For the year ended December 31, 2018, net income was $25.0 million, down from $25.3 million, in 2017. For the year ended December 31, 2018, adjusted net income increased 34.9% to $25.4 million, compared with $18.9 million, in the prior year.
Jeffrey A. Hilzinger, Marlin president and CEO, commented, “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.”
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.
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.
Other highlights for the full year of 2018 included:
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
Looking ahead to 2019, Marlin anticipates the following:
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
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