##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2008
 Commission file number 000-50448
 MARLIN BUSINESS SERVICES CORP.
  Pennsylvania
    
    38-3686388(State of incorporation)
    
    (I.R.S. Employer Identification Number)
 
 
 þ o
  Large
accelerated
filer oAccelerated
filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
 Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 2008
 TABLE OF CONTENTS
 Page No.Part I  Financial Information
    
    
    2-39Item 1 Financial Statements
    
    
    2-18Consolidated Balance Sheets at September 30, 2008 (unaudited) and December 31, 2007
    
    
    2Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007 (unaudited)
    
    
    3Consolidated Statements of Stockholders Equity at September 30, 2008 (unaudited) and December 31, 2007
    
    
    4Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6-18Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18-39Item 3 Quantitative and Qualitative Disclosure about Market Risk
    
    
    39Item 4 Controls and Procedures
    
    
    39Part II  Other Information
    
    
    40-41Item 1 Legal Proceedings
    
    
    40Item 1A Risk Factors
    
    
    40Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 3 Defaults upon Senior Securities
    
    
    40Item 4 Submission of Matters to a Vote of Security Holders
    
    
    40Item 5 Other Information
    
    
    40Item 6 Exhibits
    
    
    41Signatures
    
    
    42CertificationsRULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICERRULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICERRULE
13a-14(b) CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
  1




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##### Table of Contents



PART I. Financial Information
 
 Item 1. Financial Statements
 
 MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Balance Sheets
 September 30,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands, except per-share data)(Unaudited)ASSETSCash and cash equivalents
    
    $
    17,151
    
    
    $
    34,347Restricted cash
    
    
    64,294
    
    
    
    141,070Net investment in leases and loans
    
    
    702,095
    
    
    
    765,938Property and equipment, net
    
    
    2,953
    
    
    
    3,266Property tax receivables
    
    
    562
    
    
    
    539Fair value of cash flow hedge derivatives
    
    
    
    
    
    
    4Other assets
    
    
    16,863
    
    
    
    14,490Total assets
    
    $
    803,918
    
    
    $
    959,654LIABILITIES AND STOCKHOLDERS EQUITYRevolving and term secured borrowings
    
    $
    565,914
    
    
    $
    773,085Deposits
    
    
    47,172
    
    
    
    Other liabilities:Fair value of cash flow hedge derivatives
    
    
    4,727
    
    
    
    4,760Sales and property taxes payable
    
    
    8,716
    
    
    
    5,756Accounts payable and accrued expenses
    
    
    10,079
    
    
    
    10,226Deferred income tax liability
    
    
    14,861
    
    
    
    15,682Total liabilities
    
    
    651,469
    
    
    
    809,509Commitments and contingenciesStockholders equity:Common Stock, $0.01 par value; 75,000,000 shares
authorized; 12,227,391 and 12,201,304 shares
issued and outstanding, respectively
    
    
    122
    
    
    
    122Preferred Stock, $0.01 par value; 5,000,000
shares authorized; none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    83,666
    
    
    
    84,429Stock subscription receivable
    
    
    (5
    )
    
    
    (7
    )Accumulated other comprehensive loss
    
    
    (2,182
    )
    
    
    (3,130
    )Retained earnings
    
    
    70,848
    
    
    
    68,731Total stockholders equity
    
    
    152,449
    
    
    
    150,145Total liabilities and stockholders equity
    
    $
    803,918
    
    
    $
    959,654
  2




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##### Table of Contents



MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands, except per-share data)(Unaudited)Income:Interest income
    
    $
    21,062
    
    
    $
    22,622
    
    
    $
    65,884
    
    
    $
    66,210Fee income
    
    
    5,855
    
    
    
    5,685
    
    
    
    17,013
    
    
    
    16,486Interest and fee income
    
    
    26,917
    
    
    
    28,307
    
    
    
    82,897
    
    
    
    82,696Interest expense
    
    
    8,790
    
    
    
    8,768
    
    
    
    28,396
    
    
    
    24,735Net interest and fee income
    
    
    18,127
    
    
    
    19,539
    
    
    
    54,501
    
    
    
    57,961Provision for credit losses
    
    
    8,602
    
    
    
    3,966
    
    
    
    22,137
    
    
    
    10,826Net interest and fee income after provision for
credit losses
    
    
    9,525
    
    
    
    15,573
    
    
    
    32,364
    
    
    
    47,135Insurance and other income
    
    
    1,712
    
    
    
    1,659
    
    
    
    5,182
    
    
    
    4,888Net interest and other revenue after
provision for credit losses
    
    
    11,237
    
    
    
    17,232
    
    
    
    37,546
    
    
    
    52,023Loss on derivatives and hedging activities
    
    
    (3,280
    )
    
    
    
    
    
    
    (3,280
    )
    
    
    Non-interest expenseSalaries and benefits
    
    
    5,620
    
    
    
    5,257
    
    
    
    17,835
    
    
    
    16,087General and administrative
    
    
    3,333
    
    
    
    3,447
    
    
    
    11,629
    
    
    
    10,080Financing related costs
    
    
    370
    
    
    
    202
    
    
    
    967
    
    
    
    662Non-interest expense
    
    
    9,323
    
    
    
    8,906
    
    
    
    30,431
    
    
    
    26,829Income (loss) before income taxes
    
    
    (1,366
    )
    
    
    8,326
    
    
    
    3,835
    
    
    
    25,194Income taxes
    
    
    (425
    )
    
    
    3,298
    
    
    
    1,718
    
    
    
    9,961Net income (loss)
    
    $
    (941
    )
    
    $
    5,028
    
    
    $
    2,117
    
    
    $
    15,233Basic earnings (loss) per share
    
    $
    (0.08
    )
    
    $
    0.41
    
    
    $
    0.18
    
    
    $
    1.26Diluted earnings (loss) per share
    
    $
    (0.08
    )
    
    $
    0.41
    
    
    $
    0.18
    
    
    $
    1.24Weighted average shares used in computing basic
earnings (loss) per share
    
    
    11,843,300
    
    
    
    12,155,152
    
    
    
    11,899,731
    
    
    
    12,066,077Weighted average shares used in computing
diluted earnings (loss) per share
    
    
    11,843,300
    
    
    
    12,355,484
    
    
    
    12,013,961
    
    
    
    12,310,198
  3




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##### Table of Contents



MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Stockholders Equity
 AccumulatedAdditional
    
    
    Stock
    
    
    Other
    
    
    
    
    
    
    TotalCommon
    
    
    Stock
    
    
    Paid-In
    
    
    Subscription
    
    
    Comprehensive
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Income (Loss)
    
    
    Earnings
    
    
    Equity(Dollars in thousands)(Unaudited)Balance, December 31, 2006
    
    
    12,030,259
    
    
    $
    120
    
    
    $
    81,850
    
    
    $
    (18
    )
    
    $
    1,892
    
    
    $
    50,445
    
    
    $
    134,289Issuance of common stock
    
    
    17,994
    
    
    
    
    
    
    
    290
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290Repurchase of common stock
    
    
    (122,000
    )
    
    
    (1
    )
    
    
    (1,613
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,614
    )Exercise of stock options
    
    
    217,417
    
    
    
    2
    
    
    
    1,742
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,744Tax benefit on stock options
exercised
    
    
    
    
    
    
    
    
    
    
    1,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,220Stock option compensation
recognized, net of tax
    
    
    
    
    
    
    
    
    
    
    413
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    413Payment of receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    11Restricted stock grant
    
    
    57,634
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Restricted stock compensation
recognized
    
    
    
    
    
    
    
    
    
    
    527
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    527Net unrealized losses on cash
flow
hedge derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,022
    )
    
    
    
    
    
    
    (5,022
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,286
    
    
    
    18,286Balance, December 31, 2007
    
    
    12,201,304
    
    
    $
    122
    
    
    $
    84,429
    
    
    $
    (7
    )
    
    $
    (3,130
    )
    
    $
    68,731
    
    
    $
    150,145Issuance of common stock
    
    
    14,238
    
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94Repurchase of common stock
    
    
    (230,713
    )
    
    
    (2
    )
    
    
    (1,997
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,999
    )Exercise of stock options
    
    
    46,616
    
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145Tax benefit on stock options
exercised
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Stock option compensation
recognized, net of tax
    
    
    
    
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    192Payment of receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Restricted stock grant
    
    
    195,946
    
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock compensation
recognized
    
    
    
    
    
    
    
    
    
    
    703
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    703Net change related to cash flow
hedge derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    948
    
    
    
    
    
    
    
    948Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,117
    
    
    
    2,117Balance, September 30, 2008
    
    
    12,227,391
    
    
    $
    122
    
    
    $
    83,666
    
    
    $
    (5
    )
    
    $
    (2,182
    )
    
    $
    70,848
    
    
    $
    152,449
  4




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##### Table of Contents



MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
 Nine Months Ended September 30,2008
    
    
    2007(In thousands)(Unaudited)Cash flows from operating activities:Net income
    
    $
    2,117
    
    
    $
    15,233Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    2,160
    
    
    
    2,148Stock-based compensation
    
    
    843
    
    
    
    781Excess tax benefits from stock-based payment arrangements
    
    
    (102
    )
    
    
    (1,197
    )Amortization of deferred net gain on cash flow hedge derivatives
    
    
    (153
    )
    
    
    (1,826
    )Decrease in fair value of cash flow hedge derivatives
    
    
    2,160
    
    
    
    Cash flow hedge losses reclassified from accumulated other
comprehensive loss
    
    
    1,120
    
    
    
    Provision for credit losses
    
    
    22,137
    
    
    
    10,826Deferred taxes
    
    
    (1,381
    )
    
    
    (3,413
    )Amortization of deferred initial direct costs and fees
    
    
    12,630
    
    
    
    11,847Deferred initial direct costs and fees
    
    
    (8,055
    )
    
    
    (14,631
    )Loss on equipment disposed
    
    
    638
    
    
    
    344Effect of changes in other operating items:Other assets
    
    
    (3,495
    )
    
    
    658Other liabilities
    
    
    1,257
    
    
    
    (499
    )Net cash provided by operating activities
    
    
    31,876
    
    
    
    20,271Cash flows from investing activities:Purchases of equipment for direct financing lease contracts and funds
used to originate loans
    
    
    (198,456
    )
    
    
    (294,790
    )Principal collections on leases and loans
    
    
    232,812
    
    
    
    222,176Security deposits collected, net of returns
    
    
    (1,998
    )
    
    
    (1,595
    )Proceeds from the sale of equipment
    
    
    4,134
    
    
    
    3,806Acquisitions of property and equipment
    
    
    (639
    )
    
    
    (773
    )Change in restricted cash
    
    
    76,776
    
    
    
    (10,929
    )Net cash provided by (used by) investing activities
    
    
    112,629
    
    
    
    (82,105
    )Cash flows from financing activities:Issuances of common stock
    
    
    96
    
    
    
    182Repurchases of common stock
    
    
    (1,999
    )
    
    
    Exercise of stock options
    
    
    145
    
    
    
    1,648Excess tax benefits from stock-based payment arrangements
    
    
    102
    
    
    
    1,197Debt issuance costs
    
    
    (46
    )
    
    
    (131
    )Term securitization repayments
    
    
    (261,932
    )
    
    
    (204,180
    )Secured bank facility advances
    
    
    69,104
    
    
    
    160,652Secured bank facility repayments
    
    
    (34,276
    )
    
    
    (133,960
    )Warehouse advances
    
    
    25,911
    
    
    
    242,046Warehouse repayments
    
    
    (5,978
    )
    
    
    (21,319
    )Increase in deposits
    
    
    47,172
    
    
    
    Net cash provided by (used by) financing activities
    
    
    (161,701
    )
    
    
    46,135Net decrease in cash and cash equivalents
    
    
    (17,196
    )
    
    
    (15,699
    )Cash and cash equivalents, beginning of period
    
    
    34,347
    
    
    
    26,663Cash and cash equivalents, end of period
    
    $
    17,151
    
    
    $
    10,964Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    27,136
    
    
    $
    25,230Cash paid for income taxes
    
    
    2,660
    
    
    
    13,366
  5




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##### Table of Contents



MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  Organization
 Description
   NOTE 2  Basis of Financial Statement Presentation and Critical Accounting Policies
  Use of estimates.
 Income recognition.
 Fee income.
   6




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##### Table of Contents



Insurance and other income
 Initial direct costs and fees. Accounting for Nonrefundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases.
 Lease residual values.
 Allowance for credit losses.
  Securitizations. Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a replacement of Financial Accounting Standards Board (FASB) Statement No. 125
 Derivatives. Accounting for Derivative Instruments and Hedging
Activities
 7




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##### Table of Contents



Fair Value Measurements
 Common stock and equity.
 Stock-based compensation. Share-Based Payments,
 Income taxes. Accounting for Income Taxes.
  Accounting for
Uncertainty in Income Taxes,
 8




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##### Table of Contents



NOTE 3  Net Investment in Leases and Loans
  September 30,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Minimum lease payments receivable
    
    $
    787,515
    
    
    $
    865,156Estimated residual value of equipment
    
    
    51,091
    
    
    
    50,798Unearned lease income, net of initial direct
costs and fees deferred
    
    
    (123,447
    )
    
    
    (137,909
    )Security deposits
    
    
    (13,145
    )
    
    
    (15,144
    )Loans, net of unamortized deferred fees and costs
    
    
    14,420
    
    
    
    14,025Allowance for credit losses
    
    
    (14,339
    )
    
    
    (10,988
    )$
    702,095
    
    
    $
    765,938
   Minimum LeasePayments
    
    
    IncomeReceivable
    
    
    Amortization(Dollars in thousands)Period Ending December 31:2008
    
    $
    91,215
    
    
    $
    19,6522009
    
    
    305,028
    
    
    
    56,0142010
    
    
    209,203
    
    
    
    30,1502011
    
    
    120,302
    
    
    
    13,2072012
    
    
    51,703
    
    
    
    4,031Thereafter
    
    
    10,064
    
    
    
    393$
    787,515
    
    
    $
    123,447
 9




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NOTE 4  Allowance for Credit Losses
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands)Balance, beginning of period
    
    $
    12,873
    
    
    $
    8,829
    
    
    $
    10,988
    
    
    $
    8,201Current provisions
    
    
    8,602
    
    
    
    3,966
    
    
    
    22,137
    
    
    
    10,826Charge-offs, net
    
    
    (7,136
    )
    
    
    (3,400
    )
    
    
    (18,786
    )
    
    
    (9,632
    )Balance, end of period
    
    $
    14,339
    
    
    $
    9,395
    
    
    $
    14,339
    
    
    $
    9,395
 NOTE 5  Other Assets
  September 30,
    
    
    December 31,2008
    
    
    2007(Dollars in thousands)Derivative collateral
    
    $
    8,216
    
    
    $
    4,361Accrued fees receivable
    
    
    3,470
    
    
    
    3,361Deferred transaction costs
    
    
    1,565
    
    
    
    2,739Prepaid expenses
    
    
    1,626
    
    
    
    1,268Other
    
    
    1,986
    
    
    
    2,761$
    16,863
    
    
    $
    14,490
 NOTE 6  Contingencies
  NOTE 7  Deposits
  ScheduledMaturities(Dollars in thousands)Period Ending December 31,2008
    
    $
    2009
    
    
    19,4602010
    
    
    10,0282011
    
    
    7,5562012
    
    
    5,702Thereafter
    
    
    4,426$
    47,172
  10




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NOTE 8  Revolving and Term Secured Borrowings
  Principal
    
    
    Interest(1)(Dollars in thousands)Period Ending December 31,2008
    
    $
    117,453
    
    
    $
    13,3792009
    
    
    219,401
    
    
    
    17,0622010
    
    
    136,186
    
    
    
    7,7852011
    
    
    68,841
    
    
    
    2,6222012
    
    
    23,158
    
    
    
    383Thereafter
    
    
    875
    
    
    
    5$
    565,914
    
    
    $
    41,236
 
 (1)
    
    Includes interest on term note securitizations only. Excludes interest on $54.8
million of revolving bank facility and commercial paper (CP) conduit warehouse facility. NOTE 9  Derivative Financial Instruments
        11




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For Active Agreements:
 Inception Date
    
    March, 2008
    
    January, 2008
    
    December, 2007
    
    August, 2007
    
    August, 2006
    
    July, 2004Commencement Date
    
    October, 2009
    
    October, 2009
    
    October, 2009
    
    October, 2008
    
    October, 2008
    
    July, 2004(Dollars in thousands)Notional amount:September 30, 2008
    
    $
    25,000
    
    
    $
    25,000
    
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    50,000
    
    
    $
    December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    3,066For active agreements:Fair value recorded in other assets (liabilities)September 30, 2008
    
    $
    199
    
    
    $
    (58
    )
    
    $
    (531
    )
    
    $
    (2,659
    )
    
    $
    (1,678
    )
    
    $
    December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    (46
    )
    
    $
    (2,010
    )
    
    $
    (2,704
    )
    
    $
    4Unrealized gain (loss), net of tax, recorded in
equitySeptember 30, 2008
    
    $
    246
    
    
    $
    93
    
    
    $
    190
    
    
    $
    (629
    )
    
    $
    (857
    )
    
    $
    December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    (28
    )
    
    $
    (1,213
    )
    
    $
    (1,632
    )
    
    $
    2
 For Terminated Agreements:
 August 2006/August
    
    
    
    
    
    October/December,Inception Date
    
    August, 2006
    
    2007
    
    June/September, 2005
    
    2004Commencement Date
    
    October, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005Termination Date
    
    September, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005(Dollars in thousands)Notional amount
    
    $
    50,000
    
    
    $
    300,000
    
    
    $
    225,000
    
    
    $
    250,000Realized gain (loss) at termination
    
    $
    (1,595
    )
    
    $
    (2,683
    )
    
    $
    3,732
    
    
    $
    3,151Deferred gain (loss), net of tax,
recorded in equitySeptember 30, 2008
    
    $
    (874
    )
    
    $
    (921
    )
    
    $
    516
    
    
    $
    54December 31, 2007
    
    $
    
    
    
    $
    (1,462
    )
    
    $
    974
    
    
    $
    229Amortization recognized as increase
(decrease) in interest expenseNine months ended September 30, 2008
    
    $
    
    
    
    $
    898
    
    
    $
    (759
    )
    
    $
    (292
    )Year ended December 31, 2007
    
    $
    
    
    
    $
    255
    
    
    $
    (1,543
    )
    
    $
    (749
    )Expected amortization during next 12
months as increase (decrease) in interest
expense
    
    $
    616
    
    
    $
    794
    
    
    $
    (611
    )
    
    $
    (89
    )
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands)Change in fair value of derivative contracts
    
    $
    (2,160
    )
    
    $
    
    
    
    $
    (2,160
    )
    
    $
    Cash flow hedging losses on forecasted
transactions no longer probable of
occurring(1)
    
    
    (1,120
    )
    
    
    
    
    
    
    (1,120
    )
    
    
    Loss on derivatives and hedging activities
    
    $
    (3,280
    )
    
    $
    
    
    
    $
    (3,280
    )
    
    $
    
 
 (1)
    
    Reclassified from accumulated other comprehensive income 12




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##### Table of Contents



NOTE 10  Fair Value Measurements
 Fair Value Measurements Accounting for Leases
   
    
    Level 1  Inputs to the valuation are unadjusted quoted prices in active markets for
identical assets or liabilities.
 
    
    Level 2  Inputs to the valuation may include quoted prices for similar assets and
liabilities in active or inactive markets, and inputs other than quoted prices, such as
interest rates and yield curves, that are observable for the asset or liability for
substantially the full term of the financial instrument.
 
    
    Level 3  Inputs to the valuation are unobservable and significant to the fair value
measurement. Level 3 inputs shall be used to measure fair value only to the extent that
observable inputs are not available.
   Fair Value Measurements Using
    
    Assets/LiabilitiesLevel 1
    
    Level 2
    
    Level 3
    
    at Fair Value(Dollars in thousands)AssetsInterest-rate caps purchased
    
    $
    
    
    
    $
    286
    
    
    $
    
    
    
    $
    286Interest-rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    LiabilitiesInterest-rate caps sold
    
    
    
    
    
    
    286
    
    
    
    
    
    
    
    286Interest-rate swaps
    
    
    
    
    
    
    4,727
    
    
    
    
    
    
    
    4,727
 13




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##### Table of Contents



NOTE 11  Comprehensive Income (Loss)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands)Net income (loss), as reported
    
    $
    (941
    )
    
    $
    5,028
    
    
    $
    2,117
    
    
    $
    15,233Other comprehensive income (loss):Changes in fair values of cash flow hedge derivatives
    
    
    
    
    
    
    (4,366
    )
    
    
    593
    
    
    
    (2,978
    )Reclassification of cash flow hedging losses on
forecasted transactions no longer probable of
occurring (1)
    
    
    1,120
    
    
    
    
    
    
    
    1,120
    
    
    
    Amortization of net deferred gain on cash flow hedge
derivatives
    
    
    (32
    )
    
    
    (536
    )
    
    
    (153
    )
    
    
    (1,826
    )Tax effect
    
    
    (434
    )
    
    
    1,940
    
    
    
    (612
    )
    
    
    1,906Total other comprehensive income (loss)
    
    
    654
    
    
    
    (2,962
    )
    
    
    948
    
    
    
    (2,898
    )Comprehensive income (loss)
    
    $
    (287
    )
    
    $
    2,066
    
    
    $
    3,065
    
    
    $
    12,335
 
 (1)
    
    Reclassified to Loss on derivatives and hedging activities NOTE 12  Stockholders Equity and Earnings Per Share
 Stockholders Equity
   Regulatory Capital Requirements
    14




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##### Table of Contents



Prompt Corrective Action.
  Dividends.
 Earnings (Loss) Per Common Share (EPS)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands, except per-share data)Net income (loss)
    
    $
    (941
    )
    
    $
    5,028
    
    
    $
    2,117
    
    
    $
    15,233Weighted average common shares
outstanding used in computing basic EPS
    
    
    11,843,300
    
    
    
    12,155,152
    
    
    
    11,899,731
    
    
    
    12,066,077Effect of dilutive securities:Stock options and restricted stock
    
    
    
    
    
    
    200,332
    
    
    
    114,230
    
    
    
    244,121Adjusted weighted average common shares
used in computing diluted EPS
    
    
    11,843,300
    
    
    
    12,355,484
    
    
    
    12,013,961
    
    
    
    12,310,198Net earnings (loss) per common share:Basic
    
    $
    (0.08
    )
    
    $
    0.41
    
    
    $
    0.18
    
    
    $
    1.26Diluted
    
    $
    (0.08
    )
    
    $
    0.41
    
    
    $
    0.18
    
    
    $
    1.24
    15




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##### Table of Contents



NOTE 13  Stock-Based Compensation
  Stock Options
      Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2008
    
    2007
    
    2008
    
    2007Risk-free interest rate
    
    
    2.99
    %
    
    
    n/a
    
    
    
    2.45
    %
    
    
    4.51
    %Expected life (years)
    
    
    5
    
    
    
    n/a
    
    
    
    5
    
    
    
    5Expected volatility
    
    
    35
    %
    
    
    n/a
    
    
    
    35
    %
    
    
    35
    %Expected dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   WeightedAverageOptions
    
    Shares
    
    Exercise PriceOutstanding at January 1, 2008
    
    
    727,184
    
    
    $
    13.20Granted
    
    
    271,926
    
    
    
    9.29Exercised
    
    
    (46,616
    )
    
    
    3.12Forfeited
    
    
    (36,949
    )
    
    
    17.46Expired
    
    
    
    
    
    
    Outstanding at September 30, 2008
    
    
    915,545
    
    
    
    12.38
 16




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    
    
    
    
    Aggregate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AggregateAverage
    
    
    Weighted
    
    
    Intrinsic
    
    
    
    
    
    
    Weighted
    
    
    Weighted
    
    
    IntrinsicRange of
    
    Number
    
    
    Remaining
    
    
    Average
    
    
    Value
    
    
    Number
    
    
    Average Remaining
    
    
    Average
    
    
    ValueExercise Prices
    
    Outstanding
    
    
    Life (Years)
    
    
    Exercise Price
    
    
    (In thousands)
    
    
    Exercisable
    
    
    Life (Years)
    
    
    Exercise Price
    
    
    (In thousands)$3.39
    
    
    101,770
    
    
    
    3.5
    
    
    $
    3.39
    
    
    $
    518
    
    
    
    101,770
    
    
    
    3.5
    
    
    $
    3.39
    
    
    $
    518$4.23  5.01
    
    
    58,641
    
    
    
    1.5
    
    
    
    4.34
    
    
    
    243
    
    
    
    58,641
    
    
    
    1.5
    
    
    
    4.34
    
    
    
    243$7.61  10.18
    
    
    373,875
    
    
    
    5.5
    
    
    
    9.53
    
    
    
    28
    
    
    
    106,645
    
    
    
    3.2
    
    
    
    10.18
    
    
    
    $14.00  16.02
    
    
    89,401
    
    
    
    5.4
    
    
    
    14.80
    
    
    
    
    
    
    
    73,912
    
    
    
    5.3
    
    
    
    14.65
    
    
    
    $17.52  22.23
    
    
    291,858
    
    
    
    4.6
    
    
    
    20.04
    
    
    
    
    
    
    
    127,110
    
    
    
    4.3
    
    
    
    19.35
    
    
    
    915,545
    
    
    
    4.7
    
    
    
    12.38
    
    
    $
    789
    
    
    
    468,078
    
    
    
    3.7
    
    
    
    11.17
    
    
    $
    761
   Restricted Stock Awards
     17




---



##### Table of Contents



WeightedAverageGrant-DateShares
    
    Fair ValueNon-vested restricted stock at January 1, 2008
    
    
    218,248
    
    
    $
    20.17Granted
    
    
    214,533
    
    
    
    7.75Vested
    
    
    (13,934
    )
    
    
    19.23Forfeited
    
    
    (13,221
    )
    
    
    17.81Non-vested restricted stock at September 30, 2008
    
    
    405,626
    
    
    
    13.71
     
 Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of Operations
 The following discussion and analysis of our financial condition and results of operations should
be read in conjunction with our consolidated financial statements and the related notes thereto in
our Form 10-K filed with the Securities and Exchange Commission This discussion contains certain
statements of a forward-looking nature that involve risks and uncertainties.
 FORWARD-LOOKING STATEMENTS
  
    
    availability, terms and deployment of capital;
    
    general volatility of capital markets, in particular, the market for securitized assets;
    
    changes in our industry, interest rates or the general economy resulting in changes to our business strategy;
    
    the nature of our competition;
    
    availability of qualified personnel; and
    
    the factors set forth in the section captioned Risk Factors in our Form 10-K filed with the Securities and Exchange
Commission.
 18




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##### Table of Contents



Overview
       Nine MonthsEndedSeptember 30,
    
    As of or For the Year Ended December 31,2008
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Number of sales account executives
    
    
    91
    
    
    
    118
    
    
    
    100
    
    
    
    103
    
    
    
    100
    
    
    
    84Number of originating
sources(1)
    
    
    1,040
    
    
    
    1,246
    
    
    
    1,295
    
    
    
    1,295
    
    
    
    1,244
    
    
    
    1,147
 
 (1)
    
    Monthly average of origination sources generating lease volume  19




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##### Table of Contents



Accounting for Derivative
Instruments and Hedging Activities
 Critical Accounting Policies
  Income recognition.
   20




---



##### Table of Contents



Initial direct costs and fees. Accounting for Nonrefundable Fees
and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases.
 Lease residual values.
 Allowance for credit losses.
  Securitizations. Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a
replacement of Financial Accounting Standards Board Statement No. 125
 21




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##### Table of Contents



Derivatives. Accounting for Derivative Instruments and Hedging
Activities
    Fair Value Measurements
 Stock-based compensation. Share-Based Payments,
 Income taxes.
 Accounting for
Uncertainty in Income Taxes,
  22




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##### Table of Contents



RESULTS OF OPERATIONS
 Comparison of the Three Months Ended September 30, 2008 and 2007
 Net income.
    Three Months Ended September 30,2008
    
    
    2007(Dollars in thousands)Interest income
    
    $
    21,062
    
    
    $
    22,622Fee income
    
    
    5,855
    
    
    
    5,685Interest and fee income
    
    
    26,917
    
    
    
    28,307Interest expense
    
    
    8,790
    
    
    
    8,768Net interest and fee income
    
    $
    18,127
    
    
    $
    19,539Average total finance receivables (1)
    
    $
    706,508
    
    
    $
    733,304Percent of average total finance receivables:Interest income
    
    
    11.92
    %
    
    
    12.34
    %Fee income
    
    
    3.32
    
    
    
    3.10Interest and fee income
    
    
    15.24
    
    
    
    15.44Interest expense
    
    
    4.98
    
    
    
    4.78Net interest and fee margin
    
    
    10.26
    %
    
    
    10.66
    %
 
 (1)
    
    Total finance receivables includes net investment in direct financing leases, loans
and factoring receivables. For the calculations above, the effects of (1) the allowance for
credit losses and (2) initial direct costs and fees deferred are excluded. Net interest and fee margin.
   23




---



##### Table of Contents



Insurance and other income.
 Loss on derivatives and hedging activities.
     24




---



##### Table of Contents



Salaries and benefits expense.
  General and administrative expense.
 Financing related costs.
 Provision for credit losses.
 Provision for income taxes.
 Comparison of the Nine Months Ended September 30, 2008 and 2007
 Net income.
    25




---



##### Table of Contents



Nine Months Ended September 30,2008
    
    
    2007(Dollars in thousands)Interest income
    
    $
    65,884
    
    
    $
    66,210Fee income
    
    
    17,013
    
    
    
    16,486Interest and fee income
    
    
    82,897
    
    
    
    82,696Interest expense
    
    
    28,396
    
    
    
    24,735Net interest and fee income
    
    $
    54,501
    
    
    $
    57,961Average total finance receivables (1)
    
    $
    727,317
    
    
    $
    714,150Percent of average total finance receivables:Interest income
    
    
    12.08
    %
    
    
    12.36
    %Fee income
    
    
    3.12
    
    
    
    3.08Interest and fee income
    
    
    15.20
    
    
    
    15.44Interest expense
    
    
    5.21
    
    
    
    4.62Net interest and fee margin
    
    
    9.99
    %
    
    
    10.82
    %
 
 (1)
    
    Total finance receivables includes net investment in direct financing leases, loans
and factoring receivables. For the calculations above, the effects of (1) the allowance for
credit losses and (2) initial direct costs and fees deferred are excluded. Net interest and fee margin.
      26




---



##### Table of Contents



Insurance and other income.
 Loss on derivatives and hedging activities.
     Salaries and benefits expense.
  General and administrative expense.
 Financing related costs.
 27




---



##### Table of Contents



Provision for credit losses.
 Provision for income taxes.
 FINANCE RECEIVABLES AND ASSET QUALITY
   Year EndedThree Months Ended September 30,
    
    
    Nine Months Ended September 30,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007
    
    
    2007(Dollars in thousands)Allowance for credit losses, beginning of period
    
    $
    12,873
    
    
    $
    8,829
    
    
    $
    10,988
    
    
    $
    8,201
    
    
    $
    8,201Provision for credit losses
    
    
    8,602
    
    
    
    3,966
    
    
    
    22,137
    
    
    
    10,826
    
    
    
    17,221Charge-offs, net
    
    
    (7,136
    )
    
    
    (3,400
    )
    
    
    (18,786
    )
    
    
    (9,632
    )
    
    
    (14,434
    )Allowance for credit losses, end of period
    
    $
    14,339
    
    
    $
    9,395
    
    
    $
    14,339
    
    
    $
    9,395
    
    
    $
    10,988Annualized net charge-offs to average total finance
receivables (1)
    
    
    4.04
    %
    
    
    1.85
    %
    
    
    3.44
    %
    
    
    1.80
    %
    
    
    2.00
    %Allowance for credit losses to total finance receivables,
end of period (1)
    
    
    2.07
    %
    
    
    1.27
    %
    
    
    2.07
    %
    
    
    1.27
    %
    
    
    1.47
    %Average total finance receivables (1)
    
    $
    706,508
    
    
    $
    733,304
    
    
    $
    727,317
    
    
    $
    714,150
    
    
    $
    721,900Total finance receivables, end of period (1)
    
    $
    693,627
    
    
    $
    738,373
    
    
    $
    693,627
    
    
    $
    738,373
    
    
    $
    749,571Delinquencies greater than 60 days past due
    
    $
    11,320
    
    
    $
    7,951
    
    
    $
    11,320
    
    
    $
    7,951
    
    
    $
    8,377Delinquencies greater than 60 days past due (2)
    
    
    1.41
    %
    
    
    0.91
    %
    
    
    1.41
    %
    
    
    0.91
    %
    
    
    0.95
    %Allowance for credit losses to delinquent accounts
greater than 60 days past due (2)
    
    
    126.67
    %
    
    
    118.16
    %
    
    
    126.67
    %
    
    
    118.16
    %
    
    
    131.17
    %Non-accrual leases and loans
    
    $
    5,370
    
    
    $
    3,438
    
    
    $
    5,370
    
    
    $
    3,438
    
    
    $
    3,695Renegotiated leases and loans
    
    $
    8,133
    
    
    $
    5,042
    
    
    $
    8,133
    
    
    $
    5,042
    
    
    $
    6,987
 
 (1)
    
    Total finance receivables include net investment in direct financing leases, loans
and factoring receivables. For purposes of asset quality and allowance calculations, the
effects of (1) the allowance for credit losses and (2) initial direct costs and fees deferred
are excluded.(2)
    
    Calculated as a percent of minimum lease payments receivable for leases and as a
percent of principal outstanding for loans and factoring receivables. 28




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##### Table of Contents



www.marlincorp.com
  RESIDUAL PERFORMANCE
   LIQUIDITY AND CAPITAL RESOURCES
  29




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##### Table of Contents




    
    borrowings under a revolving bank facility;
    
    financing of leases and loans in CP conduit warehouse facilities;
    
    financing of leases through term note securitizations; and
    
    equity and debt securities with third-party investors.
       Cash and Cash Equivalents.
  30




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##### Table of Contents



Borrowings.
 For the Nine Months Ended September 30, 2008
    
    
    As of September 30, 2008MaximumMaximum
    
    
    Month End
    
    
    Average
    
    
    Weighted
    
    
    
    
    
    
    WeightedFacility
    
    
    Amount
    
    
    Amount
    
    
    Average
    
    
    Amount
    
    
    Average
    
    
    UnusedAmount
    
    
    Outstanding
    
    
    Outstanding
    
    
    Coupon
    
    
    Outstanding
    
    
    Coupon
    
    
    Capacity(Dollars in thousands)Revolving bank facility(1)
    
    $
    40,000
    
    
    $
    35,700
    
    
    $
    15,261
    
    
    
    4.34
    %
    
    $
    34,828
    
    
    
    4.10
    %
    
    $
    5,172CP conduit warehouse
facilities(1)
    
    
    175,000
    
    
    
    25,911
    
    
    
    7,439
    
    
    
    4.61
    %
    
    
    19,933
    
    
    
    5.70
    %
    
    
    155,067Term note securitizations(2)
    
    
    
    
    
    
    744,167
    
    
    
    630,499
    
    
    
    5.46
    %
    
    
    511,153
    
    
    
    5.70
    %
    
    
    $
    215,000
    
    
    
    
    
    
    $
    653,199
    
    
    
    5.42
    %
    
    $
    565,914
    
    
    
    5.60
    %
    
    $
    160,239
 
 (1)
    
    Subject to lease or loan eligibility and borrowing base formula.(2)
    
    Our term note securitizations are one-time fundings that pay down over time without
any ability for us to draw down additional amounts. Revolving Bank Facility
  CP Conduit Warehouse Facilities
     31




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##### Table of Contents



Term Note Securitizations
    Financial Covenants
  Actual(1)
    
    RequirementTangible net worth minimum
    
    $139.5 million
    
    $89.4 millionDebt-to-equity ratio maximum
    
    
    4.22 to 1
    
    
    
    10 to 1Four-quarter rolling average
interest coverage ratio minimum
    
    
    2.94 to 1
    
    
    
    1.50 to 1Three-month rolling average
lease portfolio charge-off
ratio maximum
    
    
    3.28
    %
    
    
    4.25
    %Minimum quarterly net income
(loss)
    
    $1.1 million
    
    
    ($100,000
    )
 
 (1)
    
    Calculations are based on specific contractual definitions and subsidiaries per the
applicable debt agreements, which may differ from ratios or amounts presented elsewhere in this
document.  32




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##### Table of Contents



Marlin Business Bank (Bank)
     Bank Capital and Regulatory Oversight
  Capital Requirements.
 33




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##### Table of Contents



Prompt Corrective Action.
  Dividends.
 Transfers of Funds and Transactions with Affiliates.
 Restrictions on Ownership
 Information on Stock Repurchases
  34




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##### Table of Contents



Maximum ApproximateTotal Number of
    
    Dollar Value ofShares Purchased as
    
    Shares that May YetPart of a Publicly
    
    be Purchased UnderNumber of Shares
    
    Average Price
    
    Announced Plan or
    
    the Plans orTime Period
    
    Purchased
    
    Paid Per Share(1)
    
    Program
    
    ProgramsJuly 1, 2008 to
July 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    11,902,895August 1, 2008 to
August 31, 2008
    
    
    62,015
    
    
    $
    8.06
    
    
    
    62,015
    
    
    
    11,402,903September 1, 2008 to
September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,402,903Total for the quarter
ended September 30,
2008
    
    
    62,015
    
    
    $
    8.06
    
    
    
    62,015
    
    
    
    11,402,903
 
 (1)
    
    Average price paid per share includes commissions and is rounded to the nearest two
decimal places.  Contractual Obligations
  Contractual Obligations as of September 30, 2008Operating
    
    
    Leased
    
    
    CapitalPeriod Ending December 31,
    
    Borrowings
    
    
    Interest(1)
    
    
    Leases
    
    
    Facilities
    
    
    Leases
    
    
    Total(Dollars in thousands)2008
    
    $
    117,453
    
    
    $
    13,379
    
    
    $
    3
    
    
    $
    445
    
    
    $
    3
    
    
    $
    131,2832009
    
    
    219,401
    
    
    
    17,062
    
    
    
    16
    
    
    
    1,779
    
    
    
    11
    
    
    
    238,2692010
    
    
    136,186
    
    
    
    7,785
    
    
    
    12
    
    
    
    1,624
    
    
    
    3
    
    
    
    145,6102011
    
    
    68,841
    
    
    
    2,622
    
    
    
    5
    
    
    
    1,484
    
    
    
    
    
    
    
    72,9522012
    
    
    23,158
    
    
    
    383
    
    
    
    
    
    
    
    1,514
    
    
    
    
    
    
    
    25,055Thereafter
    
    
    875
    
    
    
    5
    
    
    
    
    
    
    
    655
    
    
    
    
    
    
    
    1,535Total
    
    $
    565,914
    
    
    $
    41,236
    
    
    $
    36
    
    
    $
    7,501
    
    
    $
    17
    
    
    $
    614,704
 
 (1)
    
    Includes interest on term note securitizations only. Excludes interest on $54.8
million of revolving bank facility and CP conduit warehouse facility. MARKET INTEREST RATE RISK AND SENSITIVITY
    35




