##### 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, 2010
 Commission file number 000-50448
 MARLIN BUSINESS SERVICES CORP.
  Pennsylvania(State of incorporation)
    
    38-3686388
(I.R.S. Employer Identification Number)
 
 
 þ o
 Yes o No 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, 2010
 TABLE OF CONTENTS
 Page No.Part I  Financial Information
    
    
    2-41Item 1 Condensed Consolidated Financial Statements (Unaudited)
    
    
    2-22Condensed Consolidated Balance Sheets at March 31, 2010 and December 31, 2009
    
    
    2Condensed Consolidated Statements of Operations for the three-month periods ended
March 31, 2010 and 2009
    
    
    3Condensed Consolidated Statements of Stockholders Equity for the three-month period ended
March 31, 2010 and the year ended December 31, 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2010 and 2009
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6-22Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23-41Item 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 [Removed and Reserved]
    
    
    43Item 5 Other Information
    
    
    43Item 6 Exhibits
    
    
    43Signatures
    
    
    44Exhibit 10.1RULE 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. Condensed Consolidated Financial Statements
 MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Condensed Consolidated Balance Sheets
(Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands, except per-share data)ASSETSCash and due from banks
    
    $
    1,781
    
    
    $
    1,372Interest-earning deposits with banks
    
    
    42,553
    
    
    
    35,685Total cash and cash equivalents
    
    
    44,334
    
    
    
    37,057Restricted interest-earning deposits with banks (includes $63.1 million and $57.1
million, respectively, related to consolidated variable interest entities (VIEs))
    
    
    65,521
    
    
    
    63,400Net investment in leases and loans (includes $273.1 million and $238.0 million,
respectively, related to consolidated VIEs)
    
    
    408,205
    
    
    
    448,610Property and equipment, net
    
    
    2,305
    
    
    
    2,431Property tax receivables
    
    
    5,866
    
    
    
    1,135Other assets
    
    
    8,290
    
    
    
    13,170Total assets
    
    $
    534,521
    
    
    $
    565,803LIABILITIES AND STOCKHOLDERS EQUITYShort-term borrowings
    
    $
    
    
    
    $
    62,541Long-term borrowings (includes $249.1 million and $226.7 million, respectively,
related to consolidated VIEs)
    
    
    268,434
    
    
    
    244,445Deposits
    
    
    85,135
    
    
    
    80,288Other liabilities:Fair value of derivatives
    
    
    1,208
    
    
    
    2,408Sales and property taxes payable
    
    
    7,752
    
    
    
    4,197Accounts payable and accrued expenses
    
    
    7,268
    
    
    
    7,649Net deferred income tax liability
    
    
    14,206
    
    
    
    16,037Total liabilities
    
    
    384,003
    
    
    
    417,565Commitments and contingencies (Note 6)Stockholders equity:Common Stock, $0.01 par value; 75,000,000 shares
authorized; 12,811,578 and 12,778,935 shares issued and outstanding, respectively
    
    
    128
    
    
    
    128Preferred Stock, $0.01 par value; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Additional paid-in capital
    
    
    85,691
    
    
    
    84,674Stock subscription receivable
    
    
    (2
    )
    
    
    (3
    )Accumulated other comprehensive loss
    
    
    (242
    )
    
    
    (267
    )Retained earnings
    
    
    64,943
    
    
    
    63,706Total stockholders equity
    
    
    150,518
    
    
    
    148,238Total liabilities and stockholders equity
    
    $
    534,521
    
    
    $
    565,803
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MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009(Dollars in thousands, except per-share data)Interest income
    
    $
    12,829
    
    
    $
    19,072Fee income
    
    
    3,816
    
    
    
    5,034Interest and fee income
    
    
    16,645
    
    
    
    24,106Interest expense
    
    
    4,658
    
    
    
    7,832Net interest and fee income
    
    
    11,987
    
    
    
    16,274Provision for credit losses
    
    
    3,123
    
    
    
    8,748Net interest and fee income after provision for credit losses
    
    
    8,864
    
    
    
    7,526Other income:Insurance income
    
    
    1,158
    
    
    
    1,543Loss on derivatives
    
    
    (94
    )
    
    
    (1,307
    )Other income
    
    
    288
    
    
    
    407Other income
    
    
    1,352
    
    
    
    643Other expense:Salaries and benefits
    
    
    5,124
    
    
    
    5,885General and administrative
    
    
    3,046
    
    
    
    3,399Financing related costs
    
    
    147
    
    
    
    255Other expense
    
    
    8,317
    
    
    
    9,539Income (loss) before income taxes
    
    
    1,899
    
    
    
    (1,370
    )Income tax expense (benefit)
    
    
    662
    
    
    
    (491
    )Net income (loss)
    
    $
    1,237
    
    
    $
    (879
    )Basic earnings (loss) per share
    
    $
    0.10
    
    
    $
    (0.08
    )Diluted earnings (loss) per share
    
    $
    0.10
    
    
    $
    (0.08
    )Weighted average shares used in computing basic earnings (loss) per share
    
    
    12,778,463
    
    
    
    11,677,264Weighted average shares used in computing diluted earnings (loss) per share
    
    
    12,833,643
    
    
    
