Strong origination volume results in Net Investment in Leases and Loans surpassing the $1 billion milestone
Fourth Quarter Summary:
- Net income of $6.4 million, or $0.51 per diluted share down from $15.9 million, or $1.27 per diluted share a year ago
- Net income on an adjusted basis of $6.4 million, or $0.51 per diluted share, increased 8.5% compared with net income on an adjusted basis of $5.9 million, or $0.47 per diluted share in the fourth quarter last year
- Net Investment in Leases and Loans totaled $1.0 billion, up 9.4% from a year ago and total managed assets ended the fourth quarter at $1.2 billion, up 17.8% from a year ago
- Total Sourced Originations of $216.3 million, up 15.9% year-over-year; Direct origination volume of $40.4 million, up 27.7% year-over-year
- Yield on Total Originations of 12.36%, down 41 basis points from the prior quarter and up 77 basis points year-over-year
- Annualized net charge-offs of 2.30%, compared with 1.90% in the prior quarter and 1.87% in the fourth quarter last year
- Provision for credit losses of $5.8 million compared with $4.9 million in the prior quarter and $4.5 million in the fourth quarter last year
- Equity to assets ratio of 17.01%, compared with 17.27% in the fourth quarter last year
Full Year 2018 Summary:
- Total Sourced Originations of $739.3 million, up 8.2% from a year ago
- Total Net Investment in Leases and Loans of $1.0 billion, up 3.1% from the prior quarter and up 9.4% from a year ago
- Net income of $25.0 million, or $2.00 per diluted share, compared with $25.3 million, or $2.01 per diluted share, in the prior year
- Net income on an adjusted basis of $25.4 million, or $2.04 per share, up from $18.9 million, or $1.50 per diluted share in the prior year
- ROE of 13.27%; ROE on an adjusted basis of 13.52% compared with ROE on an adjusted basis of 11.48% in the prior year
MOUNT LAUREL, N.J., Jan. 31, 2019 (GLOBE NEWSWIRE) — Marlin (NASDAQ: MRLN), a nationwide provider of capital solutions to small businesses (“Marlin” or the “Company”), today reported fourth quarter 2018 net income of $6.4 million, or $0.51 per diluted share, compared with net income of $15.9 million, or $1.27 per share a year ago. Fourth quarter net income on an adjusted basis was $6.4 million, or $0.51 per diluted share, compared with $5.9 million or $0.47 per diluted share a year ago.
For the year ended December 31, 2018, net income was $25.0 million, or $2.00 per diluted share, down from $25.3 million, or $2.01 per diluted share, in 2017. For the year ended December 31, 2018, adjusted net income increased 34.9% to $25.4 million, or $2.04 per diluted share, compared with $18.9 million, or $1.50 per diluted share, in the prior year.
Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “We completed the year with a strong fourth quarter driven by solid origination volume that led to Net Investment in Leases and Loans reaching a record level and excellent year-over-year growth in adjusted net income. Fourth quarter Total Sourced Origination volume was $216.3 million compared with $186.5 million last year, resulting in a year-over-year improvement of 15.9%. 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 initiatives, we referred or sold $62.6 million of leases and loans. Due to these origination and capital markets activities, our Net Investment in Leases and Loans increased 9.4% from a year ago and surpassed the $1 billion milestone for the first time in Company history, and total managed assets grew to nearly $1.2 billion, an increase of 17.8% from a year ago. At the bottom line, adjusted earnings expanded sharply on a year-over-year basis for both the fourth quarter and full-year.”
Mr. Hilzinger concluded, “While overall asset quality of our portfolio remains strong, charge-offs during the fourth quarter were elevated due primarily to fraudulent activity perpetrated by a single vendor. Charge-offs in the fourth quarter associated with fraud by this vendor totaled $1.2 million. Excluding the fraud, net charge-offs in the fourth quarter would have been 1.69% on an annualized basis which is better than the average for the prior four quarters of 1.74% and adjusted earnings per share would have been $2.11. Significant actions have been taken throughout 2018 to combat fraud risk including the implementation of new anti-fraud tools, increased vendor surveillance staff and enhancements to procedures. Overall, we expect our portfolio performance to continue to be stable and remain within our targeted range.”
Results of Operations
Total Sourced Origination volume for the fourth quarter of $216.3 million was up 15.9% from a year ago. Direct origination volume of $40.4 million in the fourth quarter was up 27.7% from $31.6 million in the fourth quarter of 2017. Indirect origination volume in the fourth quarter of 2018 was $159.5 million, up from $148.5 million in the same period a year ago. Referral volume totaled $4.5 million, down from $6.5 million in the fourth quarter last year, largely due to the transition of leases originated by Marlin’s Horizon Keystone division to Marlin’s balance sheet over the past year.
Net interest and fee margin as a percentage of average finance receivables was 9.76% for the fourth quarter, down 18 basis points from the third quarter of 2018 and down 81 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 77 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 220 basis points compared with 207 basis points for the previous quarter due exclusively to the securitization completed in the third quarter. Interest expense as a percent of average finance receivables increased from 145 basis points for the fourth quarter of 2017 due primarily to the impact on funding costs from the recent securitization and to a lesser extent an increase in deposit rates.
On an absolute basis, net interest and fee income was $23.7 million for the fourth quarter of 2018 compared with $23.6 million for the fourth quarter last year.
Non-interest income was $7.1 million for the fourth quarter of 2018, compared with $4.4 million in the prior quarter and $5.3 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 $16.4 million for the fourth quarter of 2018, compared with $15.7 million in the prior quarter and $15.4 million in the fourth quarter last year.
