##### 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 March 31, 2009
 Commission file number 000-50448
 MARLIN BUSINESS SERVICES CORP.
  Pennsylvania
(State of incorporation)
    
    38-3686388
(I.R.S. Employer Identification Number)
 
 
 þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
 Quarterly Report on Form 10-Q
for the Quarter Ended March 31, 2009
 TABLE OF CONTENTS
 Page No.Part I  Financial Information
    
    
    241Item 1 Financial Statements (Unaudited)
    
    
    220Consolidated Balance Sheets at March 31, 2009 and December 31, 2008
    
    
    2Consolidated Statements of Operations for the three-month periods ended March 31, 2009 and 2008
    
    
    3Consolidated Statements of Stockholders Equity at March 31, 2009 and December 31, 2008
    
    
    4Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2009 and 2008
    
    
    5Notes to Consolidated Financial Statements
    
    
    620Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    2141Item 3 Quantitative and Qualitative Disclosure about Market Risk
    
    
    41Item 4 Controls and Procedures
    
    
    41Part II  Other Information
    
    
    4243Item 1 Legal Proceedings
    
    
    42Item 1A Risk Factors
    
    
    42Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    42Item 3 Defaults upon Senior Securities
    
    
    42Item 4 Submission of Matters to a Vote of Security Holders
    
    
    42Item 5 Other Information
    
    
    42Item 6 Exhibits
    
    
    43Signatures
    
    
    44RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICERRULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICERRULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
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##### Table of Contents



PART I. Financial Information
 
 Item 1. Financial Statements
 MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Consolidated Balance Sheets
 (Unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands, except per-share data)ASSETSCash and due from banks
    
    $
    1,704
    
    
    $
    1,604Interest-earning deposits with banks
    
    
    48,762
    
    
    
    38,666Total cash and cash equivalents
    
    
    50,466
    
    
    
    40,270Restricted interest-earning deposits with banks
    
    
    71,382
    
    
    
    66,212Net investment in leases and loans
    
    
    622,319
    
    
    
    670,494Property and equipment, net
    
    
    2,927
    
    
    
    2,961Property tax receivables
    
    
    7,493
    
    
    
    3,120Other assets
    
    
    10,437
    
    
    
    12,759Total assets
    
    $
    765,024
    
    
    $
    795,816LIABILITIES AND STOCKHOLDERS EQUITYShort-term borrowings
    
    $
    116,314
    
    
    $
    101,923Long-term borrowings
    
    
    383,538
    
    
    
    441,385Deposits
    
    
    74,853
    
    
    
    63,385Other liabilities:Fair value of cash flow hedge derivatives
    
    
    11,716
    
    
    
    11,528Sales and property taxes payable
    
    
    10,430
    
    
    
    6,540Accounts payable and accrued expenses
    
    
    7,750
    
    
    
    7,926Net deferred income tax liability
    
    
    13,936
    
    
    
    15,673Total liabilities
    
    
    618,537
    
    
    
    648,360Commitments and contingencies (Note 6)Stockholders equity:Common Stock, $0.01 par value; 75,000,000 shares
authorized; 12,615,840 and 12,246,405 shares
issued and outstanding, respectively
    
    
    126
    
    
    
    122Preferred Stock, $0.01 par value;
5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    83,566
    
    
    
    83,671Stock subscription receivable
    
    
    (5
    )
    
    
    (5
    )Accumulated other comprehensive income
    
    
    178
    
    
    
    167Retained earnings
    
    
    62,622
    
    
    
    63,501Total stockholders equity
    
    
    146,487
    
    
    
    147,456Total liabilities and stockholders equity
    
    $
    765,024
    
    
    $
    795,816
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##### Table of Contents



MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Consolidated Statements of Operations
 (Unaudited)
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands, exceptper-share data)Interest income
    
    $
    19,072
    
    
    $
    22,953Fee income
    
    
    5,034
    
    
    
    5,235Interest and fee income
    
    
    24,106
    
    
    
    28,188Interest expense
    
    
    7,832
    
    
    
    10,247Net interest and fee income
    
    
    16,274
    
    
    
    17,941Provision for credit losses
    
    
    8,748
    
    
    
    7,006Net interest and fee income after provision for
credit losses
    
    
    7,526
    
    
    
    10,935Other income:Insurance income
    
    
    1,543
    
    
    
    1,562Loss on derivatives and hedging activities
    
    
    (1,307
    )
    
    
    Other income
    
    
    407
    
    
    
    558Other income
    
    
    643
    
    
    
    2,120Other expense:Salaries and benefits
    
    
    5,885
    
    
    
    5,870General and administrative
    
    
    3,399
    
    
    
    4,303Financing related costs
    
    
    255
    
    
    
    366Other expense
    
    
    9,539
    
    
    
    10,539Income (loss) before income taxes
    
    
    (1,370
    )
    
    
    2,516Income tax (benefit) expense
    
    
    (491
    )
    
    
    1,157Net income (loss)
    
    $
    (879
    )
    
    $
    1,359Basic earnings (loss) per share
    
    $
    (0.08
    )
    
    $
    0.11Diluted earnings (loss) per share
    
    $
    (0.08
    )
    
    $
    0.11Weighted average shares used in computing basic
earnings (loss) per share
    
    
    11,677,264
    
    
    
    12,191,991Weighted average shares used in computing
diluted earnings (loss) per share
    
    
    11,677,264
    
    
    
    12,267,071
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##### Table of Contents



MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Consolidated Statements of Stockholders Equity
 (Unaudited)
 Additional
    
    
    Stock
    
    
    Accumulated Other
    
    
    
    
    
    
    TotalCommon
    
    
    Stock
    
    
    Paid-In
    
    
    Subscription
    
    
    Comprehensive
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Income (Loss)
    
