Marlin Business Services Corp. Reports Strong Four
Post# of 301275
Fourth Quarter Summary:
- Total fourth quarter origination volume of $146.1 million, a record for a single quarter, an increase of 13.9% compared to the prior quarter and an increase of 35.4% year-over-year
- Total Funding Stream loan origination volume of $11.3 million, up 9.4% from the prior quarter and 3.1 times higher than a year ago
- Net income of $4.8 million with diluted EPS of $0.38 per share, up from net income of $3.0 million with diluted EPS of $0.24 in the prior year period
- Return on equity increased to 12.06%, 96 basis points higher than the prior quarter
- Total new origination loan and lease yield of 11.50% decreased 19 basis points from the prior quarter and was up 13 basis points year-over-year
- Credit quality remained stable with 30+ and 60+ day delinquencies at 80 basis points and 46 basis points, respectively and annualized net charge-offs during the fourth quarter of 1.40%.
- Strong capital position with equity to assets ratio of 18.19%
- Subsequent to quarter end, completed the acquisition of Horizon Keystone Financial
- Subsequent to quarter end, appointed Louis E. Maslowe as Senior Vice President and Chief Credit Officer
Full Year 2016 Summary:
- Full year total origination volume of $504.3 million, up 31.1% from a year ago
- Full year total Funding Stream loan origination volume of $35.8 million, 5.4 times higher than the prior year period
- Investment in Leases and Loans (before deferred costs and loss allowance) of $793.3 million, an all-time record and up 16.7% year-over-year
- Full year net income of $17.3 million with diluted EPS of $1.38, up from net income of $16.0 million with diluted EPS of $1.25 in the prior year period
MOUNT LAUREL, N.J., Jan. 26, 2017 (GLOBE NEWSWIRE) -- Marlin Business Services Corp. (NASDAQ: MRLN ) today reported fourth quarter 2016 net income of $4.8 million, or $0.38 per diluted share, compared to $3.0 million, or $0.24 per diluted share, for the fourth quarter last year. Return on equity for the quarter was 12.06%, up from 7.96% a year ago.
For the year ended December 31, 2016, net income was $17.3 million, or $1.38 per diluted share, compared to $16.0 million and $1.25 per diluted share for the year ended December 31, 2015.
“We concluded 2016 with an outstanding fourth quarter driven by robust origination volume and stable credit quality that helped deliver solid earnings growth,” commented Jeffrey A. Hilzinger, Marlin’s President and Chief Executive Officer. “Total origination volume of $146.1 million was a record for a single quarter, an increase of nearly 14% compared to the previous quarter and up more than 35% from the fourth quarter last year. While strong customer demand in our Equipment Finance business continued to drive overall growth, we also benefited from our strategy to transform Marlin from primarily a micro-ticket equipment lessor into a broader provider of credit products and services to small businesses. Funding Stream, our working capital loan business, also performed well and contributed $11.3 million, or 8%, of total originations in the quarter, and our Franchise Finance business, which caters to the unique financing needs of franchisees, comprised $5.1 million, or 4%, of total fourth quarter originations. As a result, our Investment in Leases and Loans grew to a record $793.3 million, up almost 5% compared to the previous quarter and up 17% from a year ago, with continued stable credit performance. Fourth quarter net income also increased on both a sequential quarter and year-over-year basis to $4.8 million, or $0.38 per diluted share. Overall, 2016 was a very productive and transformative year for Marlin, and we look forward to building on our success in 2017.”
Mr. Hilzinger concluded, “Consistent with our ‘Marlin 2.0’ initiative and as part of our effort to identify additional growth engines, subsequent to year-end we completed the acquisition of Horizon Keystone Financial, an originator of equipment finance solutions for small businesses with a focus on the office furniture, heating/ventilation/ air conditioning/refrigeration (HVAC/R) and automotive markets. Horizon is a strong complement to our existing equipment finance business and provides Marlin with the opportunity to enter new and attractive equipment markets while further leveraging our existing infrastructure and resources.”
Results of Operations Combined Equipment Finance, Funding Stream and Franchise Finance origination volume for the fourth quarter ended December 31, 2016 of $146.1 million was the fifth consecutive quarter of record origination volume for the Company. Equipment Finance origination volume of $134.9 million in the fourth quarter was up 14.3% compared to $117.9 million in the prior quarter and increased 29.3% from $104.3 million in the fourth quarter of 2015. The Company also experienced solid Funding Stream origination volume in the fourth quarter of 2016 totaling $11.3 million, up from $10.3 million in the third quarter of 2016 and $3.7 million in the same period a year ago.