The Company’s efficiency ratio for the fourth quarter was 53.1% compared with 53.3% in the fourth quarter last year. The Company’s non-GAAP efficiency ratio for the fourth quarter was 53.1% compared with 51.8% in the fourth quarter last year and, excluding acquisition related sales commissions and intangible amortization, the non-GAAP efficiency ratio in 2018 was 53.2% as compared to 55.0% in 2017. 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 $2.3 million, representing an effective tax rate of 26.0% for the fourth quarter of 2018, compared with an income tax benefit of $6.9 million, for the fourth quarter of 2017 due to the Tax Cuts and Jobs Act of 2017 enacted on December 22, 2017 which resulted in a one-time net tax benefit of $10.2 million. Excluding the one-time tax benefit, Marlin recorded an income tax provision of $3.3 million for the fourth quarter of 2017, representing an effective tax rate of 37.0%.
Portfolio Performance
Allowance for credit losses as a percentage of total finance receivables was 1.62% at December 31, 2018 relatively consistent with 1.65% at September 30, 2018 and 1.63% at December 31, 2017.
Finance receivables over 30 days delinquent were 1.09% of the Company’s total finance receivables portfolio as of December 31, 2018, up 7 basis points from September 30, 2018 and up 7 basis points from December 31, 2017. Finance receivables over 60 days delinquent were 0.65% of the Company’s total finance receivables portfolio as of December 31, 2018, up 8 basis points from September 30, 2018 and up 10 basis points from December 31, 2017. Annualized fourth quarter net charge-offs were 2.30% of average total finance receivables versus 1.90% in the third quarter of 2018 and 1.87% a year ago.
As of December 31, 2018, the Company’s consolidated equity to assets ratio was 17.01%. This compares to 17.18% and 17.27%, in the prior quarter and year ago quarter, respectively.
Corporate Developments
On January 2, 2019 the Company announced the appointment of Michael R. Bogansky as Senior Vice President and Chief Financial Officer, effective February 1, 2019. Prior to joining Marlin, Mr. Bogansky was a Senior Vice President and Chief Financial Officer at PHH Corporation (formerly NYSE:PHH), as PHH was recently acquired by Ocwen Financial Corporation. Prior to that, he was Senior Vice President, Corporate Controller & Principal Accounting Officer of PHH.
Marlin’s Board of Directors today declared a $0.14 per share quarterly dividend. The dividend is payable February 21, 2019, to shareholders of record on February 11, 2019. Based on the closing stock price on January 31, 2019, the annualized dividend yield on the Company’s common stock is 2.53%.
Business Outlook
The Company’s guidance for the full year ending December 31, 2019 is as follows:
- Total Sourced Origination volume is expected to finish approximately 20% above 2018 levels
- Excluding the vendor fraud experienced in the fourth quarter of 2018, portfolio performance is expected to remain in line with the results observed over the last 12 months
- Net interest and fee margin, as a percentage of average finance receivables, is expected to be between 9.5% and 10.0%
- ROE is expected to continue to improve in 2019 as the Company continues to improve operating scale
- EPS is expected to be between $2.30 and $2.40 per share
Conference Call and Webcast
Marlin will host a conference call on Friday, February 1, 2019 at 9:00 a.m. ET to discuss the Company’s fourth 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
—Tables to Follow—
| MARLIN BUSINESS SERVICES CORP. | ||||||||||
| AND SUBSIDIARIES | ||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||
| (Unaudited) | ||||||||||
| December 31, |
December 31, |
|||||||||
| 2018 | 2017 | |||||||||
| (Dollars in thousands, except per-share data) | ||||||||||
| ASSETS | ||||||||||
| Cash and due from banks | $ | 5,088 | $ | 3,544 | ||||||
| Interest-earning deposits with banks | 92,068 | 63,602 | ||||||||
| Total cash and cash equivalents | 97,156 | 67,146 | ||||||||
| Time deposits with banks | 9,659 | 8,110 | ||||||||
| Restricted interest-earning deposits (includes $10.0 and $0 million at December 31, 2018, and | 14,045 | — | ||||||||
| December 31, 2017, respectively, related to consolidated VIEs) | ||||||||||
| Investment securities (amortized cost of $11.2 million and $11.7 million at | 10,956 | 11,533 | ||||||||
| December 31, 2018 and December 31, 2017, respectively) | ||||||||||
| Net investment in leases and loans: | ||||||||||
| Net investment in leases and loans, excluding allowance for credit losses | 1,016,840 | 929,271 | ||||||||