    
    Earnings
    
    
    Equity(Dollars in thousands)Balance, December 31, 2007
    
    
    12,201,304
    
    
    $
    122
    
    
    $
    84,429
    
    
    $
    (7
    )
    
    $
    (3,130
    )
    
    $
    68,731
    
    
    $
    150,145Issuance of common stock
    
    
    36,360
    
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148Repurchase of common stock
    
    
    (333,759
    )
    
    
    (3
    )
    
    
    (2,380
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,383
    )Exercise of stock options
    
    
    46,616
    
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145Tax benefit on stock options
exercised
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Stock option compensation recognized
    
    
    
    
    
    
    
    
    
    
    304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304Payment of receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Restricted stock grant
    
    
    295,884
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock compensation
recognized
    
    
    
    
    
    
    
    
    
    
    926
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    926Net change related to cash flow
hedge derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,297
    
    
    
    
    
    
    
    3,297Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,230
    )
    
    
    (5,230
    )Balance, December 31, 2008
    
    
    12,246,405
    
    
    $
    122
    
    
    $
    83,671
    
    
    $
    (5
    )
    
    $
    167
    
    
    $
    63,501
    
    
    $
    147,456Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase of common stock
    
    
    (94,776
    )
    
    
    (1
    )
    
    
    (369
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (370
    )Stock option compensation recognized
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57Restricted stock grant
    
    
    464,211
    
    
    
    5
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock compensation
recognized
    
    
    
    
    
    
    
    
    
    
    212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212Net change related to cash flow
hedge derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (879
    )
    
    
    (879
    )Balance, March 31, 2009
    
    
    12,615,840
    
    
    $
    126
    
    
    $
    83,566
    
    
    $
    (5
    )
    
    $
    178
    
    
    $
    62,622
    
    
    $
    146,487
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##### Table of Contents



MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months Ended March 31,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    (879
    )
    
    $
    1,359Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    606
    
    
    
    760Stock-based compensation
    
    
    402
    
    
    
    281Excess tax benefits from stock-based payment
arrangements
    
    
    
    
    
    
    (75
    )Amortization of deferred net (gain) loss on cash flow
hedge derivatives
    
    
    19
    
    
    
    (70
    )Decrease in fair value of cash flow hedge derivatives
    
    
    188
    
    
    
    Provision for credit losses
    
    
    8,748
    
    
    
    7,006Net deferred income taxes
    
    
    (1,878
    )
    
    
    685Amortization of deferred initial direct costs and fees
    
    
    3,541
    
    
    
    4,337Deferred initial direct costs and fees
    
    
    (1,165
    )
    
    
    (3,170
    )Loss on equipment disposed
    
    
    333
    
    
    
    173Effect of changes in other operating items:Other assets
    
    
    (2,066
    )
    
    
    (8,474
    )Other liabilities
    
    
    3,664
    
    
    
    4,602Net cash provided by operating activities
    
    
    11,513
    
    
    
    7,414Cash flows from investing activities:Purchases of equipment for direct financing lease contracts
and funds used to originate loans
    
    
    (36,280
    )
    
    
    (75,120
    )Principal collections on leases and loans
    
    
    72,423
    
    
    
    78,497Security deposits collected, net of returns
    
    
    (746
    )
    
    
    (706
    )Proceeds from the sale of equipment
    
    
    1,322
    
    
    
    1,387Acquisitions of property and equipment
    
    
    (178
    )
    
    
    (426
    )Change in restricted interest-earning deposits with banks
    
    
    (5,170
    )
    
    
    76,177Net cash provided by investing activities
    
    
    31,371
    
    
    
    79,809Cash flows from financing activities:Issuances of common stock
    
    
    
    
    
    
    2Repurchases of common stock
    
    
    (370
    )
    
    
    (984
    )Exercise of stock options
    
    
    
    
    
    
    80Excess tax benefits from stock-based payment arrangements
    
    
    
    
    
    
    75Debt issuance costs
    
    
    (330
    )
    
    
    (38
    )Term securitization repayments
    
    
    (57,847
    )
    
    
    (110,690
    )Secured bank facility advances
    
    
    4,192
    
    
    
    18,601Secured bank facility repayments
    
    
    (19,306
    )
    
    
    (740
    )Warehouse advances
    
    
    37,938
    
    
    
    Warehouse repayments
    
    
    (8,433
    )
    
    
    Increase in deposits
    
    
    11,468
    
    
    
    Net cash used by financing activities
    
    
    (32,688
    )
    
    
    (93,694
    )Net increase (decrease) in total cash and cash equivalents
    
    
    10,196
    
    
    
    (6,471
    )Total cash and cash equivalents, beginning of period
    
    
    40,270
    
    
    
    38,708Total cash and cash equivalents, end of period
    
    $
    50,466
    
    
    $
    32,237Supplemental disclosures of cash flow information:Cash paid for interest on deposits and borrowings
    
    $
    7,195
    
    
    $
    10,098Cash paid for income taxes
    
    
    13
    
    
    
    1,805
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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.
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##### Table of Contents



Insurance income
 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. Accounting for Contingencies,
  Securitizations. Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities a replacement of Financial Accounting Standards Board (FASB) Statement No. 125
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##### Table of Contents



Derivatives. Accounting for Derivative Instruments and Hedging
Activities
    Fair Value Measurements
 Common stock and equity.
 Stock-based compensation. Share-Based Payments,
 Income taxes. Accounting for Income Taxes.
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##### Table of Contents



Earnings (loss) per share. Earnings Per Share Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities
   NOTE 3  Net Investment in Leases and Loans
  March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Minimum lease payments receivable
    
