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Section 1: 8-K (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): November 1, 2018  

Marlin Business Services Corp.
(Exact Name of Registrant as Specified in Charter)

Pennsylvania 000-50448 38-3686388
(State or Other Jurisdiction of Incorporation) (Commission File Number) (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)


(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  [ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  [ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  [ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  [ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

The Registrant issued a press release on November 1, 2018, announcing its results of operations for the third quarter ended September 30, 2018. 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 November 1, 2018 in connection with Item 2.02.

 


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    Marlin Business Services Corp.
(Registrant)
     
     
Date: November 1, 2018   /s/ Edward R. Dietz        
    Edward R. Dietz
    Senior Vice President & General Counsel
   


INDEX TO EXHIBIT 

99.1   Press Release issued by Marlin Business Services Corp. on November 1, 2018 in connection with Item 2.02.

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Section 2: EX-99.1 (PRESS RELEASE)

EdgarFiling

EXHIBIT 99.1

Marlin Reports Third Quarter 2018 Earnings and Declares a Cash Dividend of $0.14 Per Share

Third Quarter Summary:

MOUNT LAUREL, N.J., Nov. 01, 2018 (GLOBE NEWSWIRE) --  Marlin (NASDAQ: MRLN), a nationwide provider of capital solutions to small businesses (“Marlin” or the “Company”), today reported third quarter 2018 net income of $5.9 million, or $0.47 per diluted share, compared with net income of $3.3 million, or $0.26 per share a year ago. Third quarter net income on an adjusted basis was $6.4 million, or $0.51 per diluted share, compared with $3.9 million or $0.31 per diluted share a year ago.

Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “The third quarter was another productive period for Marlin highlighted by solid growth in origination volume, continued stable credit quality, strong earnings performance, the successful completion of an asset-backed securitization transaction and an important strategic acquisition to augment our organic growth initiatives. Excluding referral volume, total origination volume was $173.1 million for the quarter compared with $147.4 million last year, resulting in a year-over-year increase of 17.4%. This increase included strong growth from both our Equipment Finance and Working Capital Loan products as well as from our Direct origination channel. In addition, as part of Marlin’s capital markets activities, we referred or sold $43.5 million of leases and loans that were better suited for our capital markets partners’ balance sheets. Due to these origination and capital markets activities, our Net Investment in Leases and Loans increased to $970.4 million, up 9% from a year ago and our total managed assets grew to approximately $1.1 billion, an increase of 18% from last year. Our ability to achieve this robust growth while maintaining our disciplined underwriting standards and stable portfolio performance is evidence of how core risk management is to Marlin’s culture. At the bottom line, earnings expanded sharply on both a sequential quarter and year-over-year basis.”

Mr. Hilzinger concluded, “Consistent with our stated strategy of augmenting organic growth with strategic corporate development activities, late in the quarter we announced the acquisition of Fleet Financing Resources—or FFR. FFR, a broker platform that originated approximately $75 million in 2017, is a well-established originator focused on financing commercial transportation equipment that brings significant domain expertise to the Company while also substantially accelerating the growth of our existing commercial transportation equipment finance business. We expect the transaction to be accretive to Marlin’s earnings per share in 2018 and to generate strong returns on invested capital over time by accelerating our growth and further leveraging the Company’s fixed infrastructure costs.”

Results of Operations
Total origination volume (excluding referral and originated for sale volume) for the third quarter of $173.1 million was up 17% from a year ago. Direct origination volume of $35.5 million in the third quarter was up 51% from $23.4 million in the third quarter of 2017. Indirect origination volume in the third quarter of 2018 was $137.6 million, up from $124.0 million in the same period a year ago. Referral volume totaled $2.5 million, down from $13.0 million in the third quarter last year, largely due to the transition of leases originated by Marlin’s Horizon Keystone Financial division to Marlin’s balance sheet over the past year.