| (includes $150.2 million and $0 million at December 31, 2018 and December 31, 2017, | ||||||||||
| respectively, related to consolidatedVIEs) | ||||||||||
| Allowance for credit losses | (16,100 | ) | (14,851 | ) | ||||||
| Total net investment in leases and loans | 1,000,740 | 914,420 | ||||||||
| Intangible assets | 7,912 | 1,128 | ||||||||
| Goodwill | 7,360 | 1,160 | ||||||||
| Property and equipment, net | 4,317 | 4,204 | ||||||||
| Property tax receivables | 5,245 | 6,292 | ||||||||
| Other assets | 9,656 | 26,167 | ||||||||
| Total assets | $ | 1,167,046 | $ | 1,040,160 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Deposits | $ | 755,776 | $ | 809,315 | ||||||
| Long-term borrowings related to consolidated VIEs | 150,055 | — | ||||||||
| Other liabilities: | ||||||||||
| Sales and property taxes payable | 3,775 | 2,963 | ||||||||
| Accounts payable and accrued expenses | 36,369 | 31,492 | ||||||||
| Net deferred income tax liability | 22,560 | 16,741 | ||||||||
| Total liabilities | 968,535 | 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; | ||||||||||
| 12,367,724 and 12,449,458 shares issued and outstanding at December 31, 2018 and | ||||||||||
| December 31, 2017, respectively | 124 | 124 | ||||||||
| Additional paid-in capital | 83,498 | 82,588 | ||||||||
| Stock subscription receivable | (2 | ) | (2 | ) | ||||||
| Accumulated other comprehensive loss | (44 | ) | (96 | ) | ||||||
| Retained earnings | 114,935 | 97,035 | ||||||||
| Total stockholders’ equity | 198,511 | 179,649 | ||||||||
| Total liabilities and stockholders’ equity | $ | 1,167,046 | $ | 1,040,160 | ||||||
| MARLIN BUSINESS SERVICES CORP. | ||||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (Dollars in thousands, except per-share data) | ||||||||||||||||
| Interest income | $ | 24,946 | $ | 22,994 | $ | 97,025 | $ | 87,455 | ||||||||
| Fee income | 4,078 | 3,809 | 15,843 | 14,864 | ||||||||||||
| Interest and fee income | 29,024 | 26,803 | 112,868 | 102,319 | ||||||||||||
| Interest expense | 5,349 | 3,228 | 17,414 | 11,180 | ||||||||||||
| Net interest and fee income | 23,675 | 23,575 | 95,454 | 91,139 | ||||||||||||
| Provision for credit losses | 5,761 | 4,516 | 19,522 | 18,394 | ||||||||||||
| Net interest and fee income after provision for credit losses | 17,914 | 19,059 | 75,932 | 72,745 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Insurance premiums written and earned | 2,108 | 1,881 | 8,087 | 7,155 | ||||||||||||
| Other income | 5,017 | 3,417 | 13,347 | 9,577 | ||||||||||||
| Non-interest income | 7,125 | 5,298 | 21,434 | 16,732 | ||||||||||||
| Non-interest expense: | ||||||||||||||||
| Salaries and benefits | 9,908 | 9,806 | 39,750 | 37,569 | ||||||||||||
| General and administrative | 6,450 | 5,583 | 24,915 | 28,272 | ||||||||||||
| Non-interest expense | 16,358 | 15,389 | 64,665 | 65,841 | ||||||||||||
| Income before income taxes | 8,681 | 8,968 | 32,701 | 23,636 | ||||||||||||
| Income tax expense | 2,259 | (6,926 | ) | 7,721 | (1,656 | ) | ||||||||||
| Net income | $ | 6,422 | $ | 15,894 | $ | 24,980 | $ | 25,292 | ||||||||
| Basic earnings per share | $ | 0.52 | $ | 1.27 | $ | 2.01 | $ | 2.02 | ||||||||
| Diluted earnings per share | $ | 0.51 | $ | 1.27 | $ | 2.00 | $ | 2.01 | ||||||||
| Cash dividends declared per share | $ | 0.14 | $ | 0.14 | $ | 0.56 | $ | 0.56 | ||||||||
| MARLIN BUSINESS SERVICES CORP. | |||||||||||||||
| AND SUBSIDIARIES | |||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| (Dollars in thousands, except per-share data) | (Dollars in thousands, except per-share data) | ||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| Net income as reported | $ | 6,422 | $ | 15,894 | $ | 24,980 | $ | 25,292 | |||||||
| Deduct: | |||||||||||||||
| Executive separation | – | (551 | ) | (631 | ) | (551 | ) | ||||||||
| Charge in connection with regulatory matters | – | – | – | (4,816 | ) | ||||||||||
| Hurricane credit loss reserve | – | – | – | (500 | ) | ||||||||||
| Hurricane insurance loss reserve | – | 110 | – | (327 | ) | ||||||||||
| Tax effect | – | 168 | 162 | 2,369 | |||||||||||
| Charges in connection with executive separation, regulatory matters, & hurricane reserves, net of tax | – | (273 | ) | (469 | ) | (3,825 | ) | ||||||||
| Net tax benefit resulting from the Tax Cuts and Jobs Act of 2017 | — | 10,246 | — | 10,246 | |||||||||||
| Net Income on an adjusted basis | $ | 6,422 | $ | 5,921 | $ | 25,449 | $ | 18,871 | |||||||
| Diluted earnings per share as reported | $ | 0.51 | $ | 1.27 | $ | 2.00 | $ | 2.01 | |||||||
