the previous quarter for Marlin Business Services (NasdaqGS: MRLN), Mount Laurel, New Jersey, primarily they claim due to the expense of hiring more salesmen. Three months ending 2010 was$1.2 million; 2011 it is $754,000. Marlin reports their sales force "grew to 94 full-time equivalents from 87 in the fourth quarter of 2010 and 53 in the first quarter of 2010, a 77% increase over the prior year," they state in their press release.
Page 26, SEC 10Q
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"Other expenses increased $1.3 million, or 15.7%, for the three-month period ended March 31, 2011 compared to the three-month period ended March 31, 2010, primarily due to increased salaries and benefits expense related to increased sales staffing levels."
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"Approval rates also rose from 46% for the quarter ended March 31, 2010 to 56% for the quarter ended March 31, 2011 due to the improved credit quality of the applications received and adjustments made to credit policy in light of the improved economic conditions.... “
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"During the three months ended March 31, 2011, we generated 3,984 new leases with a cost of $47.0 million, compared to 2,476 new leases with a cost of $23.6 million generated for the three months ended March 31, 2010...”
Page 30, SEC 10Q
Approval rates also rose from 46% for the quarter ended March 31, 2010 to 56% for the quarter ended March 31, 2011 due to the improved credit quality of the applications received and adjustments made to credit policy in light of the improved economic conditions.
For the quarter ended March 31, 2011, our annualized net credit losses were 2.30% 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.
Again, renewal income provided the profit to Marlin Business Services:
"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. Renewal income net of depreciation totaled approximately $2.0 million and $1.9 million for the three-month periods ended March 31, 2011 and March 31, 2010.
"Our leases offer our end user customers the option to own the purchased equipment at lease expiration. As of March 31, 2011, approximately 66% of our leases were one dollar purchase option leases, 31% were fair market value leases and 3% 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 March 31, 2011, there were $36.1 million of residual assets retained on our Consolidated Balance Sheet, of which $29.6 million, or 82.0%, were related to copiers. No other group of equipment represented more than 10% of equipment residuals as of March 31, 2011 and December 31, 2010, respectively. Improvements in technology and other market changes, particularly in copiers, could adversely impact our ability to realize the recorded residual values of this equipment."
Page 37, SEC 10Q
On September 24, 2010, the Company's affiliate, Marlin Leasing Receivables XIII LLC ("MLR XIII"), closed on a $50.0 million three-year committed loan facility with Key Equipment Finance Inc. The facility is secured by a lien on MLR) (Ill's assets. Advances under the facility are made pursuant to a borrowing base formula, and the proceeds are used to fund lease originations. The maturity date of the facility is September 23, 2013. An event of default such as non-payment of amounts when due under the loan agreement or a breach of covenants may accelerate the maturity date of the facility.
Page 27, SEC 10Q
Marlin 10Q 3/31/2011 (53 pages):