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##### Table of Contents



For Active Agreements:
 Inception Date
    
    March, 2008
    
    January, 2008
    
    December, 2007
    
    August, 2007
    
    August, 2006
    
    July, 2004Commencement Date
    
    October, 2009
    
    October, 2009
    
    October, 2009
    
    October, 2008
    
    October, 2008
    
    July, 2004(Dollars in thousands)Notional amount:September 30, 2008
    
    $
    25,000
    
    
    $
    25,000
    
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    50,000
    
    
    $
    December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    3,066For active agreements:Fair value recorded in other assets (liabilities)September 30, 2008
    
    $
    199
    
    
    $
    (58
    )
    
    $
    (531
    )
    
    $
    (2,659
    )
    
    $
    (1,678
    )
    
    $
    December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    (46
    )
    
    $
    (2,010
    )
    
    $
    (2,704
    )
    
    $
    4Unrealized gain (loss), net of tax, recorded in
equitySeptember 30, 2008
    
    $
    246
    
    
    $
    93
    
    
    $
    190
    
    
    $
    (629
    )
    
    $
    (857
    )
    
    $
    December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    (28
    )
    
    $
    (1,213
    )
    
    $
    (1,632
    )
    
    $
    2
 36




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##### Table of Contents



For Terminated Agreements:
 Inception Date
    
    August, 2006
    
    August 2006/August
 2007
    
    June/September,
 2005
    
    October/December,
 2004Commencement Date
    
    October, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005Termination Date
    
    September, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005(Dollars in thousands)Notional amount
    
    $
    50,000
    
    
    $
    300,000
    
    
    $
    225,000
    
    
    $
    250,000Realized gain (loss) at termination
    
    $
    (1,595
    )
    
    $
    (2,683
    )
    
    $
    3,732
    
    
    $
    3,151Deferred gain (loss), net of tax,
recorded in equitySeptember 30, 2008
    
    $
    (874
    )
    
    $
    (921
    )
    
    $
    516
    
    
    $
    54December 31, 2007
    
    $
    
    
    
    $
    (1,462
    )
    
    $
    974
    
    
    $
    229Amortization recognized as increase
(decrease) in interest expenseNine months ended September 30, 2008
    
    $
    
    
    
    $
    898
    
    
    $
    (759
    )
    
    $
    (292
    )Year ended December 31, 2007
    
    $
    
    
    
    $
    255
    
    
    $
    (1,543
    )
    
    $
    (749
    )Expected amortization during next 12
months as increase (decrease) in interest
expense
    
    $
    616
    
    
    $
    794
    
    
    $
    (611
    )
    
    $
    (89
    )
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Dollars in thousands)Change in fair value of derivative contracts
    
    $
    (2,160
    )
    
    $
    
    
    
    $
    (2,160
    )
    
    $
    Cash flow hedging losses on forecasted
transactions no longer probable of
occurring(1)
    
    
    (1,120
    )
    
    
    
    
    
    
    (1,120
    )
    
    
    Loss on derivatives and hedging activities
    
    $
    (3,280
    )
    
    $
    
    
    
    $
    (3,280
    )
    
    $
    
 
 (1)
    
    Reclassified from accumulated other comprehensive income   37




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##### Table of Contents



Scheduled Maturities by Calendar YearTotal2012 &
    
    Carrying2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Amount(Dollars in thousands)Debt:Fixed-rate debt
    
    $
    62,692
    
    
    $
    219,401
    
    
    $
    136,186
    
    
    $
    68,841
    
    
    $
    24,033
    
    
    $
    511,153Average fixed rate
    
    
    5.50
    %
    
    
    5.70
    %
    
    
    5.93
    %
    
    
    6.24
    %
    
    
    6.78
    %
    
    
    5.86
    %Variable-rate debt
    
    $
    54,761
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    54,761Average variable rate
    
    
    4.68
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.68
    %
    RECENTLY ISSUED ACCOUNTING STANDARDS
 Fair Value Measurements Accounting for Leases
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities,
 38




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
      39




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##### Table of Contents



PART II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Information on Stock Repurchases
   Maximum ApproximateTotal Number of
    
    Dollar Value ofShares Purchased as
    
    Shares that May YetPart of a Publicly
    
    be Purchased UnderNumber of Shares
    
    Average Price
    
    Announced Plan or
    
    the Plans orTime Period
    
    Purchased
    
    Paid Per Share(1)
    
    Program
    
    ProgramsJuly 1, 2008 to
July 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    11,902,895August 1, 2008 to
August 31, 2008
    
    
    62,015
    
    
    $
    8.06
    
    
    
    62,015
    
    
    
    11,402,903September 1, 2008 to
September 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,402,903Total for the quarter
ended September 30,
2008
    
    
    62,015
    
    
    $
    8.06
    
    
    
    62,015
    
    
    
    11,402,903
 
 (2)
    
    Average price paid per share includes commissions and is rounded to the nearest two
decimal places.  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote Of Security Holders
  
 Item 5. Other Information
  40




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    Description31.1
    
    Certification of the Chief Executive Officer of Marlin Business Services Corp. required by
Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. (Filed herewith)31.2
    
    Certification of the Chief Financial Officer of Marlin Business Services Corp. required by
Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. (Filed herewith)32.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer of Marlin Business
Services Corp. required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as
amended. (This exhibit shall not be deemed filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that
section. Further, this exhibit shall not be deemed to be incorporated by reference into any
filing under the Securities Exchange Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended.) (Furnished herewith)
 41




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##### Table of Contents



SIGNATURES
  MARLIN BUSINESS SERVICES CORP.
(Registrant)By:
    /s/ Daniel P. Dyer
    Chief Executive OfficerDaniel P. Dyer
    (Chief Executive Officer)By:
    /s/ Lynne C. WilsonLynne C. Wilson
    Chief Financial Officer & Senior Vice President   (Principal Financial Officer) 
 42