Net interest and fee margin as a percentage of average finance receivables was 9.94% for the third quarter, down 37 basis points from the second quarter of 2018 and down 79 basis points from a year ago. The decrease in margin percentage was primarily a result of an increase in interest expense, partially offset by an increase of 59 basis points in new origination loan and lease yield over last year. The Company’s interest expense as a percent of average finance receivables increased to 207 basis points compared with 159 basis points for the previous quarter and 139 basis points for the third quarter of 2017, primarily because of the impact on funding costs from the recent debt securitization.

On an absolute basis, net interest and fee income was $23.8 million for the third quarter of 2018 compared with $23.1 million for the third quarter last year. The increase continues to reflect the strong growth in the portfolio and the underlying earnings power of the business as the Company continues to grow and scale.

Non-interest income was $4.4 million for the third quarter of 2018, compared with $4.6 million in the prior quarter and $3.6 million in the prior year period.  The year-over-year increase in non-interest income is primarily due to an increase in gains-on-sale and to a lesser extent an increase in insurance-related income. Non-interest expense was $15.7 million for the third quarter of 2018, compared with $16.0 million in the prior quarter and $15.7 million in the third quarter last year.  Third quarter 2018 non-interest expense included $0.6 million of expense related to the departure of the Company’s Chief Financial Officer.
       
The Company’s efficiency ratio for the third quarter was 55.7% compared with 58.7% in the third quarter last year. Excluding acquisition related sales commissions and intangible amortization, the non-GAAP efficiency ratio in the third quarter of 2018 was 54.5% as compared to 56.1% in the third quarter last year. Marlin expects its efficiency ratio to continue to improve as the Company leverages its fixed costs through continued portfolio growth and from continued operational efficiencies generated by its various process improvement activities.

Marlin recorded an income tax expense of $1.7 million, representing an effective tax rate of 22.6% for the third quarter of 2018, compared with an income tax expense of $2.0 million, representing an effective tax rate of 38.3 % for the third quarter of 2017.

Portfolio Performance
Allowance for credit losses as a percentage of total finance receivables was 1.65% at September 30, 2018 relatively consistent with 1.62% at June 30, 2018 and 1.64% at September 30, 2017.

Finance receivables over 30 days delinquent were 1.02% of the Company’s total finance receivables portfolio as of September 30, 2018, up 6 basis points from June 30, 2018 and down 11 basis points from September 30, 2017. Finance receivables over 60 days delinquent were 0.57% of the Company’s total finance receivables portfolio as of September 30, 2018, up 2 basis points from June, 2018 and down 4 basis points from September 30, 2017. Annualized third quarter net charge-offs were 1.90% of average total finance receivables versus 1.84% in the second quarter of 2018 and 1.73% a year ago.

As of September 30, 2018, the Company’s consolidated equity to assets ratio was 17.18%. This compares to 17.03% and 16.42%, in the prior quarter and year ago quarter, respectively.

Corporate Developments
During the third quarter, Marlin completed a $201.7 million asset-backed notes (“Notes”) term securitization. This transaction was Marlin's eleventh term securitization and its first since 2010. The Notes, which were issued in seven classes, have fixed interest rates ranging from 2.55% to 5.02% (with a weighted averaged fixed interest rate of 3.41%) and legal final maturity dates ranging from July 22, 2019 to May 20, 2025. Marlin intends to use proceeds from the transaction to fund the growth of its portfolio of loans and leases and for general corporate purposes.

Also during the third quarter, the Company announced the acquisition of Fleet Financing Resources, a leading provider of equipment finance credit products focused on the commercial vehicle market. This acquisition allows Marlin to significantly accelerate growth in the commercial vehicle and titled transportation markets with a proven and successful team that has significant expertise in these attractive markets.

On September 4, 2018, the Company announced that W. Taylor Kamp left his position as Senior Vice President and Chief Financial Officer. Mr. Kamp will remain with Marlin as a consultant through the end of 2018 to assist in the transition of the Company’s finance and accounting functions.

Marlin’s Board of Directors today declared a $0.14 per share quarterly dividend. The dividend is payable November 23, 2018, to shareholders of record on November 12, 2018. Based on the closing stock price on October 31, 2018, the annualized dividend yield on the Company’s common stock is 2.11%.

