Entering text into the input field will update the search result below

79 Page 10Q SEC Filing Marlin Business Services - What Was Not Fully Covered In The Press Release

Aug. 10, 2015 3:53 PM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

by Christopher Menkin

(No Comments, just direct quotes from the SEC filing)

Six Month Ended June 30 Net income:
2015 $8.2 million
2014 $9.5 million
(page 7)

"Overall, our average net investment in total finance receivables for the three month period ended month period ended June 30, 2015 increased 4.6% to $627.1 million, compared to $599.4 million for the three month period ended June 30, 2014. This change was primarily due to origination volume continuing to exceed lease repayments. The end of period net investment in total finance receivables at June 30, 2015 was $641.1 million, an increase of $11.6 million, or 1.8%, from $629.5 million at December 31, 2014"
page 27

"Net charge offs were $5.5 million for the six month period ended June 30, 2015, compared to $4.6 million for the same period in 2014. The increase in net charge offs was primarily due to portfolio growth, 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 increased to 1.77% during the six month period ended June 30,2014, from 1.55% for the same period in 2004."
page 42

"During the three months ended June 30, 2015, we generated 6,366 new leases with equipment cost of $92.7 million, compared to 6,423 new leases with equipment cost of $88.9 million generated for the three months ended June 30, 2014. Sales staffing levels increased from 117 sales account executives at June 30, 2014 to 127 sales account executives at June 30, 2015. Approval rates remained stable at 64% for the quarter ended June 30, 2015, compared to 67% for the quarter ended June 30, 2014."
page 28

"Fee income increased $.02 million to $3.7 million for the three-month period ended June 30, 2015, compared to $3.5 million for the three-month period ended June 30, 2014. Fee income included approximately $1.0 million and $0.7 million of net residual income for the three month periods ended June 30, 2015 and June 30, 2014, respectively. Fee income also included approximately $2.2 million in late fee income for each of the three month periods ended June 30, 2015 and June 30, 2014."
page 33

RESIDUAL PERFORMANCE

Our leases offer our end user customers the option to own the equipment at lease expiration. As of June 30, 2015, approximately 68% of our leases were one dollar purchase option leases, 31% were fair market value leases and 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 June 30, 2015, there were $27.4 million of residual assets retained on our Consolidated Balance Sheet, of which $22.3 million, or 81.3%, were related to copiers. As of December 31, 2014, there were $27.4 million of residual assets retained on our Consolidated Balance Sheet, of which $22.0 million, or 80.2%, were related to copiers. No other group of equipment represented more than 10% of equipment residuals as of June 30, 2015 and December 31, 2014, respectively. Improvements in technology and other market changes, particularly in copiers, could aversely impact our ability to realize the recorded residual values of this equipment...

"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. We consider renewal income a component of residual performance. Rene weal income net of decpreciation totaled approximately $1.0 million and $1.1 million for the three month periods ended June 30, 2015 and June 30, 2014, respectively.

"Renewal income net of depreciation totaled approximately $2.1 million and $2.3 million for the six month periods ended June 30, 2015 and June 30, 2014, respectively. The decline in renewal income was primarily due to fewer leases reaching the end of their original contractual terms, as a result of the lower originations during the 2009 to 2011 time frame."
Page 42

"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 June 30, 2015, total MBB deposits were $554.2 million, compared to $550.1 million at December 31, 2014. We had no outstanding secured borrowings as of both June 30, 2015 and December 31, 2014."
Page 27

"At June 30, 2015, brokered certificates of deposit represented approximately 54% of total deposits, while approximately 38% of total deposits were obtained from direct channels, and 8% were in the brokered MMDA Product."
Page 33

"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 $32.1 million in unused, secured borrowing capacity at the Federal Reserve Discount Window, based on $34.9 million of net investment in leases pledged at June 30, 2015.

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. As previously disclosed, on April 8, 2015, the facility was amended to change the amount under the loan facility from $75.0 million to $50.0 million, and change the commitment termination date of the facility from April 8, 2015 to July 7, 2015. On July 6, 2015, the facility was further amended to change the commitment termination date of the facility from July 7, 2015 to October 7, 2015. An event of default, such as nonpayment of amounts when due under the loan agreement or a breach of covenants, may accelerate the commitment termination date of the facility. There was no amount outstanding under the facility at June 30, 2015."
page 45

"Salaries and benefits expense.

"Salaries and benefits expense increased $0.8 million, or 12.3%, to $7.3 million for the three month period ended June 30, 2015 from $6.5 million for the same period in 2014. The increase was primarily due to $0.3 million of salary and benefit expense associated with the separation agreement related to the departure of the Company's Chief Financial Officer and an increase in total personnel. Salaries and benefits expense, as an annualized percentage of average total finance receivables, was 4.63% for the three month period ended June 30, 2015 compared with 4.31% for the same period in 2014. Total personnel increased to 302 at June 30, 2015 from 279 at June 30, 2015 from 279 at June 30, 2014."
page 33

There is a lot more to see in the full filing:
http://www.snl.com/Cache/30587698.pdf?
IID=4089372&FID=30587698&O=3&OSID=9

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You