MRLN Marlin Business Services Corporation

Marlin Business Services Corp. (NASDAQ: MRLN), a nationwide provider of capital solutions to small businesses (“Marlin” or the “Company”), today reported third quarter 2020 net income of $2.7 million, or $0.23 per diluted share, compared with net loss of $5.9 million, or $0.50 per diluted share in the prior quarter, and net income of $7.4 million, or $0.60 per diluted share a year ago.

Commenting on the Company’s results, Jeffrey A. Hilzinger, Marlin’s President and CEO, said, “Given the significant challenges we faced in the first half of 2020 arising from the COVID-19 pandemic, I am very pleased with the resiliency of our business and our return to profitability in the third quarter. Due to significantly improving portfolio performance and outlook, coupled with the benefits from the cost reductions we implemented earlier in the year, we generated net income of $2.7 million, or $0.23 per diluted share and adjusted net income of $3.2 million, or $0.27 per diluted share. Portfolio performance improved throughout the third quarter and has continued into the fourth quarter. Given these trends, the assumptions underlying our loss reserves have been more informed by our actual experience and our capital position remains strong as we ended the quarter with increased reserve coverage, a total risk-based capital ratio of 22.49%% and book value of $15.23 per share.”

Mr. Hilzinger concluded, “Third quarter total sourced origination volume of $68.5 million was impacted by a number of factors including the disruption caused by the restructuring of our front-office operations, reduced customer demand and lower approval rates from tightened underwriting standards. As we look ahead, we believe that our strong balance sheet and the investments we are making in our digital origination platform put us in a great position to best serve our partners and customers and to take full advantage of the increased demand for small business financing as the economy recovers.”

Results of OperationsTotal sourced origination volume for the third quarter of $68.5 million was down 66.0% from a year ago. Direct origination volume of $8.4 million in the third quarter was down 79.8% from $41.6 million in the third quarter of 2019. Indirect origination volume in the third quarter of 2020 was $58.8 million, down 57.9% from $139.5 million in the third quarter last year. Assets originated for sale in the third quarter were not significant, compared with $18.2 million in the third quarter last year. Referral volume totaled $1.3 million, down from $2.4 million in the third quarter last year. Net Investment in Leases and Loans was $847 million, down 18.2% from third quarter last year, while our total managed assets stood at approximately $1.2 billion, down 14.7% from the third quarter last year.

Net interest and fee margin as a percentage of average finance receivables was 8.87% for the third quarter, up 19 basis points from the second quarter of 2020 and down 68 basis points from a year ago. The sequential quarter increase was driven primarily by an increase in new origination loan and lease yields, higher fee income, and a decrease in interest expense resulting from lower deposit rates. The year-over-year decrease in margin percentage was primarily related to the decrease in new origination loan and lease yields, the change in the presentation of residual income driven by the adoption of CECL, and portfolio mix, partially offset by a decrease in interest expense resulting from lower deposit rates. During 2019 and prior periods, residual income was presented in fee income; however, effective in the first quarter 2020, residual income is included in the future cash flows used to assess credit losses and therefore this activity is reflected in the allowance for credit losses. The Company’s interest expense as a percent of average total finance receivables was 203 basis points in the third quarter of 2020 compared with 222 basis points for the prior quarter and 250 basis points for the third quarter of 2019, resulting from lower rates and a shift in mix, as higher rate long-term debt pays down.

On an absolute basis, net interest and fee income was $20.5 million for the third quarter of 2020 compared with $25.0 million in the third quarter last year.

The provision for credit losses was $7.2 million in the third quarter of 2020, compared to $18.8 million in the second quarter of 2020, and $7.7 million in the third quarter of 2019.   In the third quarter of 2020, our net change in expected impacts from COVID-19 on our portfolio and estimated credit losses was not significant compared to the prior quarters of this year.

Non-interest income was $4.2 million for the third quarter of 2020, compared with $3.8 million in the prior quarter and $10.4 million in the prior year period. The sequential increase in non-interest income is primarily due to the increase in reserves for property tax receivables in the prior quarter. The year-over-year decrease in non-interest income is primarily due to a $6.4 million decrease in gains from the sale of assets. Non-interest expense was $14.2 million for the third quarter of 2020, compared with $13.5 million in the prior quarter and $17.0 million in the third quarter of 2019. The sequential quarter increase was primarily due to an intangible assets impairment charge of $1.0 million in the third quarter associated with the Company’s past acquisition of Fleet Financing Resources (FFR), as well as higher Salaries and Benefits expense primarily driven by an adjustment in the second quarter to reduce Incentive compensation probable payout, partially offset by a decrease in general and administrative expenses due to a $1.4 million reduction in the estimated liability for contingent consideration related to the FFR acquisition. The year-over-year decrease was primarily due to a $2.4 million reduction in Salaries and Benefits expense due to lower commission on lower origination volumes and lower incentive compensation driven by company performance, along with the aforementioned offsetting amounts related to FFR that only impacted 2020.