Business Outlook
The Company is maintaining guidance for the full year ending December 31, 2018 as follows:

Conference Call and Webcast
Marlin will host a conference call on Friday, November 2, 2018 at 9:00 a.m. ET to discuss the Company’s third quarter 2018 results. If you wish to participate, please call 877-407-0792 approximately 10 minutes in advance of the call time. The conference ID will be: “Marlin.” The call will also be webcast on the Investor Relations page of the Company’s website, www.marlinfinance.com. An audio replay will also be available on the Investor Relations section of Marlin’s website for 45 days.

About Marlin

Marlin is a nationwide provider of capital solutions to small businesses with a mission of helping small businesses fulfill their American dream. Our products and services are offered directly to small businesses and through financing programs with independent equipment dealers and other intermediaries. Marlin Business Services Corp. is publicly traded (NASDAQ: MRLN).  For more information about Marlin, visit www.marlinfinance.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, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. 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 Securities and Exchange Commission, including the sections captioned “Risk Factors” and “Business” in the Company’s Form 10-K filed with the Securities and Exchange Commission. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

Regulation G – Non-GAAP Financial Measures
In this release the Company uses certain financial measures which are not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines net income on an adjusted basis as net income excluding an after-tax charge related to a reserve for restitution in connection with certain payment processing practices in effect prior to February 2016 and charges for associated legal and consulting fees, the after-tax hurricane credit and insurance loss reserves, the after-tax executive severance, and the net tax benefit from the tax cut and jobs act, as applicable. The Company defines diluted earnings per share on an adjusted basis, return on average assets on an adjusted basis and return on average equity on an adjusted basis as the calculation used for the “as reported” number substituting net income as reported with net income on an adjusted basis while using the same denominator in the “as reported” number, where appropriate.  The Company defines efficiency ratio on an adjusted basis as the calculation used for the “as reported” ratio adjusting the numerator for the reserve for restitution in connection with certain payment processing practices in effect prior to February 2016, hurricane insurance loss reserves, and executive severance, as applicable. The Company believes that these non-GAAP measures are useful performance metrics for management, investors and lenders, because it means to evaluate period-to-period comparisons of the Company's financial performance without the effects of certain adjustments in accordance with GAAP that may not necessarily be indicative of current operating performance.

Non-GAAP financial measures should not be considered as an alternative to GAAP financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Investor Contacts:
Ed Dietz
Senior Vice President & General Counsel
856-505-4458

Lasse Glassen
Addo Investor Relations
lglassen@addoir.com
424-238-6249

MARLIN BUSINESS SERVICES CORP.  AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
         
     September 30,  December 31,
     2018   2017 
         
    (Dollars in thousands, except per-share data)
         
ASSETS     
Cash and due from banks$5,442  $3,544 
Interest-earning deposits with banks 83,006   63,602 
Total cash and cash equivalents 88,448   67,146 
Time deposits with banks 9,410   8,110 
Restricted interest-earning deposits with banks related to consolidated 10,049    
variable interest entities ("VIEs")     
Securities available for sale (amortized cost of $11.4 million and $11.7 million at     
September 30, 2018 and December 31, 2017, respectively) 10,973   11,533 
Net investment in leases and loans:     
Net investment in leases and loans, excluding allowance for credit losses 986,342   929,271 
(includes $172.9 million and $0 million at September 30, 2018 and December 31, 2017,     
respectively, related to consolidated VIEs)     
Allowance for credit losses (15,917)  (14,851)
Total net investment in leases and loans 970,425   914,420 
Intangible assets 8,131   1,128 
Goodwill 7,360   1,160 
Property and equipment, net 3,924   4,204 
Property tax receivables 6,281   6,292 
Other assets 11,732   26,167 
Total assets$1,126,733  $1,040,160 
      
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Deposits$700,107  $809,315 
Long-term borrowings related to consolidated VIEs 174,519    
Other liabilities:     
Sales and property taxes payable 6,247   2,963 
Accounts payable and accrued expenses 34,587   31,492 
Net deferred income tax liability 17,730   16,741 
Total liabilities 933,190   860,511 
      
