-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WQRpyJyyXOIvpGrftTqFgAcldWJdOWp4thXppvI+kcels/XJPh1eHfLAbXLWyXvX l4U/MBVpenkHrN17rEmAPg== 0001275287-06-004133.txt : 20060804 0001275287-06-004133.hdr.sgml : 20060804 20060803183034 ACCESSION NUMBER: 0001275287-06-004133 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060803 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060804 DATE AS OF CHANGE: 20060803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARLIN BUSINESS SERVICES CORP CENTRAL INDEX KEY: 0001260968 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 383686388 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50448 FILM NUMBER: 061003311 BUSINESS ADDRESS: STREET 1: 300 FELLOWSHIP ROAD CITY: MT. LAUREL STATE: NJ ZIP: 08054 BUSINESS PHONE: 8884799111 MAIL ADDRESS: STREET 1: 300 FELLOWSHIP ROAD CITY: MT. LAUREL STATE: NJ ZIP: 08054 FORMER COMPANY: FORMER CONFORMED NAME: MARLIN BUSINESS SERVICES INC DATE OF NAME CHANGE: 20030822 8-K 1 mb6697.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) August 3, 2006 MARLIN BUSINESS SERVICES CORP. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania 000-50448 38-3686388 ---------------------------- ------------ ------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 300 Fellowship Road, Mount Laurel, NJ 08054 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (888) 479-9111 -------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The Registrant issued a press release on August 3, 2006 announcing its results of operations for the second quarter ended June 30, 2006. A copy of the press release is being furnished as Exhibit 99.1 to this report. The information in this Current Report, including the Exhibit hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits. 99.1 Press Release issued by Marlin Business Services Corp. on August 3, 2006. 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 hereunto duly authorized. MARLIN BUSINESS SERVICES CORP. ------------------------------ (Registrant) Date: August 3, 2006 /s/ Daniel P. Dyer ------------------------------ Daniel P. Dyer Chief Executive Officer INDEX TO EXHIBITS 99.1 Press Release issued by Marlin Business Services Corp. on August 3, 2006. EX-99.1 2 mb6697ex991.txt EXHIBIT 99.1 Exhibit 99.1 MARLIN BUSINESS SERVICES CORP. REPORTS SECOND QUARTER EARNINGS MOUNT LAUREL, N.J., Aug. 3 /PRNewswire-FirstCall/ -- Marlin Business Services Corp. (Nasdaq: MRLN) today reported net income of $5.3 million for the second quarter ended June 30, 2006, a 17.8% increase over net income of $4.5 million for the same period in 2005. Diluted earnings per share was $0.44 for the second quarter of 2006, an increase of 15.8% compared to $0.38 for the same period in 2005. Due to better than expected collections on leases in areas effected by Hurricane Katrina, net income was positively impacted by an after tax reduction of reserves for expected losses of $545,000 or $.045 per diluted earnings per share. For the six months ended June 30, 2006, net income was $10.0 million compared to $8.4 million for the same period in 2005. Diluted earnings per share for the six-month period ended June 30, 2006 was $0.83 compared with $0.71 for the same period in 2005. Net income for the six-month period ended June 30, 2006 was impacted by the same after tax reduction of reserves for expected losses related to Katrina of $545,000, or $.045 per diluted earnings per share. "I'm pleased to report a solid quarter of results," said Daniel P. Dyer, Chairman and CEO of Marlin. "Performance was led by solid gains in new lease production and exceptional credit quality." Highlights for the quarter ended June 30, 2006 include: Asset Origination - Based on initial equipment cost, the company set records for new originations for both the quarter at $97.9 million and a single month (June) at $35.5 million. Net investment in leases was $622.8 million at June 30, 2006. - The average implicit yield on new business was 12.68% for the quarter ended June 30, 2006 compared to 12.84% for the quarter ended March 31, 2006. - Our end-user customer base grew to more than 85,000 at June 30, 2006 compared to 81,000 at June 30, 2005. The number of active leases in our portfolio was approximately 107,000 at June 30, 2006. Net Interest and Fee Margin and Cost of Funds - The interest income yield was 12.54% as a percentage of average net investment in leases for the quarter ended June 30, 2006, which is flat from the quarter ended March 31, 2006. - Fee income as a percentage of average net investment in leases was 3.44% for the quarter ended June 30, 2006 compared to 3.45% for the quarter ended March 31, 2006. - The average cost of funds as a percentage of net investment in leases was 4.06% for the quarter ended June 30, 2006. This was a 19 basis point increase from the 3.87% for the quarter ended March 31, 2006 and is primarily attributed to higher interest costs on the Company's variable rate warehouse facilities. Interest rates on such facilities have risen due to continued Fed actions to raise short-term rates. - The Net interest and fee margin was 11.92% as a percentage of average net investment in leases for the quarter ended June 30, 2006; a decrease of 20 basis points compared to 12.12% for the quarter ended March 31, 2006. Credit Quality - Net charge-offs totaled $2.1 million for the quarter ended June 30, 2006 compared to $2.3 million for the first quarter of 2006. On an annualized basis, net charge-offs were 1.44% of average net investment in leases during the second quarter of 2006 compared to 1.64% for the first quarter of 2006. - As of June 30, 2006, 0.54% of our total lease portfolio was 60 or more days delinquent, compared to 0.49% as of March 31, 2006 and 0.57% as of June 30, 2005. - Allowance for credit losses was $7.4 million as of June 30, 2006, compared to $7.9 million as of March 31, 2006. Allowance for credit losses as a percentage of net investment in leases was 1.21% at June 30, 2006 compared to 1.37% at March 31, 2006. - The decrease in our allowance for credit losses resulted primarily from improved credit quality of the leases in areas affected by Hurricane Katrina. During the third quarter of 2005 we recorded additional reserves of $1.25 million pretax for expected losses from the areas hardest hit by Hurricane Katrina. Through June 30, 2006 we have yet to experience significant aggregate charge-offs related to Hurricane Katrina. Based on our ongoing monitoring and review of these accounts we determined that the remaining reserve for Katrina losses of approximately $0.9 million pretax was no longer required, resulting in a reduction of the provision. This had a $0.045 positive effect on diluted EPS for the quarter ended June 30, 2006. - At June 30, 2006, the allowance for credit losses was 190.59% of leases 60 or more days delinquent compared to 179.80% at June 30, 2005. - In conjunction with this release, static pool loss statistics have been updated as supplemental information on the investor relations section of our website at http://www.marlincorp.com. Operating Expenses - Salaries and benefits expense was $5.3 million in the second quarter of 2006 compared to $5.1 million in the first quarter of 2006. Salaries and benefits expense was 3.55% as an annualized percentage of average net investment in leases for the second quarter of 2006. Salaries and benefits included $122,000 of expenses in the second quarter of 2006 related to Marlin Business Bank (in organization). In addition, option- related compensation expense totaled $225,000 in the second quarter due to the adoption of SFAS 123(R). - Other general and administrative expenses were $3.1 million in the second quarter of 2006 compared to $2.7 million in the first quarter of 2006. The increase is primarily attributable to higher personal property