Marlin Business Services: Good Investment, Despite Layoffs

Many emails on Wednesday and Thursday that Marlin Business Services, Mount Laurel, NJ (MRLN) closed two offices, let 28 people go. “28 laid off today...2 branch offices closed...funding capped at 10MM this month,” and another wrote “Word on the street is that they just didn’t have the cash anymore to pay all the employees and they had to cut costs prior to their earnings announcement.”

A well-known “insider” to Leasing News stated: “Not funding at all, but being VERY selective with funding. App volume is down considerably as credit tightens. It's probably the same everywhere. We have to be careful to cover our own hides.”

Another: “Things have really changed. Broker dept is totally gone, the last of the reps were transferred to other sales positions.”

Final, highly reliable insider: “Yes. 2 offices closing. 28 is about right. Maybe a couple less while things are finished up in the branches that are closing. Chicago and Utah sales office shutting down, bank in Utah staying open.

Without communication from Marlin Business Services, it is difficult to substantiate about the cut in fundings, the sales revenue down due to no more broker referrals. This may not be known until May or even June about the first quarter of 2009.

Other readers question Leasing News reporting about the Marlin Business Service memo printed Friday. No comments were made. It was left up to readers to interpret. It appears many jumped to the wrong conclusion. The way I read the official memo is: it does not say Marlin is getting out of the vendor leasing business, because if it was, it would be out of business.

It says to me Marlin is "clamping down" on specific vendors, looking for "specific types of business," changing its pricing, using a difference “scale,” perhaps also increasing its "equipment not financed" list; using more "due diligence." It wants more control of what it is accepting, and in its statement about getting out of the broker business, didn’t like the quality it was seeing as well as the approved to signed and funded ratio.

Marlin in previous announcement of cut backs as well as telephone conferences for the last year said it was concerned about the economy and making adjustments. CEO Dan Dyer has not changed his position. While Leasing News has criticized changes in the past in management, almost two years ago, Marlin was ahead of GE Capital (GE) and CIT, among others, in recognizing and wanting to make changes. In retrospect, the attempt at changing directors into other avenues, although only the industrial bank in Utah “survives,” may also have shown foresight to the pending marketing conditions here today.

There are 27 leasing companies out of business since the start of last year. No one is immune. Those that survive have all cut back on employees, programs, many exiting the broker business, and all have tightened up their criteria. Even the hard lenders like Dakota Financial have done so. (Leasing News reported its memo to brokers with Dakota’s permission.) How can we expect GE, CIT, even Key, letting good people go (look at the recent hires printed here and how many came from Key) and then criticize Marlin that the sky is falling. (I am going to write more about the real state of the industry for Monday’s edition.)

Marlin Business Services' stock is a good investment, as noted by Leasing News in several stories, including two editorials. It should be noted the officers think so too, as they have been purchasing stock themselves as noted in SEC filings the last year, and recently as the end of February.

This Marlin memo was sent as an extra last Friday and added to the Leasing News Friday edition on our web site. If Marlin had communicated more on its meaning to Leasing News, it may have been better received by readers.

In running it Friday, due to the many inquiries and readers seeming to jump to wrong conclusions, I specifically point out the “Mission Statement” at the end:

To:
From: Marlin Leasing Corporation
Date: February 25, 2009
Re: Policy Change
Dear Vendor:

Due to the continued disruption of the financial markets, Marlin will be implementing changes which affect our application acceptance policies effective March 1, 2009.

Marlin will only process applications from existing Marlin customers (lessees) using modified rate sheets for dealers meeting acceptable portfolio performance as determined by Marlin.

We believe that this change is temporary but we will be relying on the stabilization of the credit markets before reverting back to our standard policies. Any future change to our policy will be communicated to you when appropriate.

Thank you in advance for your cooperation. Please contact me directly at 888-479-9111 with any questions.

Sincerely,

Sales Rep

Marlin Leasing Corporation

MARLIN'S MISSION
Marlin Business Services Corp. is a company of dedicated employees committed to the delivery of quality credit products to small businesses with exceptional customer service and convenience...one customer at a time.

Marlin will be announcing its fourth quarter and year end 2008 at 9am, Tuesday, March 10.

Stock position: None.

Comments

[hm15:]

nice article again :)

Apr 14 10:14 PM