      
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;     
12,400,465 and 12,449,458 shares issued and outstanding at September 30, 2018 and 124   124 
December 31, 2017, respectively     
Additional paid-in capital 83,317   82,588 
Stock subscription receivable (2)  (2)
Accumulated other comprehensive loss (149)  (96)
Retained earnings 110,253   97,035 
Total stockholders’ equity 193,543   179,649 
Total liabilities and stockholders’ equity$1,126,733  $1,040,160 
        


MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
               
    Three Months Ended September 30, Nine Months Ended September 30,
    2018 2017 2018 2017
               
    (Dollars in thousands, except per-share data)
               
Interest income$24,836 $22,363 $72,079 $64,461
Fee income 3,930  3,780  11,765  11,055
Interest and fee income 28,766  26,143  83,844  75,516
Interest expense 4,955  3,000  12,065  7,952
Net interest and fee income 23,811  23,143  71,779  67,564
Provision for credit losses 4,893  5,680  13,761  13,878
Net interest and fee income after provision for credit losses 18,918  17,463  58,018  53,686
            
Non-interest income:           
Insurance premiums written and earned 2,047  1,817  5,979  5,274
Other income 2,401  1,785  8,330  6,160
Non-interest income 4,448  3,602  14,309  11,434
Non-interest expense:           
Salaries and benefits 10,292  9,302  29,842  27,763
General and administrative 5,445  6,409  18,465  22,689
Non-interest expense 15,737  15,711  48,307  50,452
Income before income taxes 7,629  5,354  24,020  14,668
Income tax expense 1,723  2,049  5,462  5,270
Net income$5,906 $3,305 $18,558 $9,398
            
Basic earnings per share$0.48 $0.26 $1.49 $0.75
Diluted earnings per share$0.47 $0.26 $1.49 $0.75
               
Cash dividends declared per share$0.14 $0.14 $0.42 $0.42
               


MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
        
 Three Months Ended September 30, Nine Months Ended September 30,
  2018   2017   2018   2017 
 (Dollars in thousands, except per-share data) (Dollars in thousands, except per-share data)
   (Unaudited)     (Unaudited) 
        
Net income as reported$5,906  $3,305  $18,558  $9,398 
        
Deduct:       
Executive separation (631)  -   (631)  - 
Charge in connection with regulatory matters -   -   -   (4,816)
Hurricane credit loss reserve -   (500)    (500)
Hurricane insurance loss reserve -   (437)    (437)
Tax effect 162   358   162   2,198 
Charges in connection with executive separation, regulatory matters, & hurricane reserves, net of tax (469)  (579)  (469)  (3,555)
Net Income on an adjusted basis$6,375  $3,884  $19,027  $12,953 
        
        
Diluted earnings per share as reported$0.47  $0.26  $1.49  $0.75 
Diluted earnings per share on an adjusted basis$0.51  $0.31  $1.52  $1.03 
        
Return on Average Assets as reported 2.04%   1.31%   2.27%   1.31% 
Return on Average Assets on an adjusted basis 2.20%   1.54%   2.32%   1.80% 
        
Return on Average Equity as reported 12.36%   8.01%   13.31%   7.66% 
Return on Average Equity on an adjusted basis 13.35%   9.42%   13.65%   10.56% 
        
Efficiency Ratio as reported 55.69%   58.74%   56.11%   63.87% 
Efficiency Ratio on an adjusted basis 53.46%   57.11%   55.35%   57.22% 
        
        
Net Income on an Adjusted Basis is defined as net income excluding the following:  Third quarter 2018 charge of $0.6 million related to the departure of the Company's Chief Financial Officer.  A third quarter 2017 $0.9 million charge related to credit and insurance hurricane loss reserves.  A first quarter 2017 $4.2 million charge associated with recent regulatory matters and charges for associated legal and consulting fees in the amounts of $0.3 million and $0.4 million for the first quarter and second quarter 2017, respectively.  The appropriate tax effect, where appropriate, on the aforementioned items.  The efficiency ratio as reported and the efficiency ratio on an adjusted basis are not impacted by the $0.5 million hurricane credit loss reserve charge as the provision for credit losses is not included as part of the ratio numerator. 


MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
Supplemental Quarterly Data 
(Dollars in thousands, except share amounts)
(Unaudited)
      
Quarter Ended:9/30/201712/31/20173/31/20186/30/20189/30/2018
      
Net Income:     
Net Income$3,305 $15,894 $6,185 $6,467 $5,906 
      
Annualized Performance Measures:     
Return on Average Assets 1.31%  6.21%  2.37%  2.41%  2.04% 
Return on Average Stockholders' Equity 8.01%  38.08%  13.69%  13.93%  12.36% 
      
      
EPS Data:     
Net Income Allocated to Common Stock$3,225 $15,532 $6,065 $6,352 $5,808 
Number of Shares - Basic 12,220,381  12,187,666  12,188,906  12,199,089  12,214,913 
Basic Earnings per Share$0.26 $1.27 $0.50 $0.52 $0.48 
      
Number of Shares - Diluted 12,257,922  12,230,858  12,245,019  12,269,989  12,296,726 
Diluted Earnings per Share$0.26 $1.27 $0.50 $0.52 $0.47 
      
Cash Dividends Declared per share$0.14 $0.14 $0.14 $0.14 $0.14 
      
New Asset Production:     
Direct Originations$23,444 $31,610 $30,869 $36,338 $35,469 
Indirect Originations$123,977 $148,468 $128,833 $135,865 $137,605 
Total Originations$147,421 $180,078 $159,702 $172,203 $173,074 
      
Equipment Finance Originations$133,646 $163,562 $141,646 $155,385 $153,503 
Working Capital Loans Originations$13,775 $16,516 $18,056 $16,818 $19,571 
Total Originations$147,421 $180,078 $159,702 $172,203 $173,074 
      
Assets originated for sale in the period$0 $0 $0 $1,801 $3,890 
Assets referred in the period$13,024 $6,466 $4,201 $5,638 $2,540 
Total Sourced Originations$160,445 $186,544 $163,903 $179,642 $179,504 
Assets sold in the period$9,649 $36,037 $22,981 $16,890 $40,986 
      
Implicit Yield on Direct Originations 21.44%  19.22%  19.47%  18.59%  22.39% 
Implicit Yield on Indirect Originations 10.43%  9.93%  10.75%  10.54%  10.29% 
Total Implicit Yield on Total Originations 12.18%  11.59%  12.44%  12.24%  12.77% 
      
Implicit Yield on Equipment Finance Originations 9.99%  9.46%  9.99%  9.94%  9.96% 
Implicit Yield on Working Capital Loans Originations 33.51%  32.73%  31.68%  33.52%  34.85% 
      
# of Leases / Loans Equipment Finance 7,447  8,346  7,764  8,238  7,603 
Equipment Finance Approval Percentage 56%  56%  56%  56%  57% 
Average Monthly Equipment Finance Sources 1,185  1,244  1,190  1,240  1,174 
      
Net Interest and Fee Margin (NIM)     
Percent of Average Total Finance Receivables:     
Interest Income 10.37%  10.31%  10.19%  10.24%  10.37% 
Fee Income 1.75%  1.71%  1.73%  1.66%  1.64% 
Interest and Fee Income 12.12%  12.02%  11.92%  11.90%  12.01% 
Interest Expense 1.39%  1.45%  1.49%  1.59%  2.07% 
Net Interest and Fee Margin (NIM) 10.73%  10.57%  10.43%  10.31%  9.94% 
      
Cost of Funds (1) 1.49%  1.58%  1.63%  1.76%  2.15% 
      
Interest Income Equipment Finance$19,840 $20,382 $20,639 $21,082 $21,489 
Interest Income Working Capital Loans$2,213 $2,322 $2,321 $2,463 $2,626 
      
Average Total Finance Receivables$862,718 $891,819 $913,804 $936,007 $957,755 
Average Net Investment Equipment Finance$836,713 $864,665 $884,946 $905,583 $925,900 
Average Working Capital Loans$26,005 $27,154 $28,858 $30,424 $31,855 
      
End of Period Net Investment Equipment Finance$861,102 $887,328 $900,763 $933,261 $937,897 
End of Period Working Capital Loans$25,328 $27,092 $29,864 $29,848 $32,528 
Total Owned Net Investment in Leases and Loans (2)$886,430 $914,420 $930,627 $963,109 $970,425 
                
Total Assets Serviced for Others$42,657 $74,359 $90,701 $98,442 $128,539 
                
Total Managed Assets$929,087 $988,779 $1,021,328 $1,061,551 $1,098,964 
                
Average Total Managed Assets$902,288 $950,327 $996,334 $1,030,579 $1,071,246 
                
Portfolio Asset Quality:     
      
Total Finance Receivables     
30+ Days Past Due Delinquencies 1.13%  1.02%  1.05%  0.96%  1.02% 
30+ Days Past Due Delinquencies$11,370 $10,565 $10,994 $10,438 $11,270 
      
60+ Days Past Due Delinquencies 0.61%  0.55%  0.64%  0.55%  0.57% 
60+ Days Past Due Delinquencies$6,157 $5,647 $6,735 $6,007 $6,244 
      
Equipment Finance     
30+ Days Past Due Delinquencies 1.15%  1.04%  1.07%  0.97%  1.02% 
30+ Days Past Due Delinquencies$11,260 $10,446 $10,942 $10,286 $10,913 
      
60+ Days Past Due Delinquencies 0.63%  0.56%  0.66%  0.56%  0.57% 
60+ Days Past Due Delinquencies$6,157 $5,647 $6,735 $5,952 $6,137 
      
Working Capital Loans     
15+ Days Past Due Delinquencies 0.77%  0.95%  0.53%  0.59%  1.17% 
15+ Days Past Due Delinquencies$200 $264 $162 $183 $394 
      
30+ Days Past Due Delinquencies 0.42%  0.43%  0.17%  0.49%  1.06% 
30+ Days Past Due Delinquencies$110 $119 $52 $152 $357 
      
      
Net Charge-offs - Total Finance Receivables$3,735 $4,169 $3,843 $4,306 $4,546 
% on Average Total Finance Receivables     
Annualized 1.73%  1.87%  1.68%  1.84%  1.90% 
      
Net Charge-offs - Equipment Finance$3,537 $3,944 $3,618 $3,851 $4,194 
% on Average Net Investment in Equipment Finance     
Annualized 1.69%  1.82%  1.64%  1.70%  1.81% 
      
Net Charge-offs - Working Capital Loans$198 $225 $224 $456 $352 
% of Average Working Capital Loans     
Annualized 3.05%  3.31%  3.10%  6.00%  4.42% 
      
      
Total Allowance for Credit Losses$14,504 $14,851 $15,620 $15,570 $15,917 
% of Total Finance Receivables 1.64%  1.63%  1.68%  1.62%  1.65% 
% of 60+ Delinquencies 235.57%  262.99%  231.92%  259.19%  254.92% 
      
Allowance for Credit Losses - Equipment Finance$13,422 $13,815 $14,310 $14,236 $14,498 
% of Net Investment Equipment Finance 1.56%  1.56%  1.60%  1.53%  1.55% 
% of 60+ Delinquencies 218.00%  244.64%  212.48%  239.18%  236.24% 
      
Allowance for Credit Losses - Working Capital Loans$1,082 $1,036 $1,310 $1,334 $1,419 
% of Total Working Capital Loans 4.14%  3.73%  4.25%  4.32%  4.22% 
      
      
Non-accrual - Equipment Finance$2,933 $3,065 $3,626 $3,211 $3,392 
Non-accrual - Equipment Finance 0.30%  0.30%  0.36%  0.30%  0.32% 
      
Non-accrual - Working Capital Loans$17 $118 $27 $147 $217 
Non-accrual - Working Capital Loans 0.07%  0.42%  0.09%  0.48%  0.65% 
      
Non-accrual - Total Finance Receivables$2,950 $3,183 $3,653 $3,358 $3,609 
Non-accrual - Total Finance Receivables 0.29%  0.31%  0.35%  0.31%  0.33% 
      
Restructured - Total Finance Receivables$2,543 $4,489 $4,366 $3,747 $3,456 
      
Expense Ratios:     
Salaries and Benefits Expense$9,302 $9,806 $10,023 $9,527 $10,292 
Salaries and Benefits Expense     
Annualized % of Avg. Fin. Recbl. 4.31%  4.40%  4.39%  4.07%  4.30% 
      
Total personnel end of quarter 331  330  326  320  339 
      
General and Administrative Expense$6,409 $5,583 $6,571 $6,449 $5,445 
General and Administrative Expense     
Annualized % of Avg. Fin. Recbl. 2.97%  2.50%  2.88%  2.76%  2.27% 
      
Non-Interest Expense/Average Total Managed Assets 6.96%  6.48%  6.66%  6.20%  5.88% 
Adjusted Non-Interest Expense/Average Total Managed Assets (3) 6.65%  6.16%  6.52%  6.06%  5.46% 
      
Efficiency Ratio 58.74%  53.30%  57.08%  55.56%  55.69% 
      
Balance Sheet:     
      
Assets     
Investment in Leases and Loans$883,778 $911,242 $927,752 $959,452 $966,659 
Initial Direct Costs and Fees 17,156  18,029  18,495  19,227  19,683 
Reserve for Credit Losses (14,504) (14,851) (15,620) (15,570) (15,917)
Net Investment in Leases and Loans$886,430 $914,420 $930,627 $963,109 $970,425 
Cash and Cash Equivalents 82,937  67,146  84,891  99,227  88,448 
Restricted Cash -  -  -  -  10,049 
Other Assets 43,650  58,594  55,707  50,975  57,811 
Total Assets$1,013,017 $1,040,160 $1,071,225 $1,113,311 $1,126,733 
      
Liabilities     
Deposits 806,954  809,315  833,145  863,568  700,107 
Total Debt -  -  -  -  174,519 
Other Liabilities 39,768  51,196  54,153  60,101  58,564 
Total Liabilities$846,722 $860,511 $887,298 $923,669 $933,190 
      
Stockholders' Equity     
Common Stock$125 $124 $124 $124 $124 
Paid-in Capital, net 83,391  82,586  82,507  83,472  83,315 
Other Comprehensive Income (Loss) (82) (96) (98) (73) (149)
Retained Earnings 82,861  97,035  101,394  106,119  110,253 
Total Stockholders' Equity$166,295 $179,649 $183,927 $189,642 $193,543 
      
Total Liabilities and     
Stockholders' Equity$1,013,017 $1,040,160 $1,071,225 $1,113,311 $1,126,733 
      
Capital and Leverage:     
Equity$166,295 $179,649 $183,927 $189,642 $193,543 
Debt to Equity 4.85  4.50  4.53  4.55  4.52 
Equity to Assets 16.42%  17.27%  17.17%  17.03%  17.18% 
      
Regulatory Capital Ratios:     
Tier 1 Leverage Capital 16.24%  17.25%  17.35%  17.04%  15.57% 
Common Equity Tier 1 Risk-based Capital 17.64%  18.22%  18.33%  18.07%  17.46% 
Tier 1 Risk-based Capital 17.64%  18.22%  18.33%  18.07%  17.46% 
Total Risk-based Capital 18.90%  19.47%  19.58%  19.33%  18.72% 
      
      
      
Notes and Footnotes:     
(1) COF is defined as interest expense for the period divided by average interest bearling liabilities, annualized
(2) Net investment in total finance receivables includes net investment in Equipment Finance leases and loans and Working Capital Loans.
(3) Adjusted non-interest expense excludes NON-GAAP non-interest expense items as defined in the reconciliation of GAAP to NON-GAAP financial measures and acquistion related sales commissions and intangible amortization.
** Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans. 
      

 

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