The Company’s efficiency ratio for the third quarter was 57.6% compared with 48.0% in the third quarter last year. Excluding the impact of certain non-GAAP adjustments, the Company’s efficiency ratio on an adjusted basis* for the third quarter was 53.4% compared with 46.1% in the third quarter of 2019.

Marlin recorded a $0.5 million tax expense in the third quarter, representing an effective tax rate of 16.1%. The lower effective tax rate during the quarter was due to the partial recapture of previously capped income tax benefit. In the second quarter of 2020, the Company recorded a $1.4 million tax benefit representing an effective tax rate of 18.9% due to a $0.6 million discrete reduction in the income tax benefit resulting from interim tax financial reporting requirements, and in the third quarter of 2019, the Company recorded $3.3 million of tax expense, representing an effective tax rate of 30.6%. The higher effective tax rate in the third quarter of 2019 reflects changes in state statutory rates and related revaluation of deferred tax as well as the establishment of a valuation allowance against certain net operating loss carryforwards that are not expected to be utilized.

Portfolio PerformanceAllowance for credit losses as a percentage of total finance receivables was 6.75% at September 30, 2020 compared with 6.53% at June 30, 2020. In addition, under the incurred loss allowance model in 2019, the percentage was 1.86% at September 30, 2019.

For the three months ended September 30, 2020, the Company recorded a $7.2 million provision for credit losses, which was $0.5 million lower than the $7.7 million provision recognized for the three months ended September 30, 2019 and $11.6 million lower than the $18.8 million recognized in the second quarter of 2020. In the third quarter of 2020, our net change in expected impacts from COVID-19 on our portfolio and estimated credit losses was not significant compared to the prior quarters of this year.

As a result of the ongoing impact from COVID-19, through the end of the third quarter the Company has completed over 5,200 loan and lease restructure requests from customers who have been impacted by the pandemic. As of September 30, 2020, the Company had $129.9 million total receivables that were part of this program, or 14.3% of total net investment, or $117.6 million (13.4%) Equipment Finance and $12.2 million (46.1%) of Working Capital. In the third quarter, we processed new modifications for 406 contracts, or $9.4 million net investment, and we extended the modification period for 319 contracts with $16.4 million net investment.

Through the end of the third quarter, $109.1 million (84%) of modified contracts are out of the deferral period, and the current deferral period will expire for substantially all the remaining modified contracts before December 31, 2020. As of the end of the third quarter we have stopped taking new applications for modifications, although we may consider offering extensions in select cases as part of our loss mitigation strategies.

We are closely monitoring the performance of the modified contracts as their deferral period expires. The following table outlines the delinquency status of the Company’s portfolio as of September 30, 2020, including information on restructured contracts in deferral, and restructured contracts that have resumed scheduled payment. Modified contracts are reported in our delinquency and non-accrual data based on their status with respect to their modified terms.

	Net Investment (in thousands)											Delinquency Rate by population
		30		60	90+		Current		Total			30		60		90+		Current		Total
Equipment Finance
Out of deferral period(1)	$1,402		$1,646		$1,672		$94,905		$99,625			1.41	%	1.65	%	1.68	%	95.26	%	100	%
In deferral period		371		733		—		16,943		18,047		2.06	%	4.06	%	—		93.88	%	100	%
Restructured Portfolio		1,773		2,379		1,672		111,848		117,672		1.51	%	2.02	%	1.42	%	95.05	%	100	%
Non-Restructured		4,430		3,348		5,148		749,869		762,795		0.58	%	0.44	%	0.67	%	98.31	%	100	%
Total Equipment Finance	$6,203		$5,727		$6,820		$861,717		$880,467			0.70	%	0.65	%	0.77	%	97.87	%	100	%

	Net Investment (in thousands)											Delinquency Rate by population
		15		30	60+		Current		Total			15		30		60+		Current		Total
Working Capital
Out of deferral period(1)	$185		$207		$276		$8,820		$9,488			1.95	%	2.18	%	2.91	%	92.96	%	100	%
In deferral period(1)		38		65		34		2,585		2,722		1.40	%	2.39	%	1.25	%	94.96	%	100	%
Restructured Portfolio		223		272		310		11,405		12,210		1.83	%	2.23	%	2.54	%	93.40	%	100	%
Non-Restructured		41		127		68		14,026		14,262		0.29	%	0.89	%	0.48	%	98.34	%	100	%
Total Working Capital	$264		$399		$378		$25,431		$26,472			1.00	%	1.51	%	1.43	%	96.06	%	100	%

