not yet Recognized on Nonvested Stock-based Awards, Period for Recognition in Years			4 years
Stock-based Awards, Vesting Period in Years			4 years
Stock-based Awards, Grants in Period, Aggregate Grant Date Fair Value	$ 1,100,000		$ 1,100,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value			$ 9.47
Market-Based RSUs [Member] | Minimum [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			1 year
Market-Based RSUs [Member] | Maximum [Member]
Stock-based Compensation Arrangements [Line Items]
Stock-based Awards, Vesting Period in Years			3 years

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Stock-Based Compensation (Summary of Option Activity) (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Stock-based Compensation Arrangements, Options, Outstanding [Roll Forward]
Number of Shares Outstanding, Beginning of Period | shares	50,686
Number of Shares, Stock Options Granted | shares	0
Number of Shares, Stock Options Exercised | shares	(6,880)
Number of Shares, Forfeited | shares	(1,666)
Number of Shares, Expired | shares	0
Number of Shares Outstanding, End of Period | shares	42,140
Weighted Average Exercise Price Per Share, Outstanding at Beginning of Period | $ / shares	$ 12.09
Weighted Average Exercise Price Per Share, Granted | $ / shares	0
Weighted Average Exercise Price Per Share, Exercised | $ / shares	11.29
Weighted Average Exercise Price Per Share, Forfeitures | $ / shares	12.41
Weighted Average Exercise Price Per Share, Expired | $ / shares	0
Weighted Average Exercise Price Per Share, Outstanding at End of Period | $ / shares	$ 12.37

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Stock-Based Compensation (Summary of Stock Options Outstanding and Exercisable) (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number of Shares	42,140	50,686
Options Outstanding, Weighted Average Remaining Life (Years)	7 months
Options Outstanding, Weighted Average Exercise Price	$ 12.37	$ 12.09
Options Outstanding, Aggregate Intrinsic Value	$ 295
Options Exercisable, Number of Shares	39,916
Options Exercisable, Weighted Average Remaining Life (Years)	7 months
Options Exercisable, Weighted Average Exercise Price	$ 12.37
Options Exercisable, Aggregate Intrinsic Value	$ 280
$7.17 - 7.17 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding and Exercisable, Lower Price in Range Category	$ 0
Options Outstanding and Exercisable, Upper Price in Range Category	$ 0
Options Outstanding, Number of Shares	0
Options Outstanding, Weighted Average Remaining Life (Years)	0 years
Options Outstanding, Weighted Average Exercise Price	$ 0
Options Outstanding, Aggregate Intrinsic Value	$ 0
Options Exercisable, Number of Shares	0
Options Exercisable, Weighted Average Remaining Life (Years)	0 years
Options Exercisable, Weighted Average Exercise Price	$ 0
Options Exercisable, Aggregate Intrinsic Value	$ 0
$12.08 - 12.41 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding and Exercisable, Lower Price in Range Category	$ 12.08
Options Outstanding and Exercisable, Upper Price in Range Category	$ 12.41
Options Outstanding, Number of Shares	42,140
Options Outstanding, Weighted Average Remaining Life (Years)	7 months
Options Outstanding, Weighted Average Exercise Price	$ 12.37
Options Outstanding, Aggregate Intrinsic Value	$ 295
Options Exercisable, Number of Shares	39,916
Options Exercisable, Weighted Average Remaining Life (Years)	7 months
Options Exercisable, Weighted Average Exercise Price	$ 12.37
Options Exercisable, Aggregate Intrinsic Value	$ 280

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Stock-Based Compensation (Summary of Non-Vested Restricted Stock Activity) (Details)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Stock-based Compensation Arrangements, Restricted Stock, Nonvested [Roll Forward]
Shares Outstanding, Beginning of Period | shares	313,236
Shares, Granted | shares	181,156
Shares, Vested | shares	(60,185)
Shares, Forfeited | shares	(19,482)
Shares Outstanding, End of Period | shares	414,725
Weighted Average Grant-Date Fair Value, Outstanding at Beginning of Period | $ / shares	$ 16.65
Weighted Average Grant-Date Fair Value, Granted | $ / shares	15.25
Weighted Average Grant-Date Fair Value, Vested | $ / shares	18.23
Weighted Average Grant-Date Fair Value, Forfeited | $ / shares	18.02
Weighted Average Grant-Date Fair Value, Outstanding at End of Period | $ / shares	$ 15.74
Market-Based RSUs [Member]
Stock-based Compensation Arrangements, Restricted Stock, Nonvested [Roll Forward]
Shares Outstanding, Beginning of Period | shares	0
Shares, Granted | shares	120,000
Shares Outstanding, End of Period | shares	120,000
Weighted Average Grant-Date Fair Value, Granted | $ / shares	$ 9.47
Weighted Average Grant-Date Fair Value, Outstanding at End of Period | $ / shares	9.47
Stock-based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract]
Grant date stock price | $ / shares	$ 18.24
Risk-free interest rate	1.06%
Expected volatility	35.16%
Dividend yield	0.00%

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Subsequent Events (Narratives)(Details) $ / shares in Units, $ in Thousands		9 Months Ended	12 Months Ended
	Oct. 27, 2016 USD ($) Number $ / shares	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Subsequent Event [Line Items]
Cash dividends declared		$ 5,249	$ 32,249
Subsequent Event [Member]
Subsequent Event [Line Items]
Cash dividends declared per share | $ / shares	$ 0.14
Cash dividends declared	$ 1,800
Cash dividend declared on common stock, date declared	Oct. 27, 2016
Cash dividend declared on common stock, payable date	Nov. 17, 2016
Cash dividend declared on common stock, date of record	Nov. 07, 2016
Number of consecutive quartely cash dividends declared. | Number	21