Net interest and fee margin as a percentage of average finance receivables was 11.44% for the fourth quarter ended December 31, 2016, up 14 basis points from the third quarter of 2016 and down 8 basis points from a year ago. The decrease in margin percentage from the year ago period was primarily a result of the roll-off of higher yielding assets, growth in lower yielding Equipment Finance channels, a decline in late fees and a slight increase in the Company’s cost of funds. The Company’s cost of funds increased to 114 basis points, compared to 112 basis points for the third quarter of 2016 and 98 basis points for the fourth quarter of 2015.
On an absolute basis, net interest and fee margin increased to $21.8 million for the quarter ended December 31, 2016, compared to $20.7 million for the prior quarter and $18.9 million for the fourth quarter last year.
Other income was $3.0 million for the fourth quarter of 2016, compared to $2.6 million in the prior quarter and $2.2 million in the fourth quarter last year. The increase in other income compared to the fourth quarter last year was partially due to a $0.4 million increase in gains-on-sale and servicing fee income from asset sales related to the Company’s emerging Capital Markets activities.
Other expenses were $13.5 million for the fourth quarter of 2016, compared to $12.8 million in the prior quarter and $14.6 million in the fourth quarter last year. The increase in other expenses compared to the prior quarter was partially due to an increase in compensation expense associated with higher volume. The decrease in other expenses compared to the fourth quarter last year was largely a result of one-time costs in the fourth quarter last year relating to the retirement of the Company’s previous chief executive officer.
The Company’s efficiency ratio for the fourth quarter was 54.58% compared to 54.87% for the prior quarter and 68.99% in the fourth quarter last year.
Marlin recorded a provision for income taxes of $2.9 million for the fourth quarter of 2016, representing an effective tax rate of 37.7%, compared with $3.0 million or 41.1% for the preceding quarter and $1.1 million or 26.9% for the fourth quarter of 2015.
Credit Quality Allowance for credit losses as a percentage of total finance receivables was 1.38% at December 31, 2016 versus 1.24% at December 31, 2015. Coverage of total 60+ day delinquencies was 264.37% at December 31, 2016 versus 265.98% at December 31, 2015.
Credit quality remained stable as finance receivables over 30 days delinquent were 0.80% of the Company’s total finance receivables portfolio as of December 31, 2016, an increase of 7 basis points from December 31, 2015. Finance receivables over 60 days delinquent were 0.46% of the Company’s total finance receivables portfolio as of December 31, 2016, an increase of 5 basis points from December 31, 2015. Fourth quarter net charge-offs were 1.40% of average total finance receivables versus 1.60% a year ago.
As of December 31, 2016 and 2015, the Company’s consolidated equity to assets ratio was 18.19% and 19.42%, respectively.
Corporate Developments On January 4, 2017 the Company announced the acquisition of Horizon Keystone Financial, a long established originator of equipment finance credit products focused in the office furniture, heating/ventilation/air conditioning/refrigeration (HVAC/R) and automotive markets. The acquisition represents an important milestone for Marlin and extends the Company’s existing equipment finance business into new and attractive markets.
On January 10, 2017 the Company announced the appointment of Louis E. Maslowe as Senior Vice President and Chief Credit Officer. Mr. Maslowe has an extensive background in commercial finance with over 30 years of credit experience. Prior to joining Marlin, Mr. Maslowe held senior leadership positions in credit and risk management with several leading bank owned, independent and captive leasing companies, most recently serving as Senior Vice President and Chief Risk Officer of the Americas for DLL, a wholly owned subsidiary of Rabobank Group.
The Board of Directors of Marlin Business Services Corp. today declared a $0.14 per share quarterly dividend. The dividend is payable February 16, 2017, to shareholders of record on February 6, 2017. Based on the closing stock price on January 25, 2017, the annualized dividend yield on the Company’s common stock is 2.62%.
In conjunction with this release, static pool loss statistics and a vintage delinquency analysis have been updated as supplemental information on the Investor Relations section of the Company’s website at www.marlincorp.com .
Business Outlook The Company is initiating guidance for the full year ending December 31, 2017 as follows:
- Full year origination volume (including both loans and leases) is expected to finish at least 20% above 2016 levels.
- Credit quality is anticipated to remain stable and within the Company’s expected range.
- Net interest margin, as a percentage, is expected to move slightly lower in 2017 with the roll-off of higher yielding legacy leases and continued growth in lower yielding Equipment Finance channels and Franchise Finance, partially offset by expected growth in the Company’s higher yielding Funding Stream business.
- Full year ROE is expected to grow as strategic initiatives gain traction and the Company continues to scale.
Conference Call and Webcast Marlin will host a conference call on Friday, January 27, 2017 at 9:00 a.m. ET to discuss the Company’s fourth quarter and year-end 2016 results. If you wish to participate, please call 877-312-5414 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.marlincorp.com . An audio replay will also be available on the Investor Relations section of Marlin’s website for approximately 45 days.