| Diluted earnings per share on an adjusted basis | $ | 0.51 | $ | 0.47 | $ | 2.04 | $ | 1.50 | |||||||
| Return on Average Assets as reported | 2.28 | % | 6.21 | % | 2.29 | % | 2.59 | % | |||||||
| Return on Average Assets on an adjusted basis | 2.28 | % | 2.31 | % | 2.33 | % | 1.94 | % | |||||||
| Return on Average Equity as reported | 13.16 | % | 38.08 | % | 13.27 | % | 15.38 | % | |||||||
| Return on Average Equity on an adjusted basis | 13.16 | % | 14.18 | % | 13.52 | % | 11.48 | % | |||||||
| Efficiency Ratio as reported | 53.11 | % | 53.30 | % | 55.32 | % | 61.04 | % | |||||||
| Efficiency Ratio on an adjusted basis | 53.11 | % | 51.77 | % | 54.78 | % | 55.76 | % | |||||||
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 Fourth quarter 2017 charge of $0.6 million related to the departure of the Company’s Chief Operating Officer. A fourth quarter 2017 partial reversal of hurricane insurance reserve in the amount of $0.1 million. Fourth quarter 2017 net tax benefit in the amount of $10.2 million resulting from the Tax Cuts and Jobs Act of 2017. 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: | 12/31/17 | 3/31/18 | 6/30/18 | 9/30/18 | 12/31/18 | ||||||||||
| Net Income: | |||||||||||||||
| Net Income | $ | 15,894 | $ | 6,185 | $ | 6,467 | $ | 5,906 | $ | 6,422 | |||||
| Annualized Performance Measures: | |||||||||||||||
| Return on Average Assets | 6.21 | % | 2.37 | % | 2.41 | % | 2.04 | % | 2.28 | % | |||||
| Return on Average Stockholders’ Equity | 38.08 | % | 13.69 | % | 13.93 | % | 12.36 | % | 13.16 | % | |||||
| EPS Data: | |||||||||||||||
| Net Income Allocated to Common Stock | $ | 15,532 | $ | 6,065 | $ | 6,352 | $ | 5,808 | $ | 6,322 | |||||
| Number of Shares – Basic | 12,187,666 | 12,188,906 | 12,199,089 | 12,214,913 | 12,202,652 | ||||||||||
| Basic Earnings per Share | $ | 1.27 | $ | 0.50 | $ | 0.52 | $ | 0.48 | $ | 0.52 | |||||
| Number of Shares – Diluted | 12,230,858 | 12,245,019 | 12,269,989 | 12,296,726 | 12,286,748 | ||||||||||
| Diluted Earnings per Share | $ | 1.27 | $ | 0.50 | $ | 0.52 | $ | 0.47 | $ | 0.51 | |||||
| Cash Dividends Declared per share | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.14 | |||||
| New Asset Production: | |||||||||||||||
| Direct Originations | $ | 31,610 | $ | 30,869 | $ | 36,338 | $ | 35,469 | $ | 40,381 | |||||
| Indirect Originations | $ | 148,468 | $ | 128,833 | $ | 135,865 | $ | 137,605 | $ | 159,534 | |||||
| Total Originations | $ | 180,078 | $ | 159,702 | $ | 172,203 | $ | 173,074 | $ | 199,915 | |||||
| Equipment Finance Originations | $ | 163,562 | $ | 141,646 | $ | 155,385 | $ | 153,503 | $ | 180,116 | |||||
| Working Capital Loans Originations | $ | 16,516 | $ | 18,056 | $ | 16,818 | $ | 19,571 | $ | 19,799 | |||||
| Total Originations | $ | 180,078 | $ | 159,702 | $ | 172,203 | $ | 173,074 | $ | 199,915 | |||||
| Assets originated for sale in the period | $ | 0 | $ | 0 | $ | 1,801 | $ | 3,890 | $ | 11,905 | |||||
| Assets referred in the period | $ | 6,466 | $ | 4,201 | $ | 5,638 | $ | 2,540 | $ | 4,451 | |||||
| Total Sourced Originations | $ | 186,544 | $ | 163,903 | $ | 179,642 | $ | 179,504 | $ | 216,271 | |||||
| Assets sold in the period | $ | 36,037 | $ | 22,981 | $ | 16,890 | $ | 40,986 | $ | 58,138 | |||||
| Implicit Yield on Direct Originations | 19.22 | % | 19.47 | % | 18.59 | % | 22.39 | % | 21.79 | % | |||||
| Implicit Yield on Indirect Originations | 9.93 | % | 10.75 | % | 10.54 | % | 10.29 | % | 9.97 | % | |||||
| Total Implicit Yield on Total Originations | 11.59 | % | 12.44 | % | 12.24 | % | 12.77 | % | 12.36 | % | |||||
| Implicit Yield on Equipment Finance Originations | 9.46 | % | 9.99 | % | 9.94 | % | 9.96 | % | 9.68 | % | |||||
| Implicit Yield on Working Capital Loans Originations | 32.73 | % | 31.68 | % | 33.52 | % | 34.85 | % | 36.67 | % | |||||
| # of Leases / Loans Equipment Finance | 8,346 | 7,764 | 8,238 | 7,603 | 7,873 | ||||||||||
| Equipment Finance Approval Percentage | 56 | % | 56 | % | 56 | % | 57 | % | 59 | % | |||||
| Average Monthly Equipment Finance Sources | 1,244 | 1,190 | 1,240 | 1,174 | 1,140 | ||||||||||
| Net Interest and Fee Margin (NIM) | |||||||||||||||
| Percent of Average Total Finance Receivables: | |||||||||||||||
| Interest Income | 10.31 | % | 10.19 | % | 10.24 | % | 10.37 | % | 10.28 | % | |||||
| Fee Income | 1.71 | % | 1.73 | % | 1.66 | % | 1.64 | % | 1.68 | % | |||||
| Interest and Fee Income | 12.02 | % | 11.92 | % | 11.90 | % | 12.01 | % | 11.96 | % | |||||
| Interest Expense | 1.45 | % | 1.49 | % | 1.59 | % | 2.07 | % | 2.20 | % | |||||
| Net Interest and Fee Margin (NIM) | 10.57 | % | 10.43 | % | 10.31 | % | 9.94 | % | 9.76 | % | |||||