________________(1)   Contracts out of modification period reflect those that are no longer in the full or partial deferral period on or prior to September 30, 2020. For the in-deferral population of Equipment Finance, approximately 50% have full payment deferral, and the remainder have a partial payment during the deferral period. For Working Capital, substantially all contracts have a partial payment during deferral.Equipment Finance receivables over 30 days delinquent were 213 basis points as of September 30, 2020, down 177 basis points from June 30, 2020, and up 86 basis points from September 30, 2019. Working Capital receivables over 15 days delinquent were 393 basis points as of September 30, 2020, down 45 basis points from June 30, 2020, and up 204 basis points from September 30, 2019. Annualized third quarter total net charge-offs were 4.54% of average total finance receivables versus 3.47% in the second quarter of 2020 and 1.99% a year ago.

Portfolio Concentration We have a well-diversified portfolio across industries and geographical areas for both Equipment Finance and Working Capital. As more municipalities across the U.S. have reduced lockdowns and we have begun to remove our underwriting restrictions on industries and geographical areas, we have included the total industry concentration of our portfolio, as opposed to the highly impacted concentration. The following table reflects our portfolio concentrations by industry where net investment is in excess of 5% of the total portfolio as of September 30, 2020:

	Equipment Finance			Working Capital
Medical	13.5	%		8.6	%
Miscellaneous Services(1)	12.0	%		8.2	%
Retail	10.2	%		13.6	%
Construction	8.7	%		11.2	%
Restaurants	7.1	%		7.8	%
Professional Services	6.6	%		6.3	%
Manufacturing	5.9	%		9.9	%
Transportation	5.4	%		3.2	%
Auto Repair	3.3	%		6.1	%

________(1)   Miscellaneous Services is an amalgamation of service related SIC codes, the largest of which are Business Services, Repair Services, and Equipment Rental and Leasing.

Capital and LiquidityAs of September 30, 2020, the Company had $195.1 million of Cash and cash equivalents, an increase of $72.0 million from December 31, 2019. As of September 30, 2020, the Company had additional available liquidity of $84.3 million from lines of credit with financial institutions and the Federal Reserve discount window. There were no borrowings made on these additional sources of liquidity as of September 30, 2020 or subsequently.

As of September 30, 2020, the Company’s consolidated equity to assets ratio was 16.49 %. This compares to 15.13 % and 16.74 %, in the prior quarter and year ago quarter, respectively. The Company’s Total Risk-based capital ratio was 22.49% as of September 30, 2020, which was 14.49% above our minimum regulatory requirement.

Corporate DevelopmentsOn October 29, 2020, Marlin’s Board of Directors declared a $0.14 per share quarterly dividend. The dividend is payable on November 19, 2020, to shareholders of record on November 9, 2020. Based on the closing stock price on October 28, 2020, the annualized dividend yield on the Company’s common stock is 8.24%.

* Non-GAAP Financial Measures: Net income (loss) on an adjusted basis and adjusted efficiency ratio are financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP). See “Regulation G – Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below for a detailed description and reconciliation of such Non-GAAP financial measures to their most directly comparable GAAP financial measures, in accordance with Regulation G.

Conference Call and Webcast Marlin will host a conference call on Friday, October 30, 2020 at 9:00 a.m. ET to discuss the Company’s third quarter 2020 results. The conference call details are as follows:Third Quarter 2020 Financial Results Conference Call

Date:	Friday, October 30, 2020
Time:	9:00 a.m. Eastern Time / 6:00 a.m. Pacific Time
Dial-in:	1-877-407-0792 (Domestic)
	1-201-689-8263 (International)
Conference ID:	13710845
Webcast:	http://public.viavid.com/index.php?id=141614

For those unable to participate during the live broadcast, a replay of the call will also be available from 12:00 p.m. Eastern Time on October 30, 2020 through 11:59 p.m. Eastern Time on November 13, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13710845.

About Marlin Marlin is a nationwide provider of capital solutions to small businesses with a mission of helping small businesses fulfill their American dream. Our products and services are offered directly to small businesses and through financing programs with independent equipment dealers and other intermediaries. For more information about Marlin, visit marlincapitalsolutions.com or call toll free at (888) 479-9111.

Forward-Looking Statements This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements represent only the company’s current beliefs regarding future events and are not guarantees of performance or results. All forward-looking statements (including statements regarding expectations of future financial and operating results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” “may,” “could”, “intend” and similar expressions are generally intended to identify forward-looking statements. Economic, business, funding, market, competitive, legal and/or regulatory factors, among others (including but not limited to the impact of the COVID-19 pandemic), affecting our business are examples of factors that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these factors is contained under the headings “Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the United States Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are also available in the “Investors” section of our website. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on such forward-looking statements.