tax administration fees of $100,000 and audit and filing fees of $144,000. Other general and administrative expenses as an annualized percentage of average net investment in leases were 2.08% for the second quarter of 2006 compared to 1.93% for the first quarter of 2006. Funding and Liquidity - Our debt to equity ratio was 4.17:1 at June 30, 2006 compared to 4.23:1 at March 31, 2006. - Capital increased an additional $569,000 through the exercise of employee stock options and the related tax benefits in the second quarter of 2006. Other - In October 2005, Marlin submitted an application for an Industrial Bank Charter with the FDIC and the State of Utah Department of Financial Institutions. On Friday, July 28, 2006 the Federal Deposit Insurance Corp (FDIC) announced that it has placed a six month moratorium on all industrial bank applications. For more information please go to http://www.fdic.gov. Conference Call and Webcast We will host a conference call on Friday, August 4, 2006 at 9:00 a.m. EDT to discuss our second quarter 2006 results. If you wish to participate, please call (800) 540-0559 approximately 10 minutes in advance of the call time. The conference ID will be: "7MARLIN." The call will also be Webcast on the Investor Relations page of the Marlin Business Services Corp. website, http://www.marlincorp.com. An audio replay will also be available on the Investor Relations section of Marlin's website for approximately 90 days. About Marlin Business Services Corp. Marlin Business Services Corp. is a nationwide provider of equipment leasing solutions primarily to small businesses. The Company's principal operating subsidiary, Marlin Leasing Corporation, finances over 60 equipment categories in a segment of the market generally referred to as "small-ticket" leasing (i.e. leasing transactions less than $250,000). The Company was founded in 1997 and completed its initial public offering of common stock on November 12, 2003. In addition to its executive offices in Mount Laurel, NJ, Marlin has regional offices in or near Atlanta, Chicago, Denver, Philadelphia and Salt Lake City. For more information, visit http://www.marlincorp.com or call toll-free at (888) 479-9111. Forward-Looking Statements This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements (including statements regarding future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance, or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," "may," "intend," and similar expressions are generally intended to identify forward- looking statements. Economic, business, funding, market, competitive, legal and/or regulatory factors, among others, affecting our business are examples of factors that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these factors is contained in our filings with the SEC, including the sections captioned "Risk Factors" and "Business" in the Company's Form 10-K/A filed with the Securities and Exchange Commission. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward- looking statements, whether as a result of new information, future events or otherwise. MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands) June 30, December 31, 2006 2005 ------------ ------------ (unaudited) Assets Cash and cash equivalents $ 3,168 $ 34,472 Restricted cash 54,457 47,786 Net investment in direct financing leases 622,815 572,581 Property and equipment, net 3,533 3,776 Property tax receivables 956 191 Fair value of cash flow hedges 6,107 3,383 Other assets 7,071 8,800 ------------ ------------ Total assets $ 698,107 $ 670,989 ============ ============ Liabilities and Stockholders' Equity Revolving and term secured borrowings $ 526,286 $ 516,849 Other liabilities: Sales and property taxes payable 11,981 7,702 Accounts payable and accrued expenses 8,464 8,467 Deferred income tax liability 25,135 25,362 ------------ ------------ Total liabilities 571,866 558,380 