| Cost of Funds (1) | 1.58 | % | 1.63 | % | 1.76 | % | 2.15 | % | 2.43 | % | |||||
| Interest Income Equipment Finance | $ | 20,382 | $ | 20,639 | $ | 21,082 | $ | 21,489 | $ | 21,590 | |||||
| Interest Income Working Capital Loans | $ | 2,322 | $ | 2,321 | $ | 2,463 | $ | 2,626 | $ | 2,824 | |||||
| Average Total Finance Receivables | $ | 891,819 | $ | 913,804 | $ | 936,007 | $ | 957,755 | $ | 970,785 | |||||
| Average Net Investment Equipment Finance | $ | 864,665 | $ | 884,946 | $ | 905,583 | $ | 925,900 | $ | 937,004 | |||||
| Average Working Capital Loans | $ | 27,154 | $ | 28,858 | $ | 30,424 | $ | 31,855 | $ | 33,781 | |||||
| End of Period Net Investment Equipment Finance | $ | 887,328 | $ | 900,763 | $ | 933,261 | $ | 937,897 | $ | 965,351 | |||||
| End of Period Working Capital Loans | $ | 27,092 | $ | 29,864 | $ | 29,848 | $ | 32,528 | $ | 35,389 | |||||
| Total Owned Net Investment in Leases and Loans (2) | $ | 914,420 | $ | 930,627 | $ | 963,109 | $ | 970,425 | $ | 1,000,740 | |||||
| Total Assets Serviced for Others | $ | 74,359 | $ | 90,701 | $ | 98,442 | $ | 128,539 | $ | 164,029 | |||||
| Total Managed Assets | $ | 988,779 | $ | 1,021,328 | $ | 1,061,551 | $ | 1,098,964 | $ | 1,164,769 | |||||
| Average Total Managed Assets | $ | 950,327 | $ | 996,334 | $ | 1,030,579 | $ | 1,071,246 | $ | 1,117,069 | |||||
| Portfolio Asset Quality: | |||||||||||||||
| Total Finance Receivables | |||||||||||||||
| 30+ Days Past Due Delinquencies | 1.02 | % | 1.05 | % | 0.96 | % | 1.02 | % | 1.09 | % | |||||
| 30+ Days Past Due Delinquencies | $ | 10,565 | $ | 10,994 | $ | 10,438 | $ | 11,270 | $ | 12,295 | |||||
| 60+ Days Past Due Delinquencies | 0.55 | % | 0.64 | % | 0.55 | % | 0.57 | % | 0.65 | % | |||||
| 60+ Days Past Due Delinquencies | $ | 5,647 | $ | 6,735 | $ | 6,007 | $ | 6,244 | $ | 7,292 | |||||
| Equipment Finance | |||||||||||||||
| 30+ Days Past Due Delinquencies | 1.04 | % | 1.07 | % | 0.97 | % | 1.02 | % | 1.08 | % | |||||
| 30+ Days Past Due Delinquencies | $ | 10,446 | $ | 10,942 | $ | 10,286 | $ | 10,913 | $ | 11,803 | |||||
| 60+ Days Past Due Delinquencies | 0.56 | % | 0.66 | % | 0.56 | % | 0.57 | % | 0.65 | % | |||||
| 60+ Days Past Due Delinquencies | $ | 5,647 | $ | 6,735 | $ | 5,952 | $ | 6,137 | $ | 7,100 | |||||
| Working Capital Loans | |||||||||||||||
| 15+ Days Past Due Delinquencies | 0.95 | % | 0.53 | % | 0.59 | % | 1.17 | % | 1.44 | % | |||||
| 15+ Days Past Due Delinquencies | $ | 264 | $ | 162 | $ | 183 | $ | 394 | $ | 526 | |||||
| 30+ Days Past Due Delinquencies | 0.43 | % | 0.17 | % | 0.49 | % | 1.06 | % | 1.35 | % | |||||
| 30+ Days Past Due Delinquencies | $ | 119 | $ | 52 | $ | 152 | $ | 357 | $ | 492 | |||||
| Net Charge-offs – Total Finance Receivables | $ | 4,169 | $ | 3,843 | $ | 4,306 | $ | 4,546 | $ | 5,578 | |||||
| % on Average Total Finance Receivables | |||||||||||||||
| Annualized | 1.87 | % | 1.68 | % | 1.84 | % | 1.90 | % | 2.30 | % | |||||
| Net Charge-offs – Equipment Finance | $ | 3,944 | $ | 3,618 | $ | 3,851 | $ | 4,194 | $ | 5,132 | |||||
| % on Average Net Investment in Equipment Finance | |||||||||||||||
| Annualized | 1.82 | % | 1.64 | % | 1.70 | % | 1.81 | % | 2.19 | % | |||||
| Net Charge-offs – Working Capital Loans | $ | 225 | $ | 224 | $ | 456 | $ | 352 | $ | 446 | |||||
| % of Average Working Capital Loans | |||||||||||||||
| Annualized | 3.31 | % | 3.10 | % | 6.00 | % | 4.42 | % | 5.28 | % | |||||
| Total Allowance for Credit Losses | $ | 14,851 | $ | 15,620 | $ | 15,570 | $ | 15,917 | $ | 16,100 | |||||
| % of Total Finance Receivables | 1.63 | % | 1.68 | % | 1.62 | % | 1.65 | % | 1.62 | % | |||||
| % of 60+ Delinquencies | 262.99 | % | 231.92 | % | 259.19 | % | 254.92 | % | 220.79 | % | |||||
| Allowance for Credit Losses – Equipment Finance | $ | 13,815 | $ | 14,310 | $ | 14,236 | $ | 14,498 | $ | 14,633 | |||||
| % of Net Investment Equipment Finance | 1.56 | % | 1.60 | % | 1.53 | % | 1.55 | % | 1.52 | % | |||||
| % of 60+ Delinquencies | 244.64 | % | 212.48 | % | 239.18 | % | 236.24 | % | 206.10 | % | |||||
| Allowance for Credit Losses – Working Capital Loans | $ | 1,036 | $ | 1,310 | $ | 1,334 | $ | 1,419 | $ | 1,467 | |||||
| % of Total Working Capital Loans | 3.73 | % | 4.25 | % | 4.32 | % | 4.22 | % | 4.02 | % | |||||
| Non-accrual – Equipment Finance | $ | 3,065 | $ | 3,626 | $ | 3,211 | $ | 3,392 | $ | 3,720 | |||||
| Non-accrual – Equipment Finance | 0.30 | % | 0.36 | % | 0.30 | % | 0.32 | % | 0.34 | % | |||||
| Non-accrual – Working Capital Loans | $ | 118 | $ | 27 | $ | 147 | $ | 217 | $ | 492 | |||||
