Marlin Business Services Corp. (NASDAQ:MRLN) Q3 2019 Earnings Conference Call - Final Transcript

Nov 01, 2019 • 09:00 am ET


Marlin Business Services Corp. (NASDAQ:MRLN) Q3 2019 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the Marlin Business Services Third Quarter 2019 Financial Results Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host, Lasse Glassen, with Addo Investor Relations. Thank you, sir. You may begin.

Lasse Glassen

Good morning, and thank you for joining us today for Marlin Business Services Corp.'s 2019 third quarter results conference call.

On the call today is Jeff Hilzinger, President and Chief Executive Officer; Lou Maslowe, Senior Vice President and Chief Risk Officer; and Mike Bogansky, Senior Vice President and Chief Financial Officer.

Before beginning today, let me remind you that some of the statements made on today's call will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors. We refer you to Marlin's recent filings with the SEC for a more detailed discussion of the risks that could impact the company's future operating results and financial condition.

With that, it's now my pleasure to turn the call over to Marlin's President and CEO, Jeff Hilzinger. Jeff?

Jeffrey A. Hilzinger

Thank you, Lasse. Good morning, and thank you, everyone, for joining us to discuss our 2019 third quarter results.

I'll begin with an overview of the key highlights from this past quarter along with an update on the continued execution of our strategy to transform Marlin from an equipment lessor into a nationwide provider of capital solutions to small businesses. Lou Maslowe, our Chief Risk Officer will comment on portfolio performance; and Mike Bogansky, our Chief Financial Officer will follow with additional details on our financial results and financial guidance for the remainder of the year.

During the third quarter, we delivered strong growth in earnings and double-digit growth in total sourced origination volume on a year-over-year basis. While there was only a modest increase in net charge-offs during the quarter, earnings growth was tempered by an increase in our allowance for credit losses due to an increase in delinquencies and a $936,000 specific provision related to fraudulent activities within a specific equipment dealer's portfolio.

Looking in more detail at total sourced originations, volume in the third quarter totaled $201.6 million, up 12.3% year-over-year. Year-to-date through the end of the third quarter, total sourced originations of $641.5 million are up 22.7%. Although volume growth was more moderate than during the first two quarters of the year, third quarter year-over-year growth was driven by both our Equipment Finance and Working Capital Loan products, as well as from both our direct and indirect origination channels.

While lease and loan application volume was up by more than 20%, growth in origination volume was below expectations in both the Equipment Finance and Working Capital Loan products as our approval and booking rates declined during the quarter. However, our capital markets execution was better than anticipated because we took advantage of favorable capital markets conditions and sold more loans and leases