Stockholders' equity: Common Stock, $0.01 par value; 75,000 shares authorized; 11,976 and 11,755 shares issued and outstanding, respectively 120 117 Preferred Stock, $0.01 par value; 5,000 shares authorized; none issued - - Additional paid-in capital 79,604 77,186 Stock subscription receivable (21) (25) Cumulative other comprehensive income 4,705 3,520 Retained earnings 41,833 31,811 ------------ ------------ Total stockholders' equity 126,241 112,609 ------------ ------------ Total liabilities and stockholders' equity $ 698,107 $ 670,989 ============ ============ MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES Consolidated Statements of Operations (dollars in thousands, except share amounts) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------- ------------------------- 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Income: Interest income $ 18,549 $ 16,389 $ 36,368 $ 32,103 Fee income 5,097 4,586 10,004 9,034 ----------- ----------- ----------- ----------- Interest and fee income 23,646 20,975 46,372 41,137 Interest expense 6,006 4,792 11,501 9,285 ----------- ----------- ----------- ----------- Net interest and fee income 17,640 16,183 34,871 31,852 Provision for credit losses 1,599 2,270 4,014 4,950 ----------- ----------- ----------- ----------- Net interest and fee income after provision for credit losses 16,041 13,913 30,857 26,902 Insurance and other income 1,229 1,217 2,584 2,389 ----------- ----------- ----------- ----------- Operating income 17,270 15,130 33,441 29,291 Salaries and benefits 5,254 4,391 10,399 8,824 General and administrative 3,078 2,971 5,824 5,797 Financing related costs 198 410 653 783 ----------- ----------- ----------- ----------- Income before income taxes 8,740 7,358 16,565 13,887 Income taxes 3,452 2,874 6,543 5,453 ----------- ----------- ----------- ----------- Net income $ 5,288 $ 4,484 $ 10,022 $ 8,434 =========== =========== =========== =========== Basic earnings per share $ 0.45 $ 0.39 $ 0.85 $ 0.73 =========== =========== =========== =========== Diluted earnings per share $ 0.44 $ 0.38 $ 0.83 $ 0.71 =========== =========== =========== =========== Shares used in computing basic earnings per share 11,780,018 11,508,519 11,740,989 11,483,678 =========== =========== =========== =========== Shares used in computing diluted earnings per share 12,092,752 11,912,329 12,074,066 11,891,369 =========== =========== =========== ===========
SUPPLEMENTAL QUARTERLY DATA (dollars in thousands, except share amounts) (unaudited)
Quarter Ended: 6/30/2005 9/30/2005 12/31/2005 - ---------------------------------- ------------ ------------ ------------ New Asset Production: # of Sales Reps 95 113 103 # of Leases 8,798 8,142 7,566 Equipment Volume $ 85,007 $ 79,632 $ 76,472 Average monthly sources 1,361 1,306 1,202 Implicit Yield on New Business 12.70% 12.61% 12.87% Net interest and fee margin Interest Income Yield 12.76% 13.03% 12.96% Fee Income Yield 3.57% 3.15% 3.39% Interest and Fee Income Yield 16.33% 16.18% 16.35% Cost of Funds 3.73% 4.19% 4.28% Net interest and Fee Margin 12.60% 11.99% 12.07% Average Net Investment in Leases $ 513,919 $ 536,874 $ 554,705 Portfolio Asset Quality: 60+ Days Past Due Delinquencies 0.57% 0.72% 0.61% 60+ Days Past Due Delinquencies $ 3,535 $ 4,656 $ 4,063 Net Charge-offs $ 2,231 $ 1,965 $ 2,513 % on Average Net Investment in Leases Annualized 1.74% 1.46% 1.81% Allowance for Credit Losses $ 6,355 $ 7,900 $ 7,813 % of 60+ Delinquencies 179.80% 169.70% 192.30% 90+ Day Delinquencies (Non- earning) $ 1,705 $ 2,039 $ 2,017 Balance Sheet: Assets Investment in Direct Financing Leases $ 526,934 $ 547,868 $ 562,039 Initial Direct Costs and Fees 16,918 17,902 18,355 Reserve for Credit Losses (6,355) (7,900) (7,813) Net Investment in Leases $ 537,497 $ 557,870 $ 572,581 Cash and Cash Equivalents 6,259 51,656 34,472 Restricted Cash 44,370 108,295 47,786 Other Assets 13,465 15,112 16,150 Total