Regulation G – Non-GAAP Financial Measures The Company uses certain financial measures which are not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines net income on an adjusted basis as net income excluding after-tax income and expenses that are deemed to be unusual in nature or infrequent in occurrence and are not indicative of the underlying performance of the business for the period presented. The Company defines diluted earnings per share on an adjusted basis, return on average assets on an adjusted basis and return on average equity on an adjusted basis as the calculation used for the “as reported” number substituting net income as reported with net income on an adjusted basis while using the same denominator in the “as reported” number, where appropriate. The Company defines efficiency ratio on an adjusted basis as the calculation used for the “as reported” ratio adjusting the numerator for any discrete pre-tax adjustments used to present net income on an adjusted basis as well as the impact of pass-through lease expenses that are required to be presented on a gross basis in the income statement, acquisition related expense, and Rep and Warranty liability adjustments, as applicable. The Company adjusts the denominator in the “as reported” ratio for pass-through lease revenue that is required to be presented on a gross basis in the income statement, as applicable. The Company defines General and administrative annualized percent of average finance receivables, on an adjusted basis, as the calculation used for the “as reported” ratio, adjusting the numerator for any General and administrative discrete pre-tax adjustments used to present net income on an adjusted basis, acquisition related general and administrative expenses, Rep and Warranty liability adjustments, and pass-through lease expenses that are required to be presented on a gross basis in the income statement, as applicable. The adjusted ratio uses the same denominator as the “as reported” ratio. The Company defines Non-interest expense divided by average total managed assets, on an adjusted basis, as the calculation used for the “as reported” ratio adjusting the number for any non-interest expense discrete pre-tax adjustments used to present net income on an adjusted basis as well as the impact of pass-through lease expenses that are required to be presented on a gross basis in the income statement, acquisition related expenses, and Rep and Warranty liability adjustments, as applicable. The adjusted ratio uses the same denominator as the “as reported” ratio. The Company believes that these non-GAAP measures are useful performance metrics for management, investors and lenders, because it provides a means to evaluate period-to-period comparisons of the Company's financial performance without the effects of certain adjustments in accordance with GAAP that may not necessarily be indicative of current operating performance.

Non-GAAP financial measures should not be considered as an alternative to GAAP financial measures. They may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Investor Contacts:Mike Bogansky, Senior Vice President & Chief Financial Officer856-505-4108

Lasse Glassen, Addo Investor Relationslglassen@addoir.com 424-238-6249

-Tables to Follow--

Marlin Business Services Corp. and SubsidiariesConsolidated Balance Sheets (Unaudited)(Dollars in thousands, except share amounts)
		September 30,				December 31,
		2020				2019
ASSETS
Cash and due from banks		$	5,436			$	4,701
Interest-earning deposits with banks			189,696				118,395
Total cash and cash equivalents			195,132				123,096
Time deposits with banks			8,456				12,927
Restricted interest-earning deposits			5,771				6,931
Investment securities			10,761				11,076
Net investment in leases and loans:
Leases			357,500				426,608
Loans			550,553				601,607
Net investment in leases and loans, excluding allowance for credit losses			908,053				1,028,215
Allowance for credit losses			(61,325	)			(21,695	)
Total net investment in leases and loans			846,728				1,006,520
Intangible assets			5,846				7,461
Goodwill			—				6,735
Operating lease right-of-use assets			7,729				8,863
Property and equipment, net			8,422				7,888
Property tax receivables, net of allowance			8,580				5,493
Other assets			8,526				10,453
Total assets		$	1,105,951			$	1,207,443
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits		$	823,707			$	839,132
Long-term borrowings			39,833				76,091
Operating lease liabilities			8,790				9,730
Other liabilities:
Sales and property taxes payable			5,706				2,678
Accounts payable and accrued expenses			25,533				34,028
Net deferred income tax liability			20,032				30,828
Total liabilities			923,601				992,487
Stockholders’ equity:
Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued			—				—
Common Stock, $0.01 par value; 75,000,000 shares authorized; 11,974,651 and
12,113,585 shares issued and outstanding at September 30, 2020 and December 31, 2019,			120				121
respectively
Additional paid-in capital			75,893				79,665
Accumulated other comprehensive income (loss)			93				58
Retained earnings			106,244				135,112
Total stockholders’ equity			182,350				214,956
Total liabilities and stockholders’ equity		$	1,105,951			$	1,207,443

