Marlin Year-End Growth/ Utah Industrial Bank (in organization.)

Marlin Business Services Corporation, Mount Laurel, New Jersey filed their 2005 year-end financial statement with the Security Exchange Commission.

In it, they announce the opening of a new office in Salt Lake City, Utah, along with an Industrial bank:

“We also believe that we can increase originations in certain regions of the country by establishing offices in identified strategic locations. Other regional offices are located in or near Atlanta, Georgia, Chicago, Illinois and Denver, Colorado. We expect to open our fourth regional office in Salt Lake City, Utah during 2006. Our Salt Lake City office would also house Marlin Business Bank (in organization) subject to regulatory approval and becoming operational.

Leases per state:

“Of our 296 total employees as of December 31, 2005, we employed 103 sales account executives, each of whom receives a base salary and earns commissions based on their lease originations. We also employed six employees dedicated to marketing as of December 31, 2005.

“We finance over 60 categories of commercial equipment important to our end user customers, including copiers, telecommunications equipment, water filtration systems, computers, and certain commercial and industrial equipment. Our average lease transaction was approximately $9,000 at December 31, 2005, and we typically do not exceed $200,000 for any single lease transaction. This segment of the equipment leasing market is commonly known in the industry as the small-ticket segment.

Portfolio Overview

At December 31, 2005, we had 103,278 active leases in our portfolio, representing an aggregate minimum lease payments receivable of $660.9 million. With respect to our portfolio at December 31, 2005:

• the average original lease transaction was $9,032, with an average remaining balance of $6,401;
• the average original lease term was 46 months;
• our active leases were spread among 82,479 different end user customers, with the largest single end user customer accounting for only 0.05% of the aggregate minimum lease payments receivable;
• over 74.5% of the aggregate minimum lease payments receivable were with end user customers who had been in business more than five years;
• the portfolio was spread among 10,927 origination sources, with the largest source accounting for only 1.5% of the aggregate minimum lease payments receivable, and our nine largest origination sources accounting for only 7.3% of the aggregate minimum lease payments receivable;
• there were 70 different equipment categories financed, with the largest categories set forth below, as a percentage of the December 31, 2005 aggregate minimum lease payments receivable:

“We access our end user customers through origination sources comprised of our existing network of over 9,200 independent commercial equipment dealers and, to a lesser extent, through relationships with lease brokers and direct solicitation of our end user customers. We use a highly efficient telephonic direct sales model to market to our origination sources. Through these origination sources, we are able to deliver convenient and flexible equipment financing to our end user customers.

“Our typical financing transaction involves a non-cancelable, full-payout lease with payments sufficient to recover the purchase price of the underlying equipment plus an expected profit. As of December 31, 2005, we serviced approximately 103,000 active equipment leases having a total original equipment cost of $932.8 million for approximately 82,000 end user customers.

“The small-ticket equipment leasing market is highly fragmented. We estimate that there are up to 75,000 independent equipment dealers who sell the types of equipment we finance. We focus primarily on the segment of the market comprised of the small and mid-size independent equipment dealers. We believe this segment is underserved because: 1) the large commercial finance companies and large commercial banks typically concentrate their efforts on marketing their products and services directly to equipment manufacturers and larger distributors, rather than the independent equipment dealers; and 2) many smaller commercial finance companies and regional banking institutions have not developed the systems and infrastructure required to adequately service these equipment dealers on high volume, low-balance transactions. We focus on establishing our relationships with independent equipment dealers to meet their need for high quality, convenient point-of-sale lease financing.”

Net income was $16.2 million for the year ended December 31, 2005. This represented a $2.7 million, or 20.0%, increase from $13.5 million net income reported for the year ended December 31, 2004. Our increased earnings are primarily the result of growth and improved net interest and fee margins in our core leasing business. During the third quarter of 2005, the Company increased its reserves for expected credit losses based on its initial assessments of exposure to areas significantly impacted by Hurricane Katrina (such as New Orleans). The impact of this increase in reserves was a reduction of approximately $753,000 in net income for the year 2005.

Diluted net income per share was $1.36 for the year ended December 31, 2005 and $1.15 for the year ended December 31, 2004.

For the year ended December 31, 2005, we generated 32,754 new leases at a cost of $318.5 million compared to 31,818 new leases at a cost of $272.2 million for the year ended December 31, 2004. The weighted average implicit interest rate on new leases originated was 12.75% for the year ended December 31, 2005 compared to 13.82% for year ended December 31, 2004. Overall, the net investment in direct financing leases grew 16.9%, to $572.6 million at December 31, 2005 from $489.7 million at December 31, 2004. Returns on average assets were 2.57% for the year ended December 31, 2005 and 2.54% for the year ended December 31, 2004. Returns on average equity were 15.96% for the year ended December 31, 2005 and 16.47% for the year ended December 31, 2004. Our debt to equity ratio was 4.59:1 at December 31, 2005 compared to 4.81:1 at December 31, 2004.

http://www.leasingnews.org/Pages/Marlin_YE_net_inv.htm

full financial filing available here: