Marlin: Total Sourced Origination Volume Down 64.5% Y/Y in Q4

January 29, 2021, 07:20 AM

Filed Under: Corporate Earnings

Related: COVID-19, Jeffrey Hilzinger, Marlin Business Services, Originations

Marlin Business Services Corp. reported fourth quarter 2020 net income of $15.3 million compared with net income of $2.7 million in the prior quarter, and net income of $8.4 million in the fourth quarter a year ago.

Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “Despite the unprecedented operating challenges and macro-economic uncertainty encountered throughout most of 2020 from the COVID-19 pandemic, Marlin finished the year with strong results in the fourth quarter. I am particularly pleased with the continued improvement in our portfolio performance and outlook, which supported a significant net release in loss reserves established earlier in the year. The performance of our portfolio improved throughout the fourth quarter with delinquencies and net charge-offs during the month of December trending in-line with pre-pandemic levels. While favorable macro-economic developments and our portfolio’s performance during the quarter contributed to our reserve release, we believe our allowance for loan losses of $44.2 million reflects the continuing near-term uncertainty of the macro-economic environment. In addition to the performance of the portfolio, I am also pleased with the progress we made during the quarter in growing our origination volume as the Company’s reorganized origination platforms continued to gain traction. Importantly, the operating results we delivered in the fourth quarter increased our book value per share to $16.40 as of December 31st, up $1.17, or nearly 8 percent from the prior quarter, and our capital position remains strong with a reserve coverage ratio of 5.09 percent and a total risk-based capital ratio of 24.04 percent.”

Hilzinger concluded, “In light of the challenges we faced in 2020, I am very pleased with how we managed the impact of the pandemic and generated profitability on a full-year basis for 2020, which has now allowed us to increasingly focus on growing origination volume. As we look forward to 2021, given our strong capital position, our improved cost profile, the growing benefits from our digital initiative and the traction we are achieving in our re-organized origination platform, we believe Marlin is well-positioned to resume a trajectory of profitable growth as we emerge from the pandemic and as the small business economy improves.”

Fourth Quarter Summary

Net income of $15.3 million up from $8.4 million a year ago and up from $2.7 million last quarter.
Total 30+ day delinquencies were 1.63 percent, up from 1.40 percent prior year, but down from 2.15 percent in the third quarter; annualized net charge-offs of 2.57 percent, compared with 4.54 percent in the prior quarter and 3.00 percent in the fourth quarter last year.
Non-interest expense of $14.8 million for the fourth quarter decreased 9.6 percent or $1.6 million from $16.4 million for the prior year quarter.
Total sourced origination volume of $84.1 million, up 22.8 percent from the prior quarter but down 64.5 percent year-over-year. Average total finance receivables were $869.6 million, down 15.9 percent year-over-year.
Loss provision net benefit of $12.7 million with ending allowance for credit losses of $44.2 million; allowance as a percentage of receivables was 5.07 percent for equipment finance and 6.02 percent for working capital, down from prior quarter percentages of 6.57 percent for equipment finance and 13.06 percent for working capital.

Full Year 2020 Summary

Net income of $0.3 million, down from $27.1 million a year ago. Net income on an adjusted basis of $3.4 million, down from $27.2 million in the prior year.
Net Investment in Leases and Loans totaled $825.1 million, compared with $1.0 billion a year ago, and total managed assets ended the fourth quarter at $1.1 billion, compared with $1.3 billion a year ago.
Total sourced origination volume of $377.1 million, down 57.0 percent from a year ago; Direct origination volume of $61.5 million, down 66.7 percent year-over-year.

Results of Operations
Total sourced origination volume for the fourth quarter of $84.1 million was down 64.5 percent from a year ago. Direct origination volume of $8.7 million in the fourth quarter was down 82.8 percent from $50.4 million in the fourth quarter of 2019. Indirect origination volume in the fourth quarter of 2020 was $74.4 million, down 55.7 percent from $167.7 million in the fourth quarter last year. Marlin did not originate any assets for sale in the fourth quarter, compared with $16.3 million in the fourth quarter last year. Referral volume totaled $1.0 million, down from $2.0 million in the fourth quarter last year. Net Investment in Leases and Loans was $825.1 million, down 18.0 percent from fourth quarter last year, while total managed assets stood at approximately $1.1 billion, down 21.7 percent from the fourth quarter last year.

See the full release here.