About Marlin Business Services Corp. Marlin Business Services Corp. is a nationwide provider of credit products and services to small businesses with a mission of helping small businesses achieve their American dream. Our products and services are offered directly to small businesses and through financing programs with equipment manufacturers, distributors, dealers and other intermediaries. Marlin and its wholly-owned operating subsidiary, Marlin Business Bank, are publicly traded (NASDAQ: MRLN ). For more information about Marlin, visit www.marlincorp.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.
| MARLIN BUSINESS SERVICES CORP. | |||||||
| AND SUBSIDIARIES | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (Unaudited) | |||||||
| December 31, | December 31, | ||||||
| 2016 | 2015 | ||||||
| (Dollars in thousands, except per-share data) | |||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 4,055 | $ | 4,946 | |||
| Interest-earning deposits with banks | 57,702 | 55,183 | |||||
| Total cash and cash equivalents | 61,757 | 60,129 | |||||
| Time deposits with banks | 9,605 | 7,368 | |||||
| Restricted interest-earning deposits with banks | — | 216 | |||||
| Securities available for sale (amortized cost of $6.1 million and $6.6 million at | |||||||
| December 31, 2016 and December 31, 2015, respectively) | 5,880 | 6,399 | |||||
| Net investment in leases and loans: | |||||||
| Net investment in leases and loans, excluding allowance for credit losses | 807,654 | 690,845 | |||||
| Allowance for credit losses | (10,937 | ) | (8,413 | ) | |||
| Total net investment in leases and loans | 796,717 | 682,432 | |||||
| Property and equipment, net | 3,495 | 3,872 | |||||
| Property tax receivables | 5,296 | 47 | |||||
| Other assets | 9,408 | 12,521 | |||||
| Total assets | $ | 892,158 | $ | 772,984 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Deposits | $ | 697,357 | $ | 587,940 | |||
| Other liabilities: | |||||||
| Sales and property taxes payable | 2,586 | 2,686 | |||||
| Accounts payable and accrued expenses | 14,809 | 15,371 | |||||
| Net deferred income tax liability | 15,117 | 16,849 | |||||
| Total liabilities | 729,869 | 622,846 | |||||
| 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; | |||||||
| 12,572,114 and 12,410,899 shares issued and outstanding at December 31, 2016 | |||||||
| and December 31, 2015, respectively | 126 | 124 | |||||
| Additional paid-in capital | 83,505 | 81,703 | |||||
| Stock subscription receivable | (2 | ) | (2 | ) | |||
| Accumulated other comprehensive loss | (138 | ) | (129 | ) | |||
| Retained earnings | 78,798 | 68,442 | |||||
| Total stockholders’ equity | 162,289 | 150,138 | |||||
| Total liabilities and stockholders’ equity | $ | 892,158 | $ | 772,984 | |||
| MARLIN BUSINESS SERVICES CORP. | ||||||||||||||
| AND SUBSIDIARIES | ||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||
| (Unaudited) | ||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| (Dollars in thousands, except per-share data) | ||||||||||||||
| Interest income | $ | 20,188 | $ | 16,997 | $ | 74,709 | $ | 66,662 | ||||||
| Fee income | 3,796 | 3,529 | 15,543 | 15,291 | ||||||||||
| Interest and fee income | 23,984 | 20,526 | 90,252 | 81,953 | ||||||||||
| Interest expense | 2,174 | 1,609 | 7,778 | 5,696 | ||||||||||
| Net interest and fee income | 21,810 | 18,917 | 82,474 | 76,257 | ||||||||||
| Provision for credit losses | 3,534 | 2,453 | 12,414 | 9,995 | ||||||||||
| Net interest and fee income after provision for credit losses | 18,276 | 16,464 | 70,060 | 66,262 | ||||||||||
| Other income: | ||||||||||||||
| Insurance premiums written and earned | 1,639 | 1,646 | 6,398 | 5,940 | ||||||||||
| Other income | 1,347 | 533 | 3,360 | 1,869 | ||||||||||
| Other income | 2,986 | 2,179 | 9,758 | 7,809 | ||||||||||
| Other expense: | ||||||||||||||
| Salaries and benefits | 8,083 | 9,884 | 31,912 | 31,174 | ||||||||||
| General and administrative | 5,450 | 4,671 | 19,523 | 17,451 | ||||||||||
| Financing related costs | — | 34 | 85 | 218 | ||||||||||
| Other expenses | 13,533 | 14,589 | 51,520 | 48,843 | ||||||||||
| Income before income taxes | 7,729 | 4,054 | 28,298 | 25,228 | ||||||||||
| Income tax expense | 2,914 | 1,089 | 11,019 | 9,262 | ||||||||||
| Net income | $ | 4,815 | $ | 2,965 | $ | 17,279 | $ | 15,966 | ||||||
| Basic earnings per share | $ | 0.38 | $ | 0.24 | $ | 1.38 | $ | 1.25 | ||||||
| Diluted earnings per share | $ | 0.38 | $ | 0.24 | $ | 1.38 | $ | 1.25 | ||||||
| Cash dividends declared per share | $ | 0.14 | $ | 0.14 | $ | 0.56 | $ | 2.53 | ||||||
| SUPPLEMENTAL QUARTERLY DATA | |||||||||||||||||
| (Dollars in thousands, except share amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Quarter Ended: | 12/31/2015 | 3/31/2016 | 6/30/2016 | 9/30/2016 | 12/31/2016 | ||||||||||||
| Net Income: | |||||||||||||||||
| Net Income | $ | 2,965 | $ | 3,651 | $ | 4,468 | $ | 4,345 | $ | 4,815 | |||||||
| Annualized Performance Measures: | |||||||||||||||||
| Return on Average Assets | 1.56 | % | 1.88 | % | 2.19 | % | 2.05 | % | 2.20 | % | |||||||
| Return on Average Stockholders' Equity | 7.96 | % | 9.74 | % | 11.66 | % | 11.10 | % | 12.06 | % | |||||||
| EPS Data: | |||||||||||||||||
| Net Income Allocated to Common Stock | $ | 2,891 | $ | 3,548 | $ | 4,339 | $ | 4,209 | $ | 4,663 | |||||||
| Number of Shares - Basic | 12,118,789 | 12,120,934 | 12,136,660 | 12,146,727 | 12,161,782 | ||||||||||||
| Basic Earnings per Share | $ | 0.24 | $ | 0.29 | $ | 0.36 | $ | 0.35 | $ | 0.38 | |||||||
| Number of Shares - Diluted | 12,128,613 | 12,126,812 | 12,143,181 | 12,157,356 | 12,173,010 | ||||||||||||
| Diluted Earnings per Share | $ | 0.24 | $ | 0.29 | $ | 0.36 | $ | 0.35 | $ | 0.38 | |||||||
| Cash Dividends Declared per share | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.14 | |||||||
| New Asset Production: | |||||||||||||||||
| Equipment Finance | $ | 104,263 | $ | 102,092 | $ | 113,615 | $ | 117,945 | $ | 134,853 | |||||||
| Funding Stream Loans | $ | 3,670 | $ | 6,301 | $ | 7,873 | $ | 10,316 | $ | 11,287 | |||||||
| Total New Originations | $ | 107,933 | $ | 108,393 | $ | 121,488 | $ | 128,261 | $ | 146,140 | |||||||
| Implicit Yield on Equipment Finance Originations | 10.64 | % | 10.30 | % | 10.20 | % | 9.78 | % | 9.68 | % | |||||||
| Implicit Yield on Funding Stream Loan Originations | 32.15 | % | 34.17 | % | 34.72 | % | 33.50 | % | 33.28 | % | |||||||
| Total Implicit Yield on New Originations | 11.37 | % | 11.69 | % | 11.78 | % | 11.69 | % | 11.50 | % | |||||||
| Assets sold in the period | $ | 317 | $ | 0 | $ | 2,707 | $ | 3,871 | $ | 11,554 | |||||||
| # of Sales Reps - Total | 136 | 136 | 139 | 136 | 135 | ||||||||||||
| # of Leases / Loans Equipment Finance | 6,625 | 6,316 | 6,681 | 6,606 | 7,029 | ||||||||||||
| Equipment Finance Approval Percentage | 62 | % | 62 | % | 58 | % | 56 | % | 57 | % | |||||||
| Average Monthly Equipment Finance Sources | 1,109 | 1,075 | 1,138 | 1,118 | 1,134 | ||||||||||||
| Net Interest and Fee Margin: | |||||||||||||||||
| Interest Income Equipment Finance | $ | 16,598 | $ | 16,808 | $ | 17,152 | $ | 17,368 | $ | 18,575 | |||||||
| Interest Income Funding Stream Loans | $ | 316 | $ | 618 | $ | 930 | $ | 1,254 | $ | 1,499 | |||||||
| Interest Income Yield | 10.35 | % | 10.32 | % | 10.30 | % | 10.27 | % | 10.59 | % | |||||||
| Fee Income Yield | 2.15 | % | 2.26 | % | 2.25 | % | 2.15 | % | 1.99 | % | |||||||
| Interest and Fee Income Yield | 12.50 | % | 12.58 | % | 12.55 | % | 12.42 | % | 12.58 | % | |||||||
| Cost of Funds | 0.98 | % | 1.00 | % | 1.05 | % | 1.12 | % | 1.14 | % | |||||||
| Net Interest and Fee Margin | 11.52 | % | 11.58 | % | 11.50 | % | 11.30 | % | 11.44 | % | |||||||
| Average Total Finance Receivables | $ | 656,942 | $ | 679,252 | $ | 706,039 | $ | 732,346 | $ | 762,604 | |||||||
| Average Net Investment Equipment Finance | $ | 653,497 | $ | 672,198 | $ | 695,683 | $ | 718,601 | $ | 745,075 | |||||||
| Average Funding Stream Loans | $ | 3,445 | $ | 7,054 | $ | 10,356 | $ | 13,745 | $ | 17,529 | |||||||
| End of Period Net Investment Equipment Finance | $ | 677,491 | $ | 693,510 | $ | 718,631 | $ | 743,914 | $ | 777,607 | |||||||
| End of Period Funding Stream Loans | $ | 4,941 | $ | 8,616 | $ | 12,119 | $ | 15,508 | $ | 19,110 | |||||||
| Portfolio Asset Quality: | |||||||||||||||||
| Total Finance Receivables | |||||||||||||||||
| 30+ Days Past Due Delinquencies | 0.73 | % | 0.85 | % | 0.71 | % | 0.78 | % | 0.80 | % | |||||||
| 30+ Days Past Due Delinquencies | $ | 5,618 | $ | 6,698 | $ | 5,850 | $ | 6,751 | $ | 7,226 | |||||||
| 60+ Days Past Due Delinquencies | 0.41 | % | 0.52 | % | 0.43 | % | 0.45 | % | 0.46 | % | |||||||
| 60+ Days Past Due Delinquencies | $ | 3,163 | $ | 4,114 | $ | 3,548 | $ | 3,885 | $ | 4,137 | |||||||
| Equipment Finance | |||||||||||||||||
| 30+ Days Past Due Delinquencies | 0.74 | % | 0.86 | % | 0.72 | % | 0.80 | % | 0.82 | % | |||||||
| 30+ Days Past Due Delinquencies | $ | 5,618 | $ | 6,698 | $ | 5,850 | $ | 6,751 | $ | 7,226 | |||||||
| 60+ Days Past Due Delinquencies | 0.41 | % | 0.53 | % | 0.44 | % | 0.46 | % | 0.47 | % | |||||||
| 60+ Days Past Due Delinquencies | $ | 3,163 | $ | 4,114 | $ | 3,548 | $ | 3,885 | $ | 4,137 | |||||||
| Funding Stream Loans | |||||||||||||||||
| 15+ Days Past Due Delinquencies | 0.00 | % | 0.00 | % | 0.00 | % | 0.27 | % | 0.50 | % | |||||||
| 15+ Days Past Due Delinquencies | $ | 0 | $ | 0 | $ | 0 | $ | 44 | $ | 98 | |||||||
| 30+ Days Past Due Delinquencies | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||
| 30+ Days Past Due Delinquencies | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||
| Net Charge-offs - Total Finance Receivables | $ | 2,628 | $ | 2,297 | $ | 2,429 | $ | 2,494 | $ | 2,670 | |||||||
| % on Average Total Finance Receivables | |||||||||||||||||
| Annualized | 1.60 | % | 1.35 | % | 1.38 | % | 1.36 | % | 1.40 | % | |||||||
| Net Charge-offs - Equipment Finance | $ | 2,628 | $ | 2,220 | $ | 2,331 | $ | 2,456 | $ | 2,521 | |||||||
| % on Average Net Investment in Equipment Finance | |||||||||||||||||
| Annualized | 1.61 | % | 1.32 | % | 1.34 | % | 1.37 | % | 1.35 | % | |||||||
| Net Charge-offs - Funding Stream Loans | $ | 0 | $ | 77 | $ | 98 | $ | 38 | $ | 149 | |||||||
| % of Average Funding Stream Loans | |||||||||||||||||
| Annualized | n/a | 4.39 | % | 3.77 | % | 1.11 | % | 2.37 | % | ||||||||
| Total Allowance for Credit Losses | $ | 8,413 | $ | 9,191 | $ | 9,430 | $ | 10,073 | $ | 10,937 | |||||||
| % of Total Finance Receivables | 1.24 | % | 1.31 | % | 1.30 | % | 1.33 | % | 1.38 | % | |||||||
| % of 60+ Delinquencies | 265.98 | % | 223.41 | % | 265.78 | % | 259.28 | % | 264.37 | % | |||||||
| Allowance for Credit Losses - Equipment Finance | $ | 8,239 | $ | 8,906 | $ | 8,926 | $ | 9,328 | $ | 10,177 | |||||||
| % of Net Investment Equipment Finance | 1.22 | % | 1.29 | % | 1.25 | % | 1.26 | % | 1.32 | % | |||||||
| % of 60+ Delinquencies | 260.49 | % | 216.47 | % | 251.58 | % | 240.10 | % | 245.98 | % | |||||||
| Allowance for Credit Losses - Funding Stream Loans | $ | 174 | $ | 285 | $ | 503 | $ | 745 | $ | 760 | |||||||
| % of Total Funding Stream Loans | 3.49 | % | 3.26 | % | 4.03 | % | 4.63 | % | 3.86 | % | |||||||
| % of 60+ Delinquencies | n/a | n/a | n/a | n/a | n/a | ||||||||||||
| Non-accrual Leases and Loans | $ | 1,677 | $ | 2,352 | $ | 1,771 | $ | 2,022 | $ | 2,242 | |||||||
| Expense Ratios: | |||||||||||||||||
| Salaries and Benefits Expense | $ | 9,884 | $ | 8,200 | $ | 7,812 | $ | 7,817 | $ | 8,083 | |||||||
| Salaries and Benefits Expense | |||||||||||||||||
| Annualized % of Avg. Fin. Recbl. | 6.02 | % | 4.83 | % | 4.43 | % | 4.27 | % | 4.24 | % | |||||||
| Total personnel end of quarter | 314 | 309 | 315 | 318 | 318 | ||||||||||||
| General and Administrative Expense | $ | 4,671 | $ | 4,465 | $ | 4,628 | $ | 4,980 | $ | 5,450 | |||||||
| General and Administrative Expense | |||||||||||||||||
| Annualized % of Avg. Fin. Recbl. | 2.84 | % | 2.63 | % | 2.62 | % | 2.72 | % | 2.86 | % | |||||||
| Efficiency Ratio | 68.99 | % | 58.23 | % | 55.63 | % | 54.87 | % | 54.58 | % | |||||||
| Balance Sheet: | |||||||||||||||||
| Assets | |||||||||||||||||
| Investment in Leases and Loans | $ | 679,737 | $ | 699,672 | $ | 727,707 | $ | 756,144 | $ | 793,285 | |||||||
| Initial Direct Costs and Fees | 11,108 | 11,645 | 12,473 | 13,351 | 14,369 | ||||||||||||
| Reserve for Credit Losses | (8,413 | ) | (9,191 | ) | (9,430 | ) | (10,073 | ) | (10,937 | ) | |||||||
| Net Investment in Leases and Loans | $ | 682,432 | $ | 702,126 | $ | 730,750 | $ | 759,422 | $ | 796,717 | |||||||
| Cash and Cash Equivalents | 60,129 | 65,093 | 78,767 | 77,625 | 61,757 | ||||||||||||
| Restricted Cash | 216 | 112 | 26 | - | - | ||||||||||||
| Other Assets | 30,207 | 33,775 | 32,248 | 31,954 | 33,684 | ||||||||||||
| Total Assets | $ | 772,984 | $ | 801,106 | $ | 841,791 | $ | 869,001 | $ | 892,158 | |||||||
| Liabilities | |||||||||||||||||
| Deposits | 587,940 | 612,721 | 650,429 | 676,920 | 697,357 | ||||||||||||
| Other Liabilities | 34,906 | 35,909 | 35,677 | 33,413 | 32,512 | ||||||||||||
| Total Liabilities | $ | 622,846 | $ | 648,630 | $ | 686,106 | $ | 710,333 | $ | 729,869 | |||||||
| Stockholders' Equity | |||||||||||||||||
| Common Stock | $ | 124 | $ | 125 | $ | 125 | $ | 126 | $ | 126 | |||||||
| Paid-in Capital, net | 81,701 | 82,054 | 82,516 | 82,890 | 83,503 | ||||||||||||
| Other Comprehensive Income (Loss) | (129 | ) | (49 | ) | (22 | ) | (5 | ) | (138 | ) | |||||||
| Retained Earnings | 68,442 | 70,346 | 73,066 | 75,657 | 78,798 | ||||||||||||
| Total Stockholders' Equity | $ | 150,138 | $ | 152,476 | $ | 155,685 | $ | 158,668 | $ | 162,289 | |||||||
| Total Liabilities and | |||||||||||||||||
| Stockholders' Equity | $ | 772,984 | $ | 801,106 | $ | 841,791 | $ | 869,001 | $ | 892,158 | |||||||
| Capital and Leverage: | |||||||||||||||||
| Equity | $ | 150,138 | $ | 152,476 | $ | 155,685 | $ | 158,668 | $ | 162,289 | |||||||
| Debt to Equity | 3.92 | 4.02 | 4.18 | 4.27 | 4.30 | ||||||||||||
| Equity to Assets | 19.42 | % | 19.03 | % | 18.49 | % | 18.26 | % | 18.19 | % | |||||||
