Marlin Capital Solutions reported second quarter 2019 net income of $6.1 million, or $0.49 per diluted share, compared with $5.1 million, or $0.41 per diluted share in the prior quarter, and $6.5 million, or $0.52 per share a year ago.
Second quarter 2019 net income on an adjusted basis was $6.3 million, or $0.51 per diluted share, compared with $6.5 million or $0.52 per diluted share a year ago.
Commenting on the company’s results, Jeffrey A. Hilzinger, Marlin president and CEO, said, “Marlin delivered a productive second quarter highlighted by strong growth in origination volume, stable portfolio performance and improving profitability. Second quarter total sourced origination volume of $231.5 million increased 29% year-over-year, a record for a single quarter. Growth was strong in both our equipment finance and working capital loan products, and we continued to benefit from strong growth in both our direct and indirect origination channels. At quarter end, our net investment in leases and loans reached nearly $1.1 billion, up 10% from a year ago. Our portfolio of total managed assets, which includes assets we service for others, expanded to nearly $1.3 billion, an increase of 20% from the second quarter last year. Importantly, the credit quality of our portfolio remained stable and within expectations.”
Total sourced origination volume for the second quarter of $231.5 million was up 28.9% from a year ago. Direct origination volume of $49.0 million in the second quarter was up 34.9% from $36.3 million in the second quarter of 2018. Indirect origination volume in the second quarter of 2019 was $160.3 million, up 18.0% from $135.9 million in the second quarter last year. Assets originated for sale in the second quarter of $18.0 million compared with $1.8 in the second quarter last year. Referral volume totaled $4.1 million, down from $5.6 million in the second quarter last year.
Net interest and fee margin as a percentage of average finance receivables was 9.38% for the second quarter, down 21 basis points from the first quarter of 2019 and down 93 basis points from a year ago. The year-over-year decrease in margin percentage was primarily a result of an increase in interest expense resulting from higher deposit rates as well as the higher cost of funds associated with the securitization that was executed in the second half of 2018, partially offset by an increase of 71 basis points in new origination loan and lease yield.
On an absolute basis, net interest and fee income was $24.2 million for the second quarter of 2019 compared with $24.1 million for the second quarter last year.
Non-interest income was $7.2 million for the second quarter of 2019, compared with $12.9 million in the prior quarter and $4.6 million in the prior year period. The decrease compared with the prior quarter is primarily due to the company’s January 1, 2019 adoption of ASC 842 – Lease. The year-over-year increase in non-interest income is primarily due to an increase in gains-on-sale and an increase in insurance-related income.
Non-interest expense was $18.5 million for the second quarter of 2019, compared with $24.8 million in the prior quarter and $16.0 million in the second quarter last year. The decrease in non-interest expense compared with the prior quarter was primarily due to the aforementioned adoption of ASC 842, which increased non-interest expense by $6.2 million in the first quarter of 2019 due to the change in presentation of property taxes paid by the lessee to the lessor gross in the consolidated statement of operations. The year-over-year increase in non-interest expense is primarily due to higher employee related expenses and an increase in commissions tied to originations.
Subsequent to quarter end, Senior Vice President, General Counsel and Chief Compliance Officer, Edward Dietz announced his resignation. Dietz will remain with Marlin through the end of 2019 to assist in the transition of the company’s legal and compliance functions.
Commenting on Dietz’s resignation, Hilzinger said, “On behalf of the board and everybody at Marlin, we thank Ed for his contributions and many years of service to the organization. We wish him all the best in his future endeavors.”
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