Marlin Business Services reported Q1/17 net income of $1.5 million. Before a one-time, net of tax charge of $2,717 million related to a reserve for restitution in connection with certain payment processing practices in effect prior to February 2016, Q1/17 net income on an adjusted basis was $4.3 million compared to $3.7 million for Q1/16.
The following highlights were excerpted from the news release:
“Our first quarter represented a great start to 2017 highlighted by strong origination volume, solid portfolio growth and good asset quality, along with excellent progress on our ‘Marlin 2.0’ initiative that we expect will help take the company to the next level of growth and profitability,” said Jeffrey A. Hilzinger, Marlin’s president and CEO.
“Total first quarter origination volume of $168.8 million increased 49% from a year ago and was 11% higher than the previous record established in the fourth quarter last year. During the quarter, we benefitted from continued strong customer demand for our Equipment Finance business, including meaningful contributions from the previously announced acquisition of Horizon Keystone Financial that we completed early in the first quarter. Funding Stream, our working capital loan business, continues to gain traction with $13.8 million, or 8.2%, of total first quarter originations. We also enjoyed solid growth from our Franchise and Transportation Finance businesses. In total, our Investment in Leases and Loans grew to a record $824.9 million, up 4% compared to the previous quarter and up almost 18% from a year ago. Importantly, our focus on maintaining disciplined underwriting standards continues to be a top priority and credit quality remained consistent with expectations.”
Hilzinger concluded, “As previously disclosed, one of Marlin Business Bank’s regulatory agencies communicated preliminary findings in connection with the timing of certain aspects of the payment application processes in effect prior to February 2016 related to the assessment of late fees. We believe that the resolution of this matter will require Marlin to pay restitution to customers. Our current estimate of such restitution is $4.2 million, which has been charged against first quarter earnings along with related professional service fees and costs. Consistent with our Marlin 2.0 initiative and strategy, we have a deep commitment to our customers and the Company’s new management team continues to diligently strive to enhance the governance and business processes we have in place. Further, because we revised our practices in February 2016, we do not believe this matter will have a negative impact on our operations going forward.”
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