    $
    696,874
    
    
    $
    752,802Estimated residual value of equipment
    
    
    50,522
    
    
    
    51,197Unearned lease income, net of initial direct
costs and fees deferred
    
    
    (108,418
    )
    
    
    (118,390
    )Security deposits
    
    
    (11,419
    )
    
    
    (12,165
    )Loans, net of unamortized deferred fees and costs
    
    
    10,069
    
    
    
    12,333Allowance for credit losses
    
    
    (15,309
    )
    
    
    (15,283
    )$
    622,319
    
    
    $
    670,494
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##### Table of Contents



Minimum LeasePayments
    
    
    IncomeReceivable
    
    
    Amortization(Dollars in thousands)Period Ending December 31:2009
    
    $
    235,165
    
    
    $
    46,3422010
    
    
    231,364
    
    
    
    36,6782011
    
    
    141,738
    
    
    
    17,5682012
    
    
    66,161
    
    
    
    6,4222013
    
    
    21,339
    
    
    
    1,362Thereafter
    
    
    1,107
    
    
    
    46$
    696,874
    
    
    $
    108,418
  NOTE 4  Allowance for Credit Losses
   Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Allowance for credit losses, beginning of period
    
    $
    15,283
    
    
    $
    10,988Charge-offs
    
    
    (9,398
    )
    
    
    (6,683
    )Recoveries
    
    
    676
    
    
    
    763Net charge-offs
    
    
    (8,722
    )
    
    
    (5,920
    )Provision for credit losses
    
    
    8,748
    
    
    
    7,006Allowance for credit losses, end of period
    
    $
    15,309
    
    
    $
    12,074
 NOTE 5  Other Assets
  March 31,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Income taxes receivable
    
    $
    2,760
    
    
    $
    4,136Accrued fees receivable
    
    
    3,596
    
    
    
    3,559Deferred transaction costs
    
    
    1,421
    
    
    
    1,375Prepaid expenses
    
    
    1,338
    
    
    
    1,990Other
    
    
    1,322
    
    
    
    1,699$
    10,437
    
    
    $
    12,759
 NOTE 6  Contingencies
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NOTE 7  Deposits
  ScheduledMaturities(Dollars in thousands)Period Ending December 31,2009
    
    $
    24,5052010
    
    
    19,1962011
    
    
    13,3842012
    
    
    10,3282013
    
    
    5,926Thereafter
    
    
    1,514$
    74,853
  NOTE 8  Short-term and Long-term Borrowings
   Principal
    
    

Interest (1)(Dollars in thousands)Period Ending December 31,2009
    
    $
    270,162
    
    
    $
    13,8782010
    
    
    135,811
    
    
    
    9,7482011
    
    
    68,851
    
    
    
    3,6602012
    
    
    23,606
    
    
    
    7632013
    
    
    1,344
    
    
    
    36Thereafter
    
    
    78
    
    
    
    1$
    499,852
    
    
    $
    28,086
 
 (1)
    
    Includes interest on term note securitizations only. Excludes interest on $116.3
million of short-term bank facility and CP conduit warehouse facility. NOTE 9  Derivative Financial Instruments
 .
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For Active Agreements:
 March,
    
    January,
    
    December,
    
    August,
    
    August,Inception Date
    
    2008
    
    2008
    
    2007
    
    2007
    
    2006October,
    
    October,
    
    October,
    
    October,
    
    October,Commencement Date
    
    2009
    
    2009
    
    2009
    
    2008
    
    2008(Dollars in thousands)Notional amount:March 31, 2009
    
    $
    25,000
    
    
    $
    25,000
    
    
    $
    100,000
    
    
    $
    50,000
    
    
    $
    50,000December 31, 2008
    
    $
    25,000
    
    
    $
    25,000
    
    
    $
    100,000
    
    
    $
    50,000
    
    
    $
    50,000For active agreements:Fair value recorded in other assets (liabilities)March 31, 2009
    
    $
    (802
    )
    
    $
    (1,072
    )
    
    $
    (4,552
    )
    
    $
    (2,499
    )
    
    $
    (2,791
    )December 31, 2008
    
    $
    (653
    )
    
    $
    (922
    )
    
    $
    (3,955
    )
    
    $
    (2,823
    )
    
    $
    (3,175
    )Unrealized gain, net of tax, recorded in equityMarch 31, 2009
    
    $
    246
    
    
    $
    93
    
    
    $
    190
    
    
    $
    
    
    
    $
    December 31, 2008
    
    $
    246
    
    
    $
    93
    
    
    $
    190
    
    
    $
    
    
    
    $
    
 For Terminated Agreements:
 August,2006/August,
    
    June/September,
    
    October/December,Inception Date
    
    August, 2007
    
    August, 2006
    
    2007
    
    2005
    
    2004Commencement Date
    
    October, 2008
    
    October, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005Termination Date
    
    October, 2008
    
    September, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005(Dollars in thousands)Notional amount
    
    $
    50,000
    
    
    $
    50,000
    
    
    $
    300,000
    
    
    $
    225,000
    
    
    $
    250,000Realized gain (loss) at termination
    
    $
    (1,717
    )
    
    $
    (1,595
    )
    
    $
    (2,683
    )
    
    $
    3,732
    
    
    $
    3,151Deferred gain (loss), net of tax,
recorded in equity:March 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    (651
    )
    
    $
    300
    
    
    $
    December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    (777
    )
    
    $
    399
    
    
    $
    16Amortization recognized as
increase (decrease) in interest
expense:Three months ended March 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    209
    
    
    $
    (164
    )
    
    $
    (26
    )Year ended December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    1,136
    
    
    $
    (953
    )
    
    $
    (354
    )Expected amortization during next
12 months as increase (decrease)
in interest expense
    
    $
    
    
    
    $
    
    
    
    $
    610
    
    
    $
    (428
    )
    
    $
    
    - 13 -




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging
Activities-an amendment of FASB Statement No. 133.
 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.
  - 14 -




---



##### Table of Contents



Fair Value Measurements Using
    
    Assets/LiabilitiesLevel 1
    
    Level 2
    
    Level 3
    
    at Fair Value(Dollars in thousands)AssetsInterest-rate caps purchased
    
    $
    
    
    
    $
    62
    
    
    $
    
    
    
    $
    62LiabilitiesInterest-rate caps sold
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    49Interest-rate swaps
    
    
    
    
    
    
    11,716
    
    
    
    
    
    
    
    11,716
 NOTE 11 Earnings (Loss) Per Common Share (EPS)
    Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands, except per-share data)Net income (loss)
    
    $
    (879
    )
    
    $
    1,359Weighted average common shares outstanding
    
    
    11,677,264
    
    
    
    12,033,523Add: Unvested restricted stock awards considered
participating securities
    
    
    
    
    
    
    158,468Adjusted weighted average common shares used in
computing basic EPS
    
    
    11,677,264
    
    
    
    12,191,991Add: Effect of dilutive stock options
    
    
    
    
    
    
    75,080Adjusted weighted average common shares used in
computing diluted EPS
    
    
    11,677,264
    
    
    
    12,267,071Net earnings (loss) per common share:Basic
    
    $
    (0.08
    )
    
    $
    0.11Diluted
    
    $
    (0.08
    )
    
    $
    0.11
   - 15 -




---



##### Table of Contents



NOTE 12  Comprehensive Income (Loss)
  Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Net income (loss), as reported
    
    $
    (879
    )
    
    $
    1,359Other comprehensive income (loss):Changes in fair values of cash flow hedge derivatives
    
    
    
    
    
    
    (5,352
    )Amortization of net deferred gain on cash flow hedge
derivatives
    
    
    19
    
    
    
    (70
    )Tax effect
    
    
    (8
    )
    
    
    2,150Total other comprehensive income (loss)
    
    
    11
    
    
    
    (3,272
    )Comprehensive income (loss)
    
    $
    (868
    )
    
    $
    (1,913
    )
 NOTE 13  Stockholders Equity
 Stockholders Equity
   Regulatory Capital Requirements
     - 16 -




---



##### Table of Contents



Minimum Capital
    
    Well-Capitalized CapitalActual
    
    Requirement
    
    RequirementRatio
    
    Amount
    
    Ratio(1)
    
    Amount
    
    Ratio
    
    Amount(Dollars in thousands)Tier 1 Leverage CapitalMarlin Business Services Corp.
    
    
    19.30
    %
    
    $
    146,309
    
    
    
    4
    %
    
    $
    30,319
    
    
    
    5
    %
    
    $
    37,899Marlin Business Bank
    
    
    16.34
    %
    
    $
    13,874
    
    
    
    5
    %
    
    $
    4,244
    
    
    
    5
    %
    
    $
    4,244Tier 1 Risk-based CapitalMarlin Business Services Corp.
    
    
    21.60
    %
    
    $
    146,309
    
    
    
    4
    %
    
    $
    27,092
    
    
    
    6
    %
    
    $
    40,638Marlin Business Bank
    
    
    16.39
    %
    
    $
    13,874
    
    
    
    6
    %
    
    $
    5,078
    
    
    
    6
    %
    
    $
    5,078Total Risk-based CapitalMarlin Business Services Corp.
    
    
    22.86
    %
    
    $
    154,854
    
    
    
    8
    %
    
    $
    54,184
    
    
    
    10
    %
    
    $
    67,730Marlin Business Bank
    
    
    17.47
    %
    
    $
    14,787
    
    
    
    15
    %
    
    $
    12,696
    
    
    
    10
    %(1)
    
    $
    8,464
 
 (1)
    
    MBB is required to maintain well-capitalized status. In addition, MBB must
maintain a total risk-based capital ratio greater than 15%. Prompt Corrective Action
   
    
    prohibiting the payment of principal and interest on subordinated debt;
    
    prohibiting the holding company from making distributions without prior regulatory
approval;
 - 17 -




---



##### Table of Contents




    
    placing limits on asset growth and restrictions on activities;
    
    placing additional restrictions on transactions with affiliates;
    
    restricting the interest rate the institution may pay on deposits;
    
    prohibiting the institution from accepting deposits from correspondent banks; and
    
    in the most severe cases, appointing a conservator or receiver for the institution.
   NOTE 14  Stock-Based Compensation
   Stock Options
     - 18 -




---



##### Table of Contents



Three Months EndedMarch 31,2009
    
    2008Risk-free interest rate
    
    
    n/a
    
    
    
    2.36
    %Expected life (years)
    
    
    n/a
    
    
    5.2 yearsExpected volatility
    
    
    n/a
    
    
    
    35
    %Expected dividends
    
    
    n/a
    
    
    
    
   WeightedAverageShares
    
    
    Exercise PriceOptionsOutstanding at January 1, 2009
    
    
    885,459
    
    
    $
    12.32Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (35,964
    )
    
    
    18.59Expired
    
    
    
    
    
    
    Outstanding at March 31, 2009
    
    
    849,495
    
    
    
    12.05
    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
    
    
    
    3.0
    
    
    $
    3.39
    
    
    $
    57
    
    
    
    101,770
    
    
    
    3.0
    
    
    $
    3.39
    
    
    $
    57$4.23  5.01
    
    
    58,641
    
    
    
    1.0
    
    
    
    4.34
    
    
    
    
    
    
    
    58,641
    
    
    
    1.0
    
    
    
    4.34
    
    
    
    $7.61  10.18
    
    
    356,822
    
    
    
    5.0
    
    
    
    9.53
    
    
    
    
    
    
    
    128,852
    
    
    
    3.2
    
    
    
    10.06
    
    
    
    $14.00  16.02
    
    
    78,571
    
    
    
    4.9
    
    
    
    14.89
    
    
    
    
    
    
    
    64,329
    
    
    
    4.9
    
    
    
    14.74
    
    
    
    $17.52  22.23
    
    
    253,691
    
    
    
    4.2
    
    
    
    19.98
    
    
    
    
    
    
    
    141,992
    
    
    
    4.0
    
    
    
    19.26
    
    
    
    849,495
    
    
    
    4.2
    
    
    
    12.05
    
    
    $
    57
    
    
    
    495,584
    
    
    
    3.3
    
    
    
    11.26
    
    
    $
    57
  - 19 -




---



##### Table of Contents



Restricted Stock Awards
      WeightedAverageGrant-DateShares
    
    
    Fair ValueNon-vested restricted stock at January 1, 2009
    
    
    503,914
    
    
    $
    11.29Granted
    
    
    476,483
    
    
    
    4.40Vested
    
    
    (15,599
    )
    
    
    12.39Forfeited
    
    
    (12,372
    )
    
    
    6.30Non-vested restricted stock at March 31, 2009
    
    
    952,426
    
    
    
    7.89
     - 20 -




---



##### Table of Contents



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 for the year ended December 31, 2008 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 funding and capital;-
    
    general volatility of the securitization and capital markets;-
    
    changes in our industry, interest rates or the general economy;-
    
    changes in our business strategy;-
    
    the degree and nature of our competition;-
    
    availability and retention of qualified personnel; and-
    
    the factors set forth in the section captioned Risk Factors in our
Form 10-K for the year ended December 31, 2008 filed with the
Securities and Exchange Commission.
  Overview
     - 21 -




---



##### Table of Contents



Three MonthsEndedMarch 31,
    
    As of or For the Year Ended December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Number of sales account executives
    
    
    58
    
    
    
    86
    
    
    
    118
    
    
    
    100
    
    
    
    103
    
    
    
    100Number of originating
sources(1)
    
    
    692
    
    
    
    1,014
    
    
    
    1,246
    
    
    
    1,295
    
    
    
    1,295
    
    
    
    1,244
 
 (1)
    
    Monthly average of origination sources generating lease volume    - 22 -




---



##### Table of Contents



Accounting for Derivative Instruments and Hedging Activities
 Critical Accounting Policies
  Income recognition.
     - 23 -




---



##### 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. Accounting for Contingencies
  Securitizations. Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities a
replacement of Financial Accounting Standards Board Statement No. 125
 Derivatives. Accounting for Derivative Instruments and Hedging
Activities
 - 24 -




---



##### Table of Contents



Fair Value Measurements
 Stock-based compensation. Share-Based Payment,
    Income taxes. Accounting for Income Taxes.
 - 25 -




---



##### Table of Contents



RESULTS OF OPERATIONS
 Comparison of the Three-Month Periods Ended March 31, 2009 and 2008
 Net income.
     Average balances and net interest margin.
 - 26 -




---



##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Average(1)
    
    
    
    
    
    
    Average
    
    
    Average(1)
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yields/Rates(2)
    
    
    Balance
    
    
    Interest
    
    
    Yields/Rates(2)Interest-earning assets:Interest-earning deposits with banks
    
    $
    36,858
    
    
    $
    58
    
    
    
    0.62
    %
    
    $
    37,293
    
    
    $
    279
    
    
    
    2.99
    %Restricted interest-earning deposits
with banks
    
    
    48,871
    
    
    
    141
    
    
    
    1.16
    
    
    
    96,593
    
    
    
    929
    
    
    
    3.85Net investment in leases(3)
    
    
    634,314
    
    
    
    18,540
    
    
    
    11.69
    
    
    
    729,950
    
    
    
    21,279
    
    
    
    11.66Loans receivable(3)
    
    
    11,256
    
    
    
    333
    
    
    
    11.84
    
    
    
    15,225
    
    
    
    466
    
    
    
    12.25Total interest-earning assets
    
    
    731,299
    
    
    
    19,072
    
    
    
    10.43
    
    
    
    879,061
    
    
    
    22,953
    
    
    
    10.44Non-interest-earning assets:Cash and due from banks
    
    
    1,650
    
    
    
    
    
    
    
    
    
    
    
    351Property and equipment, net
    
    
    2,954
    
    
    
    
    
    
    
    
    
    
    
    3,340Property tax receivables
    
    
    2,553
    
    
    
    
    
    
    
    
    
    
    
    1,781Other assets(4)
    
    
    12,218
    
    
    
    
    
    
    
    
    
    
    
    24,114Total non-interest-earning assets
    
    
    19,375
    
    
    
    
    
    
    
    
    
    
    
    29,586Total assets
    
    $
    750,674
    
    
    
    
    
    
    
    
    
    
    $
    908,647Interest-bearing liabilities:Short-term borrowings(5)
    
    $
    107,969
    
    
    $
    1,165
    
    
    
    4.32
    %
    
    $
    5,445
    
    
    $
    102
    
    
    
    7.46
    %Long-term borrowings(5)
    
    
    392,441
    
    
    
    6,019
    
    
    
    6.13
    
    
    
    716,705
    
    
    
    10,145
    
    
    
    5.66Deposits
    
    
    67,239
    
    
    
    648
    
    
    
    3.86
    
    
    
    
    
    
    
    
    
    
    
    Total interest-bearing liabilities
    
    
    567,649
    
    
    
    7,832
    
    
    
    5.52
    
    
    
    722,150
    
    
    
    10,247
    
    
    
    5.68Non-interest-bearing liabilities:Fair value of cash flow hedge
derivatives
    
    
    10,984
    
    
    
    
    
    
    
    
    
    
    
    8,418Sales and property taxes payable
    
    
    5,497
    
    
    
    
    
    
    
    
    
    
    
    6,108Accounts payable and accrued expenses
    
    
    3,655
    
    
    
    
    
    
    
    
    
    
    
    8,950Net deferred income tax liability
    
    
    15,696
    
    
    
    
    
    
    
    
    
    
    
    14,672Total non-interest-bearing
liabilities
    
    
    35,832
    
    
    
    
    
    
    
    
    
    
    
    38,148Total liabilities
    
    
    603,481
    
    
    
    
    
    
    
    
    
    
    
    760,298Stockholders equity
    
    
    147,193
    
    
    
    
    
    
    
    
    
    
    
    148,349Total liabilities and
stockholders equity
    
    $
    750,674
    
    
    
    
    
    
    
    
    
    
    $
    908,647Net interest income
    
    
    
    
    
    $
    11,240
    
    
    
    
    
    
    
    
    
    
    $
    12,706Interest rate spread(6)
    
    
    
    
    
    
    
    
    
    
    4.91
    %
    
    
    
    
    
    
    
    
    
    
    4.77
    %Net interest margin(7)
    
    
    
    
    
    
    
    
    
    
    6.15
    %
    
    
    
    
    
    
    
    
    
    
    5.78
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    
    
    
    
    
    
    
    
    128.83
    %
    
    
    
    
    
    
    
    
    
    
    121.73
    %
 
 (1)
    
    Average balances are calculated using month-end balances, to the extent such
averages are representative of operations.(2)
    
    Annualized.(3)
    
    Average balances of leases and loans include non-accrual leases and loans, and are presented net of unearned income.(4)
    
    Includes operating leases.(5)
    
    Includes effect of transaction costs.(6)
    
    Interest rate spread represents the difference between the average yield on
interest-earning assets and the average rate on interest-bearing liabilities.(7)
    
    Net interest margin represents net interest income as a percentage of average
interest-earning assets. - 27 -




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##### Table of Contents



Three Months Ended March 31, 2009 Compared To Three MonthsEnded March 31, 2008Increase (Decrease) Due To:(Dollars in thousands)Volume(1)
    
    Rate(1)
    
    TotalInterest income:Interest-earning deposits with banks
    
    $
    (3
    )
    
    $
    (218
    )
    
    $
    (221
    )Restricted interest-earning deposits with banks
    
    
    (326
    )
    
    
    (462
    )
    
    
    (788
    )Net investment in leases
    
    
    (2,795
    )
    
    
    56
    
    
    
    (2,739
    )Loans receivable
    
    
    (118
    )
    
    
    (15
    )
    
    
    (133
    )Total interest income
    
    
    (3,854
    )
    
    
    (27
    )
    
    
    (3,881
    )Interest expense:Short-term borrowings
    
    
    1,124
    
    
    
    (61
    )
    
    
    1,063Long-term borrowings
    
    
    (4,913
    )
    
    
    787
    
    
    
    (4,126
    )Deposits
    
    
    648
    
    
    
    
    
    
    
    648Total interest expense
    
    
    (2,139
    )
    
    
    (276
    )
    
    
    (2,415
    )Net interest income
    
    
    (2,234
    )
    
    
    768
    
    
    
    (1,466
    )
 
 (1)
    
    Changes due to volume and rate are calculated independently for each line item
presented. Changes attributable to changes in volume represent changes in average
balances multiplied by the prior periods average rates. Changes attributable to changes in
rate represent changes in average rates multiplied by the prior years average balances.
Changes attributable to the combined impact of volume and rate have been allocated
proportionately to the change due to volume and the change due to rate. Net interest and fee margin.
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Interest income
    
    $
    19,072
    
    
    $
    22,953Fee income
    
    
    5,034
    
    
    
    5,235Interest and fee income
    
    
    24,106
    
    
    
    28,188Interest expense
    
    
    7,832
    
    
    
    10,247Net interest and fee income
    
    $
    16,274
    
    
    $
    17,941Average total finance receivables (1)
    
    $
    645,570
    
    
    $
    745,175Percent of average total finance receivables:Interest income
    
    
    11.82
    %
    
    
    12.32
    %Fee income
    
    
    3.12
    
    
    
    2.81Interest and fee income
    
    
    14.94
    
    
    
    15.13Interest expense
    
    
    4.86
    
    
    
    5.50Net interest and fee margin
    
    
    10.08
    %
    
    
    9.63
    %
 
 (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.  - 28 -




---



##### Table of Contents



Insurance income.
 Other income.
 Loss on derivatives and hedging activities.
 - 29 -




---



##### Table of Contents



Salaries and benefits expense.
   General and administrative expense.
 Financing related costs.
 Provision for credit losses.
  - 30 -




---



##### Table of Contents



Provision for income taxes.
 FINANCE RECEIVABLES AND ASSET QUALITY
   Year EndedThree Months Ended March 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2008(Dollars in thousands)Allowance for credit losses, beginning of period
    
    $
    15,283
    
    
    $
    10,988
    
    
    $
    10,988Charge-offs
    
    
    (9,398
    )
    
    
    (6,683
    )
    
    
    (30,231
    )Recoveries
    
    
    676
    
    
    
    763
    
    
    
    3,032Net charge-offs
    
    
    (8,722
    )
    
    
    (5,920
    )
    
    
    (27,199
    )Provision for credit losses
    
    
    8,748
    
    
    
    7,006
    
    
    
    31,494Allowance for credit losses, end of period(1)
    
    $
    15,309
    
    
    $
    12,074
    
    
    $
    15,283Annualized net charge-offs to average total finance
receivables (2)
    
    
    5.40
    %
    
    
    3.18
    %
    
    
    3.80
    %Allowance for credit losses to total finance receivables, end of
period (2)
    
    
    2.47
    %
    
    
    1.63
    %
    
    
    2.30
    %Average total finance receivables (2)
    
    $
    645,570
    
    
    $
    745,175
    
    
    $
    715,649Total finance receivables, end of period (2)
    
    $
    618,988
    
    
    $
    739,393
    
    
    $
    664,761Delinquencies greater than 60 days past due
    
    $
    16,824
    
    
    $
    9,527
    
    
    $
    12,203Delinquencies greater than 60 days past due (3)
    
    
    2.38
    %
    
    
    1.10
    %
    
    
    1.59
    %Allowance for credit losses to delinquent accounts greater than
60 days past due (3)
    
    
    91.00
    %
    
    
    126.73
    %
    
    
    125.24
    %Non-accrual leases and loans, end of period
    
    $
    8,263
    
    
    $
    3,940
    
    
    $
    6,380Renegotiated leases and loans, end of period
    
    $
    7,751
    
    
    $
    7,607
    
    
    $
    8,256Accruing leases and loans past due 90 days or more
    
    $
    
    
    
    $
    
    
    
    $
    Interest income included on non-accrual leases and loans(4)
    
    $
    114
    
    
    $
    66
    
    
    $
    711Interest income excluded on non-accrual leases and loans(5)
    
    $
    199
    
    
    $
    108
    
    
    $
    525
 
 (1)
    
    The allowance for credit losses allocated to loans at March 31, 2009, March 31, 2008
and December 31, 2008, was $909,000, $312,000 and $881,000, respectively.(2)
    
    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.(3)
    
    Calculated as a percent of minimum lease payments receivable for leases and as a
percent of principal outstanding for loans and factoring receivables.(4)
    
    Represents interest which was recognized during the period on non-accrual loans and
leases, prior to non-accrual status.(5)
    
    Represents interest which would have been recorded on non-accrual loans and leases
had they performed in accordance with their contractual terms during the period. - 31 -




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www.marlincorp.com
 Accounting for Contingencies
 RESIDUAL PERFORMANCE
   LIQUIDITY AND CAPITAL RESOURCES
  - 32 -




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
    
    borrowings under a revolving or short-term 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.
         - 33 -




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Total Cash and Cash Equivalents.
  Borrowings.
 For the Three Months Ended March 31, 2009
    
    
    As of March 31, 2009MaximumMaximum
    
    
    Month End
    
    
    Average
    
    
    Weighted
    
    
    
    
    
    
    WeightedFacility
    
    
    Amount
    
    
    Amount
    
    
    Average
    
    
    Amount
    
    
    Average
    
    
    UnusedAmount
    
    
    Outstanding
    
    
    Outstanding
    
    
    Coupon
    
    
    Outstanding
    
    
    Coupon
    
    
    Capacity(Dollars in thousands)Revolving or short-term bank
facility(1)
    
    $
    n/a
    
    
    $
    16,839
    
    
    $
    14,129
    
    
    
    2.13
    %
    
    $
    4,934
    
    
    
    2.16
    %
    
    $
    CP conduit warehouse
facility(1)
    
    
    n/a
    
    
    
    111,380
    
    
    
    93,840
    
    
    
    4.52
    %
    
    
    111,380
    
    
    
    5.41
    %
    
    
    Term note securitizations(2)
    
    
    
    
    
    
    419,167
    
    
    
    392,441
    
    
    
    5.87
    %
    
    
    383,538
    
    
    
    5.72
    %
    
    
    $
    
    
    
    
    
    
    
    $
    500,410
    
    
    
    5.51
    %
    
    $
    499,852
    
    
    
    5.62
    %
    
    $
    
 
 (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/Short-term Bank Facility
  - 34 -




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##### Table of Contents



CP Conduit Warehouse Facility
    Term Note Securitizations
  Financial Covenants
  Actual(1)
    
    RequirementTangible net worth minimum
    
    $146.5 million
    
    $92.2 millionDebt-to-equity ratio maximum
    
    
    4.13 to 1

    
    
    10 to 1Four-quarter rolling average
interest coverage ratio minimum
    
    
    1.71 to 1

    
    
    1.50 to 1Minimum quarterly net income
(loss)  adjusted
    
    $
    (88,000)

    
    $
    (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.  - 35 -




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##### Table of Contents



Bank Capital and Regulatory Oversight
    Capital Adequacy
 i.e.
  - 36 -




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##### Table of Contents



Information on Stock Repurchases
  Contractual Obligations (excluding Deposits)
  Contractual Obligations as of March 31, 2009Operating
    
    
    Leased
    
    
    CapitalPeriod Ending December 31,
    
    Borrowings
    
    
    Interest(1)
    
    
    Leases
    
    
    Facilities
    
    
    Leases
    
    
    Total(Dollars in thousands)2009
    
    $
    270,162
    
    
    $
    13,878
    
    
    $
    12
    
    
    $
    1,312
    
    
    $
    20
    
    
    $
    285,3842010
    
    
    135,811
    
    
    
    9,748
    
    
    
    12
    
    
    
    1,575
    
    
    
    21
    
    
    
    147,1672011
    
    
    68,851
    
    
    
    3,660
    
    
    
    5
    
    
    
    1,431
    
    
    
    18
    
    
    
    73,9652012
    
    
    23,606
    
    
    
    763
    
    
    
    
    
    
    
    1,461
    
    
    
    5
    
    
    
    25,8352013
    
    
    1,344
    
    
    
    36
    
    
    
    
    
    
    
    623
    
    
    
    
    
    
    
    2,003Thereafter
    
    
    78
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    79Total
    
    $
    499,852
    
    
    $
    28,086
    
    
    $
    29
    
    
    $
    6,402
    
    
    $
    64
    
    
    $
    534,433
 
 (1)
    
    Includes interest on term note securitizations only. Excludes interest on $116.3
million of short-term bank facility and CP conduit warehouse facility. MARKET INTEREST RATE RISK AND SENSITIVITY
    - 37 -




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Accounting for Derivatives Instruments and Hedging Activities.
      - 38 -




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##### Table of Contents



For Active Agreements:
 March,
    
    January,
    
    December,
    
    August,
    
    August,Inception Date
    
    2008
    
    2008
    
    2007
    
    2007
    
    2006October,
    
    October,
    
    October,
    
    October,
    
    October,Commencement Date
    
    2009
    
    2009
    
    2009
    
    2008
    
    2008(Dollars in thousands)Notional amount:March 31, 2009
    
    $
    25,000
    
    
    $
    25,000
    
    
    $
    100,000
    
    
    $
    50,000
    
    
    $
    50,000December 31, 2008
    
    $
    25,000
    
    
    $
    25,000
    
    
    $
    100,000
    
    
    $
    50,000
    
    
    $
    50,000For active agreements:Fair value recorded in other assets (liabilities)March 31, 2009
    
    $
    (802
    )
    
    $
    (1,072
    )
    
    $
    (4,552
    )
    
    $
    (2,499
    )
    
    $
    (2,791
    )December 31, 2008
    
    $
    (653
    )
    
    $
    (922
    )
    
    $
    (3,955
    )
    
    $
    (2,823
    )
    
    $
    (3,175
    )Unrealized gain, net of tax, recorded in equityMarch 31, 2009
    
    $
    246
    
    
    $
    93
    
    
    $
    190
    
    
    $
    
    
    
    $
    December 31, 2008
    
    $
    246
    
    
    $
    93
    
    
    $
    190
    
    
    $
    
    
    
    $
    
 For Terminated Agreements:
 August,2006/August,
    
    June/September,
    
    October/December,Inception Date
    
    August, 2007
    
    August, 2006
    
    2007
    
    2005
    
    2004Commencement Date
    
    October, 2008
    
    October, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005Termination Date
    
    October, 2008
    
    September, 2008
    
    October, 2007
    
    September, 2006
    
    August, 2005(Dollars in thousands)Notional amount
    
    $
    50,000
    
    
    $
    50,000
    
    
    $
    300,000
    
    
    $
    225,000
    
    
    $
    250,000Realized gain (loss) at termination
    
    $
    (1,717
    )
    
    $
    (1,595
    )
    
    $
    (2,683
    )
    
    $
    3,732
    
    
    $
    3,151Deferred gain (loss), net of tax,
recorded in equity:March 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    (651
    )
    
    $
    300
    
    
    $
    December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    (777
    )
    
    $
    399
    
    
    $
    16Amortization recognized as
increase (decrease) in interest
expense:Three months ended March 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    209
    
    
    $
    (164
    )
    
    $
    (26
    )Year ended December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    1,136
    
    
    $
    (953
    )
    
    $
    (354
    )Expected amortization during next
12 months as increase (decrease)
in interest expense
    
    $
    
    
    
    $
    
    
    
    $
    610
    
    
    $
    (428
    )
    
    $
    
    - 39 -




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Scheduled Maturities by Calendar YearTotal2013 &
    
    Carrying2009
    
    2010
    
    2011
    
    2012
    
    Thereafter
    
    Amount(Dollars in thousands)Debt:Fixed-rate debt
    
    $
    153,848
    
    
    $
    135,811
    
    
    $
    68,851
    
    
    $
    23,606
    
    
    $
    1,422
    
    
    $
    383,538Average fixed rate
    
    
    5.62
    %
    
    
    5.85
    %
    
    
    6.10
    %
    
    
    6.49
    %
    
    
    7.00
    %
    
    
    5.85
    %Variable-rate debt
    
    $
    116,314
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    116,314Average variable rate
    
    
    5.41
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.41
    %
    RECENTLY ISSUED ACCOUNTING STANDARDS
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities ,
  Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly .
 - 40 -




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
      - 41 -




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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 Shares
    
    Dollar Value of SharesTotal Number of
    
    
    
    
    
    Purchased as Part of a
    
    that May Yet beShares
    
    Average Price
    
    Publicly Announced Plan
    
    Purchased Under theTime Period
    
    Purchased
    

Paid Per Share (1)
    

or Program (2)
    
    Plans or ProgramsJanuary 1, 2009 to
January 31, 2009
    
    
    68,160
    
    
    $
    3.86
    
    
    
    68,160
    
    
    $
    10,755,970February 1, 2009 to
February 28, 2009
    
    
    20,734
    
    
    
    4.03
    
    
    
    20,734
    
    
    
    10,672,445March 1, 2009 to
March 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,672,445Total for the quarter
ended March 31, 2009
    
    
    88,894
    
    
    
    3.90
    
    
    
    88,894
    
    
    
    10,672,445
 
 (1)
    
    Average price paid per share includes commissions and is rounded to the nearest two
decimal places.(2)
    
    The stock repurchase plan was announced on November 6, 2007.  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote Of Security Holders
  
 Item 5. Other Information
  - 42 -




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    Description10.1
    
    Marlin Business Services Corp. Compensation Policy for Non-Employee Independent Directors (1)31.1
    
    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)
 
 (1)
    
    Previously filed with the Securities and Exchange Commission as an exhibit to the
Registrants Form 8-K dated April 2, 2009, and incorporated by reference herein. - 43 -




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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)
  - 44 -