| Regulatory Capital Ratios: | |||||||||||||||||
| Tier 1 Leverage Capital | 19.63 | % | 19.39 | % | 18.90 | % | 18.53 | % | 18.36 | % | |||||||
| Common Equity Tier 1 Risk-based Capital | 20.86 | % | 20.51 | % | 20.14 | % | 19.77 | % | 19.37 | % | |||||||
| Tier 1 Risk-based Capital | 20.86 | % | 20.51 | % | 20.14 | % | 19.77 | % | 19.37 | % | |||||||
| Total Risk-based Capital | 22.02 | % | 21.74 | % | 21.36 | % | 21.02 | % | 20.62 | % | |||||||
| Notes: | |||||||||||||||||
| Net investment in total finance receivables includes net investment in direct financing leases and loans. | |||||||||||||||||
| Equipment Finance consists of equipment leases and loans. | |||||||||||||||||
| Funding Stream Loans consist of small business loans. | |||||||||||||||||
| SUPPLEMENTAL ANNUAL DATA | ||||||||||||
| (Dollars in thousands, except share amounts) | ||||||||||||
| (Unaudited) | ||||||||||||
| Year Ended: | 2014 | 2015 | 2016 | |||||||||
| Net Income: | ||||||||||||
| Net Income | $ | 19,350 | $ | 15,966 | $ | 17,279 | ||||||
| Annualized Performance Measures: | ||||||||||||
| Return on Average Assets | 2.64 | % | 2.11 | % | 2.08 | % | ||||||
| Return on Average Stockholders' Equity | 11.47 | % | 9.49 | % | 11.15 | % | ||||||
| EPS Data: | ||||||||||||
| Net Income Allocated to Common Stock | $ | 18,798 | $ | 15,501 | $ | 16,761 | ||||||
| Number of Shares - Basic | 12,520,496 | 12,364,873 | 12,141,595 | |||||||||
| Basic Earnings per Share | $ | 1.50 | $ | 1.25 | $ | 1.38 | ||||||
| Number of Shares - Diluted | 12,575,938 | 12,381,552 | 12,150,697 | |||||||||
| Diluted Earnings per Share | $ | 1.49 | $ | 1.25 | $ | 1.38 | ||||||
| Cash Dividends Declared per share | $ | 0.47 | $ | 2.53 | $ | 0.56 | ||||||
| New Asset Production: | ||||||||||||
| Equipment Finance | $ | 334,926 | $ | 377,981 | $ | 468,505 | ||||||
| Funding Stream Loans | n/a | $ | 6,679 | $ | 35,777 | |||||||
| Total New Originations | $ | 334,926 | $ | 384,660 | $ | 504,282 | ||||||
| Implicit Yield on Equipment Finance Originations | 11.14 | % | 10.69 | % | 9.97 | % | ||||||
| Implicit Yield on Funding Stream Loan Originations | n/a | 33.65 | % | 33.82 | % | |||||||
| Total Implicit Yield on New Originations | 11.14 | % | 11.09 | % | 11.66 | % | ||||||
| Assets sold in the period | $ | 91 | $ | 3,589 | $ | 18,132 | ||||||
| # of Sales Reps - Total | 115 | 136 | 135 | |||||||||
| # of Leases / Loans Equipment Finance | 24,228 | 25,158 | 26,632 | |||||||||
| Equipment Finance Approval Percentage | 66 | % | 63 | % | 58 | % | ||||||
| Average Monthly Equipment Finance Sources | 1,117 | 1,093 | 1,116 | |||||||||
| Net Interest and Fee Margin: | ||||||||||||
| Interest Income Equipment Finance | $ | 66,473 | $ | 65,866 | $ | 69,903 | ||||||
| Interest Income Funding Stream Loans | n/a | $ | 492 | $ | 4,302 | |||||||
| Interest Income Yield | 11.07 | % | 10.47 | % | 10.38 | % | ||||||
| Fee Income Yield | 2.47 | % | 2.40 | % | 2.16 | % | ||||||
| Interest and Fee Income Yield | 13.54 | % | 12.87 | % | 12.54 | % | ||||||
| Cost of Funds | 0.82 | % | 0.89 | % | 1.08 | % | ||||||
| Net Interest and Fee Margin | 12.72 | % | 11.98 | % | 11.46 | % | ||||||
| Average Total Finance Receivables | $ | 602,923 | $ | 636,790 | $ | 720,060 | ||||||
| Average Net Investment Equipment Finance | $ | 602,923 | $ | 635,476 | $ | 707,889 | ||||||
| Average Funding Stream Loans | n/a | $ | 1,314 | $ | 12,171 | |||||||
| End of Period Net Investment Equipment Finance | $ | 629,507 | $ | 677,491 | $ | 777,607 | ||||||