Marlin Business Services Corp. and SubsidiariesConsolidated Statements of Operations (Unaudited)(Dollars in thousands, except share amounts)
				Three Months Ended September 30,						Nine Months Ended September 30,
				2020			2019			2020				2019
Interest income				$	22,398		$	27,708		$	73,111			$	80,673
Fee income					2,803			3,869			8,019				11,418
	Interest and fee income				25,201			31,577			81,130				92,091
Interest expense					4,694			6,561			15,802				18,931
	Net interest and fee income				20,507			25,016			65,328				73,160
Provision for credit losses					7,204			7,662			51,160				17,781
	Net interest and fee income after provision for credit losses				13,303			17,354			14,168				55,379
Non-interest income:
	Gain on leases and loans sold				87			6,456			2,426				13,400
	Insurance premiums written and earned				2,082			2,230			6,612				6,538
	Other income				2,044			1,676			11,172				10,573
	Non-interest income				4,213			10,362			20,210				30,511
Non-interest expense:
	Salaries and benefits				8,515			10,897			25,702				34,817
	General and administrative				4,717			6,092			24,169				25,514
	Goodwill impairment				—			—			6,735				—
	Intangible assets impairment				1,016			—			1,016				—
		Non-interest expense			14,248			16,989			57,622				60,331
			Income (loss) before income taxes		3,268			10,727			(23,244	)			25,559
Income tax expense (benefit)					525			3,281			(8,284	)			6,857
			Net income (loss)	$	2,743			7,446			(14,960	)			18,702
Basic (loss) earnings per share				$	0.23		$	0.61		$	(1.27	)		$	1.52
Diluted (loss) earnings per share				$	0.23		$	0.60		$	(1.27	)		$	1.51

Marlin Business Services Corp. and SubsidiariesReconciliation of GAAP to Non-GAAP Financial Measures(Dollars in thousands, except share amounts)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Net income (loss) as reported	$ 2,743				$ 7,446				$ (14,960)				$ 18,702
Deduct:
Goodwill impairment		—				—				(6,735)				—
Intangible assets impairment		(1,016)				—				(1,016)				—
Charge in connection with workforce reorganization		(836)				—				(1,713)				(311)
Charge in connection with office lease termination		(190)				—				(414)				—
Acquisition earn out valuation adjustment		1,435				—				1,435				—
Reversal of charges in connection with executive separation		—				—				—				218
Tax effect		152				—				2,108				24
Total adjustments, net of tax		(455)				—				(6,335)				(69)
Net tax benefit resulting from the CARES Act of 2020		—				—				3,256				—
Net income (loss) on an adjusted basis	$ 3,198				$ 7,446				$ (11,881)				$ 18,771
Diluted earnings (loss) per share
As reported	$0.23				$0.60				($1.27		)		$1.51
As adjusted	$0.27				$0.60				($1.01		)		$1.52
Return on Average Assets
As reported		0.98%				2.34%				-1.68%				2.00%
As adjusted		1.14%				2.34%				-1.33%				2.01%
Return on Average Equity
As reported		6.00%				14.58%				-10.31%				12.38%
As adjusted		6.99%				14.58%				-8.19%				12.43%
Efficiency Ratio numerator as reported	$ 14,248				$ 16,989				$ 57,622				$ 60,331
Adjustments to Numerator:
Expense adjustments as seen in Net Income reconciliation		(607)				—				(8,443)				(93)
Acquisition related expenses		(286)				(670)				(957)				(2,142)
Rep & Warranty liability adjustment		(175)				—				(982)				—
Pass-through expenses		(49)				(9)				(6,063)				(6,251)
Efficiency ratio numerator on an adjusted basis	$ 13,131				$ 16,310				$ 41,177				$ 51,845
Efficiency Ratio denominator as reported	$ 24,720				$ 35,378				$ 85,538				$ 103,671
Adjustments to Denominator:
Pass-through revenue		(122)				42				(5,247)				(5,680)
Efficiency Ratio denominator on an adjusted basis	$ 24,598				$ 35,420				$ 80,291				$ 97,991
Efficiency Ratio
As reported		57.64%				48.02%				67.36%				58.19%
As adjusted		53.38%				46.05%				51.28%				52.91%