Assets $ 601,591 $ 732,933 $ 670,989 Liabilities Total Debt $ 460,919 $ 582,611 $ 516,849 Other Liabilities 39,369 42,851 41,531 Total Liabilities $ 500,288 $ 625,462 $ 558,380 Stockholders' Equity Common Stock $ 117 $ 117 $ 117 Paid-in Capital, net 75,853 76,528 77,161 Other Comprehensive Income 1,336 3,386 3,520 Retained Earnings 23,997 27,440 31,811 Total Stockholders' Equity $ 101,303 $ 107,471 $ 112,609 Total Liabilities and Stockholders' Equity $ 601,591 $ 732,933 $ 670,989 Capital and Leverage: Tangible Equity $ 101,303 $ 107,471 $ 112,609 Debt to Tangible Equity 4.55 5.42 4.59 Expense Ratios: Salaries and Benefits Expense $ 4,391 $ 4,567 $ 4,781 Salaries and Benefits Expense annualized % of Avg. Net Invest 3.42% 3.40% 3.45% Total personnel end of quarter 277 308 296 General and Administrative Expense $ 2,971 $ 3,049 $ 3,062 General and Administrative Expense annualized % of Avg. Net Invest 2.31% 2.27% 2.21% Efficiency Ratio 42.31% 44.13% 43.87% Net Income: Net Income $ 4,484 $ 3,444 $ 4,370 Annualized Performance Measures: Return on Average Assets 3.03% 2.06% 2.49% Return on Average Stockholders Equity 18.09% 13.20% 15.89% Per Share Data: Number of Shares - Basic 11,508,519 11,608,450 11,646,864 EPS- Basic $ 0.39 $ 0.30 $ 0.38 Number of Shares - Diluted 11,912,329 12,048,274 12,075,882 EPS- Diluted $ 0.38 $ 0.29 $ 0.36
Quarter Ended: 3/31/2006 6/30/2006 - ------------------------------------ ------------ ------------ New Asset Production: # of Sales Reps 101 103 # of Leases 7,734 8,553 Equipment Volume $ 82,049 $ 97,871 Average monthly sources 1,219 1,333 Implicit Yield on New Business 12.84% 12.68% Net interest and fee margin Interest Income Yield 12.54% 12.54% Fee Income Yield 3.45% 3.44% Interest and Fee Income Yield 15.99% 15.98% Cost of Funds 3.87% 4.06% Net interest and Fee Margin 12.12% 11.92% Average Net Investment in Leases $ 568,248 $ 591,905 Portfolio Asset Quality: 60+ Days Past Due Delinquencies 0.49% 0.54% 60+ Days Past Due Delinquencies $ 3,320 $ 3,867 Net Charge-offs $ 2,324 $ 2,133 % on Average Net Investment in Leases Annualized 1.64% 1.44% Allowance for Credit Losses $ 7,904 $ 7,370 % of 60+ Delinquencies 238.10% 190.59% 90+ Day Delinquencies (Non-earning) $ 1,544 $ 1,648 Balance Sheet: Assets Investment in Direct Financing Leases $ 577,219 $ 609,359 Initial Direct Costs and Fees 19,329 20,826 Reserve for Credit Losses (7,904) (7,370) Net Investment in Leases $ 588,644 $ 622,815 Cash and Cash Equivalents 4,929 3,168 Restricted Cash 52,987 54,457 Other Assets 23,735 17,667 Total Assets $ 670,295 698,107 Liabilities Total Debt $ 504,459 $ 526,286 Other Liabilities 46,645 45,580 Total Liabilities $ 551,104 $ 571,866 Stockholders' Equity Common Stock $ 118 $ 120 Paid-in Capital, net 78,308 79,583 Other Comprehensive Income 4,220 4,705 Retained Earnings 36,545 41,833 Total Stockholders' Equity $ 119,191 $ 126,241 Total Liabilities and Stockholders' Equity $ 670,295 $ 698,107 Capital and Leverage: Tangible Equity $ 119,191 $ 126,241 Debt to Tangible Equity 4.23 4.17 Expense Ratios: Salaries and Benefits Expense $ 5,145 $ 5,254 Salaries and Benefits Expense annualized % of Avg. Net Invest 3.62% 3.55% Total personnel end of quarter 301 319 General and Administrative Expense $ 2,746 $ 3,078 General and Administrative Expense annualized % of Avg. Net Invest 1.93% 2.08% Efficiency Ratio 42.46% 44.16% Net Income: Net Income $ 4,734 $ 5,288 Annualized Performance Measures: Return on Average Assets 2.82% 3.09% Return on Average Stockholders Equity 16.34% 17.24% Per Share Data: Number of Shares - Basic 11,702,161 11,780,018 EPS- Basic $ 0.40 $ 0.45 Number of Shares - Diluted 12,042,436 12,092,752 EPS- Diluted $ 0.39 $ 0.44 SOURCE Marlin Business Services Corp. -0- 08/03/2006 /CONTACT: Lynne Wilson of Marlin Business Services Corp., +1-856-359-9111 x4108/ /Web site: http://www.marlincorp.com / (MRLN) -----END PRIVACY-ENHANCED MESSAGE-----