| Non-accrual – Working Capital Loans | 0.42 | % | 0.09 | % | 0.48 | % | 0.65 | % | 1.35 | % | |||||
| Non-accrual – Total Finance Receivables | $ | 3,183 | $ | 3,653 | $ | 3,358 | $ | 3,609 | $ | 4,212 | |||||
| Non-accrual – Total Finance Receivables | 0.31 | % | 0.35 | % | 0.31 | % | 0.33 | % | 0.37 | % | |||||
| Restructured – Total Finance Receivables | $ | 4,489 | $ | 4,366 | $ | 3,747 | $ | 3,456 | $ | 3,636 | |||||
| Expense Ratios: | |||||||||||||||
| Salaries and Benefits Expense | $ | 9,806 | $ | 10,023 | $ | 9,527 | $ | 10,292 | $ | 9,908 | |||||
| Salaries and Benefits Expense | |||||||||||||||
| Annualized % of Avg. Fin. Recbl. | 4.40 | % | 4.39 | % | 4.07 | % | 4.30 | % | 4.08 | % | |||||
| Total personnel end of quarter | 330 | 326 | 320 | 339 | 341 | ||||||||||
| General and Administrative Expense | $ | 5,583 | $ | 6,571 | $ | 6,449 | $ | 5,445 | $ | 6,450 | |||||
| General and Administrative Expense | |||||||||||||||
| Annualized % of Avg. Fin. Recbl. | 2.50 | % | 2.88 | % | 2.76 | % | 2.27 | % | 2.66 | % | |||||
| Non-Interest Expense/Average Total Managed Assets | 6.48 | % | 6.66 | % | 6.20 | % | 5.88 | % | 5.86 | % | |||||
| Adjusted Non-Interest Expense/Average Total Managed Assets (3) | 6.16 | % | 6.52 | % | 6.06 | % | 5.46 | % | 5.61 | % | |||||
| Efficiency Ratio | 53.30 | % | 57.08 | % | 55.56 | % | 55.69 | % | 53.11 | % | |||||
| Balance Sheet: | |||||||||||||||
| Assets | |||||||||||||||
| Investment in Leases and Loans | $ | 911,242 | $ | 927,752 | $ | 959,452 | $ | 966,659 | $ | 996,384 | |||||
| Initial Direct Costs and Fees | 18,029 | 18,495 | 19,227 | 19,683 | 20,456 | ||||||||||
| Reserve for Credit Losses | (14,851 | ) | (15,620 | ) | (15,570 | ) | (15,917 | ) | (16,100 | ) | |||||
| Net Investment in Leases and Loans | $ | 914,420 | $ | 930,627 | $ | 963,109 | $ | 970,425 | $ | 1,000,740 | |||||
| Cash and Cash Equivalents | 67,146 | 84,891 | 99,227 | 88,448 | 97,156 | ||||||||||
| Restricted Cash | – | – | – | 10,049 | 14,045 | ||||||||||
| Other Assets | 58,594 | 55,707 | 50,975 | 57,811 | 55,105 | ||||||||||
| Total Assets | $ | 1,040,160 | $ | 1,071,225 | $ | 1,113,311 | $ | 1,126,733 | $ | 1,167,046 | |||||
| Liabilities | |||||||||||||||
| Deposits | 809,315 | 833,145 | 863,568 | 700,107 | 755,776 | ||||||||||
| Total Debt | – | – | – | 174,519 | 150,055 | ||||||||||
| Other Liabilities | 51,196 | 54,153 | 60,101 | 58,564 | 62,704 | ||||||||||
| Total Liabilities | $ | 860,511 | $ | 887,298 | $ | 923,669 | $ | 933,190 | $ | 968,535 | |||||
| Stockholders’ Equity | |||||||||||||||
| Common Stock | $ | 124 | $ | 124 | $ | 124 | $ | 124 | $ | 124 | |||||
| Paid-in Capital, net | 82,586 | 82,507 | 83,472 | 83,315 | 83,496 | ||||||||||
| Other Comprehensive Income (Loss) | (96 | ) | (98 | ) | (73 | ) | (149 | ) | (44 | ) | |||||
| Retained Earnings | 97,035 | 101,394 | 106,119 | 110,253 | 114,935 | ||||||||||
| Total Stockholders’ Equity | $ | 179,649 | $ | 183,927 | $ | 189,642 | $ | 193,543 | $ | 198,511 | |||||
| Total Liabilities and | |||||||||||||||
| Stockholders’ Equity | $ | 1,040,160 | $ | 1,071,225 | $ | 1,113,311 | $ | 1,126,733 | $ | 1,167,046 | |||||
| Capital and Leverage: | |||||||||||||||
| Equity | $ | 179,649 | $ | 183,927 | $ | 189,642 | $ | 193,543 | $ | 198,511 | |||||
| Debt to Equity | 4.50 | 4.53 | 4.55 | 4.52 | 4.56 | ||||||||||
| Equity to Assets | 17.27 | % | 17.17 | % | 17.03 | % | 17.18 | % | 17.01 | % | |||||
| Regulatory Capital Ratios: | |||||||||||||||
| Tier 1 Leverage Capital | 17.25 | % | 17.35 | % | 17.04 | % | 15.57 | % | 16.38 | % | |||||
| Common Equity Tier 1 Risk-based Capital | 18.22 | % | 18.33 | % | 18.07 | % | 17.46 | % | 17.50 | % | |||||
| Tier 1 Risk-based Capital | 18.22 | % | 18.33 | % | 18.07 | % | 17.46 | % | 17.50 | % | |||||
| Total Risk-based Capital | 19.47 | % | 19.58 | % | 19.33 | % | 18.72 | % | 18.76 | % | |||||
| Notes and Footnotes: | |||||||||||||||
| (1) COF is defined as interest expense for the period divided by average interest bearing 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 acquisition related sales commissions and intangible amortization. | |||||||||||||||
| **Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans. | |||||||||||||||
| MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES | |||||||||
| SUPPLEMENTAL ANNUAL DATA | |||||||||
| (Dollars in thousands, except share amounts) | |||||||||
| (Unaudited) | |||||||||
| Year Ended: | 2016 | 2017 | 2018 | ||||||
| Net Income: | |||||||||
| Net Income | $ | 17,279 | $ | 25,292 | $ | 24,980 | |||
| Annualized Performance Measures: | |||||||||