Marlin Business Services Corp. and SubsidiariesReconciliation of GAAP to Non-GAAP Financial Measures(Dollars in thousands, except share amounts)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
Non-interest Expense / Average total managed assets numerator, as reported	$	14,248			$	16,989			$	57,622			$	60,331
Adjustments to Numerator:
Expense adjustments as seen in Net Income reconciliation		(607)				—				(8,443)				(93)
Acquisition related expenses		(286)				(670)				(957)				(2,142)
Rep & Warranty liability adjustment		(175)				—				(982)				—
Pass-through expenses		(49)				(9)				(6,063)				(6,251)
Non-interest Expense / Average total managed assets numerator, on an adjusted basis	$	13,131			$	16,310			$	41,177			$	51,845
Non-interest Expense / Average total managed assets
As reported		4.74%				5.32%				6.22%				6.55%
As adjusted		4.36%				5.10%				4.44%				5.63%
General and administrative expense Annualized % of
Avg. Fin. Receivables numerator, as reported	$	4,717			$	6,092			$	24,169			$	25,514
Adjustments to Numerator:
Expense adjustments as seen in Net Income reconciliation		1,245				—				1,021				—
Acquisition related expenses		(200)				(230)				(599)				(700)
Rep & Warranty liability adjustment		(175)				—				(982)				—
Pass-through expenses		(49)				(9)				(6,063)				(6,251)
General and administrative expense Annualized % of
Avg. Fin. Receivables numerator, as adjusted	$	5,538			$	5,853			$	17,546			$	18,563
General and administrative expense Annualized % of
Average Finance Receivables
As reported		2.04%				2.32%				3.32%				3.31%
As adjusted		2.40%				2.23%				2.41%				2.41%

Marlin Business Services Corp. and SubsidiariesSupplemental Quarterly Data(Dollars in thousands, except share amounts)
	Q3 2019					Q4 2019					Q1 2020					Q2 2020					Q3 2020
Net Income (Loss)		$7,446					$8,414					($11,821)					($5,882)					$2,743
Annualized Performance Measures:
Return on Average Assets			2.34%					2.74%					-3.98%					-1.88%					0.98%
Return on Average Stockholders' Equity			14.58%					16.04%					-22.75%					-12.41%					6.00%
EPS Data:
Net Income Allocated to Common Stock		$7,357					$8,313					($11,821)					($5,882)					$2,707
Basic Earnings (loss) per Share		$0.61					$0.69					($1.00)					($0.50)					$0.23
Diluted Earnings (loss) per Share		$0.60					$0.69					($1.00)					($0.50)					$0.23
Number of Shares - Basic	12,054,944					11,996,446					11,876,147					11,760,479					11,791,141
Number of Shares - Diluted	12,167,962					12,118,193					11,876,147					11,760,479					11,832,413
Cash Dividends Declared per share		$0.14					$0.14					$0.14					$0.14					$0.14
New Asset Production:
Direct Originations		$41,556					$50,421					$37,821					$6,617					$8,381
Indirect Originations		$139,472					$167,740					$113,760					$58,802					$58,736
Total Originations (1)		$181,028					$218,161					$151,581					$65,419					$67,117
Equipment Finance Originations		$154,781					$186,852					$127,681					$64,572					$65,764
Working Capital Loans Originations		$26,247					$31,309					$23,900					$847					$1,353
Total Originations (1)		$181,028					$218,161					$151,581					$65,419					$67,117
Assets originated for sale in the period		$18,174					$16,344					$3,301					$1,135					$62
Assets referred in the period		$2,408					$1,961					$2,509					$664					$1,297
Total Sourced Originations (1)		$201,610					$236,466					$157,391					$67,218					$68,476
Implicit Yield on Loans Originated:
Total (1)			13.38%					12.43%					12.45%					9.16%					9.34%
Direct			24.38%					23.20%					21.69%					13.80%					15.76%
Indirect			10.10%					9.19%					9.39%					8.64%					8.42%
Equipment Finance			9.57%					8.91%					8.95%					8.80%					8.77%
Working Capital			35.81%					33.51%					31.16%					36.75%					36.62%
Paycheck Protection Program Loans Originated			—					—					—				$4,178					$202
Implicit Yield on PPP Loans Originated			—					—					—					4.56%					2.76%
Assets sold in the period		$85,425					$114,483					$22,929					$1,127					$4,286
# of Leases / Loans Equipment Finance			6,836					7,279					5,863					3,178					3,410
Equipment Finance Approval Percentage			53%					54%					46%					37%					40%
Average Monthly Equipment Finance Sources			1,067					1,033					932					518					547