| End of Period Funding Stream Loans | n/a | $ | 4,941 | $ | 19,110 | |||||||
| Portfolio Asset Quality: | ||||||||||||
| Total Finance Receivables | ||||||||||||
| 30+ Days Past Due Delinquencies | 0.85 | % | 0.73 | % | 0.80 | % | ||||||
| 30+ Days Past Due Delinquencies | $ | 5,997 | $ | 5,618 | $ | 7,226 | ||||||
| 60+ Days Past Due Delinquencies | 0.51 | % | 0.41 | % | 0.46 | % | ||||||
| 60+ Days Past Due Delinquencies | $ | 3,602 | $ | 3,163 | $ | 4,137 | ||||||
| Equipment Finance | ||||||||||||
| 30+ Days Past Due Delinquencies | 0.85 | % | 0.74 | % | 0.82 | % | ||||||
| 30+ Days Past Due Delinquencies | $ | 5,997 | $ | 5,618 | $ | 7,226 | ||||||
| 60+ Days Past Due Delinquencies | 0.51 | % | 0.41 | % | 0.47 | % | ||||||
| 60+ Days Past Due Delinquencies | $ | 3,602 | $ | 3,163 | $ | 4,137 | ||||||
| Funding Stream Loans | ||||||||||||
| 15+ Days Past Due Delinquencies | n/a | 0.00 | % | 0.50 | % | |||||||
| 15+ Days Past Due Delinquencies | n/a | $ | 0 | $ | 98 | |||||||
| 30+ Days Past Due Delinquencies | n/a | 0.00 | % | 0.00 | % | |||||||
| 30+ Days Past Due Delinquencies | n/a | $ | 0 | $ | 0 | |||||||
| Net Charge-offs - Total Finance Receivables | $ | 9,052 | $ | 10,119 | $ | 9,890 | ||||||
| % on Average Total Finance Receivables | ||||||||||||
| Annualized | 1.50 | % | 1.59 | % | 1.37 | % | ||||||
| Net Charge-offs - Equipment Finance | $ | 9,052 | $ | 10,119 | $ | 9,528 | ||||||
| % on Average Net Investment in Equipment Finance | ||||||||||||
| Annualized | 1.50 | % | 1.59 | % | 1.35 | % | ||||||
| Net Charge-offs - Funding Stream Loans | n/a | $ | 0 | $ | 362 | |||||||
| % of Average Funding Stream Loans | ||||||||||||
| Annualized | n/a | n/a | 2.18 | % | ||||||||
| Total Allowance for Credit Losses | $ | 8,537 | $ | 8,413 | $ | 10,937 | ||||||
| % of Total Finance Receivables | 1.36 | % | 1.24 | % | 1.38 | % | ||||||
| % of 60+ Delinquencies | 237.01 | % | 265.98 | % | 264.37 | % | ||||||
| Allowance for Credit Losses - Equipment Finance | $ | 8,537 | $ | 8,239 | $ | 10,177 | ||||||
| % of Net Investment Equipment Finance | 1.36 | % | 1.22 | % | 1.32 | % | ||||||
| % of 60+ Delinquencies | 237.01 | % | 260.49 | % | 245.98 | % | ||||||
| Allowance for Credit Losses - Funding Stream Loans | n/a | $ | 174 | $ | 760 | |||||||
| % of Total Funding Stream Loans | n/a | 3.49 | % | 3.86 | % | |||||||
| % of 60+ Delinquencies | n/a | n/a | n/a | |||||||||
| Non-accrual Leases and Loans | $ | 1,742 | $ | 1,677 | $ | 2,242 | ||||||
| Expense Ratios: | ||||||||||||
| Salaries and Benefits Expense | $ | 26,628 | $ | 31,174 | $ | 31,912 | ||||||
| Salaries and Benefits Expense | ||||||||||||
| Annualized % of Avg. Fin. Recbl. | 4.42 | % | 4.90 | % | 4.43 | % | ||||||
| Total personnel end of quarter | 285 | 314 | 318 | |||||||||
| General and Administrative Expense | $ | 15,606 | $ | 17,451 | $ | 19,523 | ||||||
| General and Administrative Expense | ||||||||||||
| Annualized % of Avg. Fin. Recbl. | 2.59 | % | 2.74 | % | 2.71 | % | ||||||
| Efficiency Ratio | 50.40 | % | 57.84 | % | 55.77 | % | ||||||
| Notes: | ||||||||||||
| Net investment in total finance receivables includes net investment in direct financing leases and loans. | ||||||||||||
| Equipment Finance consists of equipment leases and loans. | ||||||||||||
| Funding Stream Loans consist of small business loans. | ||||||||||||
Investor Contacts: Taylor Kamp Senior Vice President & Chief Financial Officer 856-505-4108 Lasse Glassen Addo Investor Relations lglassen@addoir.com 424-238-6249
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