| Return on Average Assets | 2.08 | % | 2.59 | % | 2.29 | % | |||
| Return on Average Stockholders’ Equity | 11.15 | % | 15.38 | % | 13.27 | % | |||
| EPS Data: | |||||||||
| Net Income Allocated to Common Stock | $ | 16,761 | $ | 24,664 | $ | 24,548 | |||
| Number of Shares – Basic | 12,141,595 | 12,216,020 | 12,201,465 | ||||||
| Basic Earnings per Share | $ | 1.38 | $ | 2.02 | $ | 2.01 | |||
| Number of Shares – Diluted | 12,150,697 | 12,249,623 | 12,273,406 | ||||||
| Diluted Earnings per Share | $ | 1.38 | $ | 2.01 | $ | 2.00 | |||
| Cash Dividends Declared per share | $ | 0.56 | $ | 0.56 | $ | 0.56 | |||
| New Asset Production: | |||||||||
| Direct Originations | $ | 50,313 | $ | 91,182 | $ | 143,057 | |||
| Indirect Originations | $ | 453,969 | $ | 538,263 | $ | 561,837 | |||
| Total Originations | $ | 504,282 | $ | 629,445 | $ | 704,894 | |||
| Equipment Finance Originations | $ | 468,505 | $ | 570,555 | $ | 630,650 | |||
| Working Capital Loans Originations | $ | 35,777 | $ | 58,890 | $ | 74,244 | |||
| Total Originations | $ | 504,282 | $ | 629,445 | $ | 704,894 | |||
| Assets originated for sale in the period | $ | 0 | $ | 0 | $ | 17,596 | |||
| Assets referred in the period | $ | 17,724 | $ | 54,110 | $ | 16,830 | |||
| Total Sourced Originations | $ | 522,006 | $ | 683,555 | $ | 739,320 | |||
| Assets sold in the period | $ | 18,132 | $ | 66,744 | $ | 138,995 | |||
| Implicit Yield on Direct Originations | 23.49 | % | 21.58 | % | 20.63 | % | |||
| Implicit Yield on Indirect Originations | 10.35 | % | 10.32 | % | 10.37 | % | |||
| Total Implicit Yield on Total Originations | 11.66 | % | 11.95 | % | 12.45 | % | |||
| Implicit Yield on Equipment Finance Originations | 9.97 | % | 9.76 | % | 9.88 | % | |||
| Implicit Yield on Working Capital Loans Originations | 33.82 | % | 33.19 | % | 34.26 | % | |||
| # of Leases / Loans Equipment Finance | 26,632 | 30,682 | 31,478 | ||||||
| Equipment Finance Approval Percentage | 58 | % | 56 | % | 57 | % | |||
| Average Monthly Equipment Finance Sources | 1,116 | 1,198 | 1,186 | ||||||
| Net Interest and Fee Margin (NIM) | |||||||||
| Percent of Average Total Finance Receivables: | |||||||||
| Interest Income | 10.38 | % | 10.33 | % | 10.27 | % | |||
| Fee Income | 2.16 | % | 1.76 | % | 1.68 | % | |||
| Interest and Fee Income | 12.54 | % | 12.09 | % | 11.95 | % | |||
| Interest Expense | 1.08 | % | 1.32 | % | 1.84 | % | |||
| Net Interest and Fee Margin (NIM) | 11.46 | % | 10.77 | % | 10.11 | % | |||
| Cost of Funds (1) | 1.20 | % | 1.43 | % | 2.02 | % | |||
| Interest Income Equipment Finance | $ | 69,903 | $ | 78,171 | 84,800 | ||||
| Interest Income Working Capital Loans | $ | 4,302 | $ | 8,355 | 10,234 | ||||
| Average Total Finance Receivables | $ | 720,060 | $ | 846,743 | $ | 944,588 | |||
| Average Net Investment Equipment Finance | $ | 707,889 | $ | 821,972 | $ | 913,358 | |||
| Average Working Capital Loans | $ | 12,171 | $ | 24,771 | $ | 31,230 | |||
| End of Period Net Investment Equipment Finance | $ | 777,607 | $ | 887,328 | $ | 965,351 | |||
| End of Period Working Capital Loans | $ | 19,110 | $ | 27,092 | $ | 35,389 | |||
| Total Owned Net Investment in Leases and Loans (2) | $ | 796,717 | $ | 914,420 | $ | 1,000,740 | |||
| Total Assets Serviced for Others | $ | 19,203 | $ | 74,359 | $ | 164,029 | |||
| Total Managed Assets | $ | 815,920 | $ | 988,779 | $ | 1,164,769 | |||
| Average Total Managed Assets | $ | 731,259 | $ | 884,851 | $ | 1,053,829 | |||
| Portfolio Asset Quality: | |||||||||
| Total Finance Receivables | |||||||||
| 30+ Days Past Due Delinquencies | 0.80 | % | 1.02 | % | 1.09 | % | |||
| 30+ Days Past Due Delinquencies | $ | 7,226 | $ | 10,565 | $ | 12,295 | |||
| 60+ Days Past Due Delinquencies | 0.46 | % | 0.55 | % | 0.65 | % | |||
| 60+ Days Past Due Delinquencies | $ | 4,137 | $ | 5,647 | $ | 7,292 | |||
| Equipment Finance | |||||||||
| 30+ Days Past Due Delinquencies | 0.82 | % | 1.04 | % | 1.08 | % | |||
| 30+ Days Past Due Delinquencies | $ | 7,226 | $ | 10,446 | $ | 11,803 | |||
| 60+ Days Past Due Delinquencies | 0.47 | % | 0.56 | % | 0.65 | % | |||
| 60+ Days Past Due Delinquencies | $ | 4,137 | $ | 5,647 | $ | 7,100 | |||
| Working Capital Loans | |||||||||
| 15+ Days Past Due Delinquencies | 0.50 | % | 0.95 | % | 1.44 | % | |||
| 15+ Days Past Due Delinquencies | $ | 98 | $ | 264 | $ | 526 | |||
| 30+ Days Past Due Delinquencies | 0.00 | % | 0.43 | % | 1.35 | % | |||
| 30+ Days Past Due Delinquencies | $ | 0 | $ | 119 | $ | 492 | |||
| Net Charge-offs – Total Finance Receivables | $ | 9,890 | $ | 14,480 | $ | 18,273 | |||