_________________      (1)    Excludes Paycheck Protection Program (PPP) Loans Originated.

Marlin Business Services Corp. and SubsidiariesSupplemental Quarterly Data(Dollars in thousands, except share amounts)
	Q3 2019				Q4 2019				Q1 2020					Q2 2020				Q3 2020
Net Interest and Fee Margin Percentage
of Average Total Finance Receivables:
Interest Income		10.57%				10.34%					10.49%				9.90%				9.69%
Fee Income (4)		1.48%				1.46%					1.10%				1.00%				1.21%
Interest and Fee Income		12.05%				11.80%					11.59%				10.90%				10.90%
Interest Expense		2.50%				2.36%					2.25%				2.22%				2.03%
Net Interest and Fee Margin (NIM)		9.55%				9.44%					9.34%				8.68%				8.87%
Cost of Funds (2)		2.63%				2.57%					2.50%				2.17%				2.13%
Interest Income Equipment Finance	$22,355				$21,620				$21,076					$19,985				$19,719
Interest Income Working Capital		4,389				4,545					4,932				4,095				2,526
Average Total Finance Receivables	$1,048,798				$1,034,464				$1,008,823					$979,313				$924,635
Average Net Investment Equipment Finance		995,346				977,225					947,696				928,210				886,990
Average Working Capital Loans		53,452				57,239					61,127				51,103				33,696
End of Period Net Investment in leases and loans,
net of allowance:
Equipment Finance	$980,799				$947,477				$918,264					$876,919				$823,712
Working Capital		53,699				59,043					51,812				34,116				23,016
Total Owned Leases and Loans (3)		1,034,498				1,006,520					970,076				911,035				846,728
Assets Serviced for Others		264,226				341,064					328,252				296,401				261,144
Total Managed Assets	$1,298,724				$1,347,584				$1,298,328					$1,207,436				$1,107,872
Average Total Managed Assets	$1,278,394				$1,314,728				$1,343,862					$1,292,052				$1,203,502
Restructured Receivables:
Payment Deferral Modification Program:
Equipment Finance		—				—			$12,530					$115,941				$117,672
Working Capital		—				—					6,987				17,876				12,210
Total - $		—				—			$19,517					$133,817				$129,882
Total - as a % of Ending Finance Receivables		—				—					2.0%				13.7%				14.3%
Total - # of Active Modified Contracts		—				—					520				5,017				5,237
Other Restructured Contracts	$2,323				$2,668				$	$3,096				$1,751				$1,035

_________________(2) COF is defined as interest expense for the period divided by average interest-bearing liabilities, annualized

(3) Net investment in total finance receivables includes net investment in Equipment finance leases and loans and Working Capital loans.

(4) Effective January 1, 2020, in connection with the adoption of ASU 2016-13 “CECL”, residual income is no longer recorded as a component of fee income and instead is presented within the allowance for loan loss.

Marlin Business Services Corp. and SubsidiariesSupplemental Quarterly Data(Dollars in thousands, except share amounts)
	Q3 2019					Q4 2019					Q1 2020					Q2 2020					Q3 2020
Portfolio Asset Quality
Allowance
Total		$19,211					$21,695					$52,060					$63,644					$61,325
% of Total Finance Receivables			1.86%					2.15%					5.09%					6.53%					6.75%
Equipment Finance		$17,115					$19,796					$44,860					$55,682					$57,869
% of Net Investment Equipment Finance			1.75%					2.09%					4.66%					5.97%					6.57%
Working Capital		$2,096					$1,899					$7,200					$7,962					$3,456
% of Total Working Capital Loans			3.80%					3.14%					12.20%					18.92%					13.06%
Net Charge-Offs
Total		$5,228					$7,771					$7,846					$8,494					$10,488
% on Avg. Finance Receivables, Annualized			1.99%					3.00%					3.11%					3.47%					4.54%
Equipment Finance		$5,038					$6,634					$6,603					$7,872					$9,956
% on Avg. Finance Receivables, Annualized			2.02%					2.72%					2.79%					3.39%					4.49%
Working Capital		$190					$1,137					$1,243					$622					$532
% on Avg. Finance Receivables, Annualized			1.42%					7.95%					8.13%					4.87%					6.32%
Delinquency
Total Finance Receivables:
30+ Days Past Due			1.27%					1.40%					1.79%					3.83%					2.15%
60+ Days Past Due			0.83%					0.83%					1.00%					2.46%					1.42%
Equipment Finance:
30+ Days Past Due			1.27%					1.40%					1.82%					3.90%					2.13%
60+ Days Past Due			0.87%					0.86%					1.05%					2.52%					1.42%
Working Capital:
15+ Days Past Due			1.89%					1.75%					2.55%					4.38%					3.93%
30+ Days Past Due			1.34%					1.42%					1.14%					2.68%					2.94%

Marlin Business Services Corp. and SubsidiariesSupplemental Quarterly Data(Dollars in thousands, except share amounts)
	Q3 2019					Q4 2019					Q1 2020					Q2 2020					Q3 2020
Delinquency (continued)
Total Finance Receivables:
30+ Days Past Due		$13,130					$14,081					$18,249					$37,347					$19,527
60+ Days Past Due		$8,542					$8,383					$10,220					$24,015					$12,925
Equipment Finance:
30+ Days Past Due		$12,390					$13,226					$17,576					$36,217					$18,750
60+ Days Past Due		$8,515					$8,112					$10,156					$23,353					$12,546
Working Capital:
15+ Days Past Due		$1,043					$1,058					$1,504					$1,843					$1,041
30+ Days Past Due		$740					$855					$673					$1,130					$777
Non-Accrual
Total			0.68%					0.55%					0.66%					1.13%					0.92%
Equipment Finance			0.65%					0.49%					0.62%					1.06%					0.82%
Working Capital			1.34%					1.57%					1.28%					2.83%					4.32%
Total (5)		$7,047					$5,592					$6,705					$11,031					$8,375
Equipment Finance		$6,307					$4,646					$5,950					$9,842					$7,231
Working Capital		$740					$946					$755					$1,189					$1,144

_________________(5)   Non-Accrual as of September 30, 2020 includes $1.8 million of Equipment Finance restructured contracts and $0.8 million of Working Capital restructured contacts.

Marlin Business Services Corp. and SubsidiariesSupplemental Quarterly Data(Dollars in thousands, except share amounts)
	Q3 2019					Q4 2019					Q1 2020					Q2 2020					Q3 2020
Expense Ratios
Salaries and Benefits Expense		$10,897					$9,351					$9,519					$7,668					$8,515
As a % of Avg. Fin. Receivables (annualized)			4.16%					3.62%					3.77%					3.13%					3.68%
Total personnel end of quarter			348					348					339					240					247
General and Administrative Expense		$6,092					$7,052					$13,605					$5,847					$4,717
As a % of Avg. Fin. Receivables (annualized)			2.32%					2.73%					5.39%					2.39%					2.04%
Adjusted General and Administrative Expense
As a % of Avg. Fin. Receivables (annualized) (6)			2.23%					2.40%					2.62%					2.21%					2.40%
Non-Interest Expense /
Average Total Managed Assets			5.32%					4.99%					8.89%					4.18%					4.74%
Adjusted Non-Interest Expense /
Average Total Managed Assets (7)			5.10%					4.56%					4.74%					3.75%					4.36%
Efficiency Ratio			48.02%					43.22%					83.51%					53.92%					57.64%
Adjusted Efficiency Ratio (7)			46.05%					40.23%					52.68%					47.58%					53.38%

_________________(6)   Adjusted general and administrative expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

(7)   Adjusted non-interest expense adjusts certain items, as defined in the reconciliation of GAAP to Non-GAAP financial measures. See schedule for details.

Marlin Business Services Corp. and SubsidiariesSupplemental Quarterly Data(Dollars in thousands, except share amounts)
	Q3 2019					Q4 2019					Q1 2020					Q2 2020					Q3 2020
Balance Sheet:
Assets
Investment in Leases and Loans		$1,032,868					$1,007,707					$1,002,611					$956,981					$891,940
Initial Direct Costs and Fees			20,841					20,508					19,525					17,698					16,113
Reserve for Credit Losses			(19,211)					(21,695)					(52,060)					(63,644)					(61,325)
Net Investment in Leases and Loans		$1,034,498					$1,006,520					$970,076					$911,035					$846,728
Cash and Cash Equivalents			132,461					123,096					211,070					211,706					195,132
Restricted Cash			7,576					6,931					6,474					6,072					5,771
Other Assets			72,881					70,896					75,917					67,402					58,320
Total Assets		$1,247,416					$1,207,443					$1,263,537					$1,196,215					$1,105,951
Liabilities
Deposits			869,257					839,132					941,996					902,191					823,707
Total Debt			91,739					76,091					62,193					50,890					39,833
Other Liabilities			77,633					77,264					70,858					62,130					60,061
Total Liabilities		$1,038,629					$992,487					$1,075,047					$1,015,211					$923,601
Stockholders' Equity
Common Stock		$122					$121					$119					$119					$120
Paid-in Capital, net			80,226					79,665					75,647					75,606					75,893
Other Comprehensive Income (Loss)			89					58					20					86					93
Retained Earnings			128,350					135,112					112,704					105,193					106,244
Total Stockholders' Equity		$208,787					$214,956					$188,490					$181,004					$182,350
Total Liabilities and
Stockholders' Equity		$1,247,416					$1,207,443					$1,263,537					$1,196,215					$1,105,951
Capital and Leverage:
Equity		$208,787					$214,956					$188,490					$181,004					$182,350
Debt to Equity			4.60					4.26					5.33					5.27					4.74
Equity to Assets			16.74%					17.80%					14.92%					15.13%					16.49%
Regulatory Capital Ratios:
Tier 1 Leverage Capital			15.28%					16.31%					16.18%					15.05%					16.92%
Common Equity Tier 1 Risk-based Capital			17.72%					18.73%					18.64%					19.33%					21.17%
Tier 1 Risk-based Capital			17.72%					18.73%					18.64%					19.33%					21.17%
Total Risk-based Capital			18.98%					19.99%					19.94%					20.65%					22.49%