| % on Average Total Finance Receivables | |||||||||
| Annualized | 1.37 | % | 1.71 | % | 1.93 | % | |||
| Net Charge-offs – Equipment Finance | $ | 9,528 | $ | 13,383 | $ | 16,795 | |||
| % on Average Net Investment in Equipment Finance | |||||||||
| Annualized | 1.35 | % | 1.63 | % | 1.84 | % | |||
| Net Charge-offs – Working Capital Loans | $ | 362 | $ | 1,097 | $ | 1,478 | |||
| % of Average Working Capital Loans | |||||||||
| Annualized | 2.97 | % | 4.43 | % | 4.73 | % | |||
| Total Allowance for Credit Losses | $ | 10,937 | $ | 14,851 | $ | 16,100 | |||
| % of Total Finance Receivables | 1.38 | % | 1.63 | % | 1.62 | % | |||
| % of 60+ Delinquencies | 264.37 | % | 262.99 | % | 220.79 | % | |||
| Allowance for Credit Losses – Equipment Finance | $ | 10,177 | $ | 13,815 | $ | 14,633 | |||
| % of Net Investment Equipment Finance | 1.32 | % | 1.56 | % | 1.52 | % | |||
| % of 60+ Delinquencies | 245.98 | % | 244.64 | % | 206.10 | % | |||
| Allowance for Credit Losses – Working Capital Loans | $ | 760 | $ | 1,036 | $ | 1,467 | |||
| % of Total Working Capital Loans | 3.86 | % | 3.73 | % | 4.02 | % | |||
| Non-accrual – Equipment Finance | $ | 2,176 | $ | 3,065 | $ | 3,720 | |||
| Non-accrual – Equipment Finance | 0.25 | % | 0.30 | % | 0.34 | % | |||
| Non-accrual – Working Capital Loans | $ | 66 | $ | 118 | $ | 492 | |||
| Non-accrual – Working Capital Loans | 0.34 | % | 0.42 | % | 1.35 | % | |||
| Non-accrual – Total Finance Receivables | $ | 2,242 | $ | 3,183 | $ | 4,212 | |||
| Non-accrual – Total Finance Receivables | 0.25 | % | 0.31 | % | 0.37 | % | |||
| Restructured – Total Finance Receivables | $ | 769 | $ | 4,489 | $ | 3,636 | |||
| Expense Ratios: | |||||||||
| Salaries and Benefits Expense | $ | 31,912 | $ | 37,569 | $ | 39,750 | |||
| Salaries and Benefits Expense | |||||||||
| Annualized % of Avg. Fin. Recbl. | 4.43 | % | 4.44 | % | 4.21 | % | |||
| Total personnel end of quarter | 318 | 330 | 341 | ||||||
| General and Administrative Expense | $ | 19,523 | $ | 28,272 | $ | 24,915 | |||
| General and Administrative Expense | |||||||||
| Annualized % of Avg. Fin. Recbl. | 2.71 | % | 3.34 | % | 2.64 | % | |||
| Non-Interest Expense/Average Total Managed Assets | 7.05 | % | 7.44 | % | 6.14 | % | |||
| Adjusted Non-Interest Expense/Average Total Managed Assets (3) | 7.05 | % | 6.71 | % | 5.90 | % | |||
| Efficiency Ratio | 55.77 | % | 61.04 | % | 55.32 | % | |||
| Balance Sheet: | |||||||||
| Assets | |||||||||
| Investment in Leases and Loans | $ | 793,285 | $ | 911,242 | $ | 996,384 | |||
| Initial Direct Costs and Fees | 14,369 | 18,029 | 20,456 | ||||||
| Reserve for Credit Losses | (10,937 | ) | (14,851 | ) | (16,100 | ) | |||
| Net Investment in Leases and Loans | $ | 796,717 | $ | 914,420 | $ | 1,000,740 | |||
| Cash and Cash Equivalents | 61,757 | 67,146 | 97,156 | ||||||
| Restricted Cash | – | – | 14,045 | ||||||
| Other Assets | 33,684 | 58,594 | 55,105 | ||||||
| Total Assets | $ | 892,158 | $ | 1,040,160 | $ | 1,167,046 | |||
| Liabilities | |||||||||
| Deposits | 697,357 | 809,315 | 755,776 | ||||||
| Total Debt | – | – | 150,055 | ||||||
| Other Liabilities | 32,512 | 51,196 | 62,704 | ||||||
| Total Liabilities | $ | 729,869 | $ | 860,511 | $ | 968,535 | |||
| Stockholders’ Equity | |||||||||
| Common Stock | $ | 126 | $ | 124 | $ | 124 | |||
| Paid-in Capital, net | 83,503 | 82,586 | 83,496 | ||||||
| Other Comprehensive Income (Loss) | (138 | ) | (96 | ) | (44 | ) | |||
| Retained Earnings | 78,798 | 97,035 | 114,935 | ||||||
| Total Stockholders’ Equity | $ | 162,289 | $ | 179,649 | $ | 198,511 | |||
| Total Liabilities and | |||||||||
| Stockholders’ Equity | $ | 892,158 | $ | 1,040,160 | $ | 1,167,046 | |||
| Capital and Leverage: | |||||||||
| Equity | $ | 162,289 | $ | 179,649 | $ | 198,511 | |||
| Debt to Equity | 4.30 | 4.50 | 4.56 | ||||||
| Equity to Assets | 18.19 | % | 17.27 | % | 17.01 | % | |||
| Regulatory Capital Ratios: | |||||||||
| Tier 1 Leverage Capital | 18.36 | % | 17.25 | % | 16.38 | % | |||
| Common Equity Tier 1 Risk-based Capital | 19.37 | % | 18.22 | % | 17.50 | % | |||
| Tier 1 Risk-based Capital | 19.37 | % | 18.22 | % | 17.50 | % | |||
| Total Risk-based Capital | 20.62 | % | 19.47 | % | 18.76 | % | |||
| Notes and Footnotes: | |||||||||
| (1) COF is defined as interest expense for the period divided by average interest bearing 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 acquisition related sales commissions and intangible amortization. | |||||||||
| **Equipment Finance consists of equipment leases and loans; Working Capital Loans consist of small business loans. | |||||||||