    11,677,264
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MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Condensed Consolidated
Statements of Stockholders Equity
(Unaudited)
 AccumulatedAdditional
    
    
    Stock
    
    
    Other
    
    
    
    
    
    
    TotalCommon
    
    
    Stock
    
    
    Paid-In
    
    
    Subscription
    
    
    Comprehensive
    
    
    Retained
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Income (Loss)
    
    
    Earnings
    
    
    Equity(Dollars in thousands)Balance, December 31, 2008
    
    
    12,246,405
    
    
    $
    122
    
    
    $
    83,671
    
    
    $
    (5
    )
    
    $
    167
    
    
    $
    62,670
    
    
    $
    146,625Issuance of common stock
    
    
    35,004
    
    
    
    1
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106Repurchase of common stock
    
    
    (102,614
    )
    
    
    (1
    )
    
    
    (399
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (400
    )Exercise of stock options
    
    
    40,424
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167Tax benefit on stock options exercised
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48Stock option compensation recognized
    
    
    
    
    
    
    
    
    
    
    298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    298Payment of receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Restricted stock grant
    
    
    559,716
    
    
    
    6
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock compensation recognized
    
    
    
    
    
    
    
    
    
    
    790
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    790Net change related to derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (434
    )
    
    
    
    
    
    
    (434
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,036
    
    
    
    1,036Balance, December 31, 2009
    
    
    12,778,935
    
    
    $
    128
    
    
    $
    84,674
    
    
    $
    (3
    )
    
    $
    (267
    )
    
    $
    63,706
    
    
    $
    148,238Repurchase of common stock
    
    
    (54,600
    )
    
    
    (1
    )
    
    
    (484
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (485
    )Exercise of stock options
    
    
    28,503
    
    
    
    
    
    
    
    113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113Tax benefit on stock options exercised
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56Stock option compensation recognized
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74Payment of receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Restricted stock grant
    
    
    58,740
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted stock compensation recognized
    
    
    
    
    
    
    
    
    
    
    1,259
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,259Net change related to derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,237
    
    
    
    1,237Balance, March 31, 2010
    
    
    12,811,578
    
    
    $
    128
    
    
    $
    85,691
    
    
    $
    (2
    )
    
    $
    (242
    )
    
    $
    64,943
    
    
    $
    150,518
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MARLIN BUSINESS SERVICES CORP.
AND SUBSIDIARIES
 
 Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months Ended March 31,2010
    
    
    2009(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    1,237
    
    
    $
    (879
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    706
    
    
    
    606Stock-based compensation
    
    
    1,333
    
    
    
    402Excess tax benefits from stock-based payment arrangements
    
    
    (56
    )
    
    
    Amortization of deferred net loss (gain) on cash flow hedge derivatives
    
    
    42
    
    
    
    19Change in fair value of derivatives
    
    
    (1,121
    )
    
    
    188Provision for credit losses
    
    
    3,123
    
    
    
    8,748Net deferred income taxes
    
    
    (1,848
    )
    
    
    (1,878
    )Amortization of deferred initial direct costs and fees
    
    
    2,057
    
    
    
    3,541Deferred initial direct costs and fees
    
    
    (670
    )
    
    
    (1,165
    )Loss on equipment disposed
    
    
    596
    
    
    
    333Effect of changes in other operating items:Other assets
    
    
    551
    
    
    
    (2,066
    )Other liabilities
    
    
    3,240
    
    
    
    3,664Net cash provided by operating activities
    
    
    9,190
    
    
    
    11,513Cash flows from investing activities:Purchases of equipment for direct financing lease contracts and funds used to originate loans
    
    
    (23,656
    )
    
    
    (36,280
    )Principal collections on leases and loans
    
    
    58,691
    
    
    
    72,423Security deposits collected, net of refunds
    
    
    (823
    )
    
    
    (746
    )Proceeds from the sale of equipment
    
    
    1,087
    
    
    
    1,322Acquisitions of property and equipment
    
    
    (128
    )
    
    
    (178
    )Change in restricted interest-earning deposits with banks
    
    
    (2,121
    )
    
    
    (5,170
    )Net cash provided by investing activities
    
    
    33,050
    
    
    
    31,371Cash flows from financing activities:Issuances of common stock
    
    
    1
    
    
    
    Repurchases of common stock
    
    
    (485
    )
    
    
    (370
    )Exercise of stock options
    
    
    113
    
    
    
    Excess tax benefits from stock-based payment arrangements
    
    
    56
    
    
    
    Debt issuance costs
    
    
    (943
    )
    
    
    (330
    )Term securitization advances
    
    
    68,169
    
    
    
    Term securitization repayments
    
    
    (45,768
    )
    
    
    (57,847
    )Warehouse and bank facility advances
    
    
    4,425
    
    
    
    42,130Warehouse and bank facility repayments
    
    
    (65,378
    )
    
    
    (27,739
    )Increase in deposits
    
    
    4,847
    
    
    
    11,468Net cash used in financing activities
    
    
    (34,963
    )
    
    
    (32,688
    )Net increase in total cash and cash equivalents
    
    
    7,277
    
    
    
    10,196Total cash and cash equivalents, beginning of period
    
    
    37,057
    
    
    
    40,270Total cash and cash equivalents, end of period
    
    $
    44,334
    
    
    $
    50,466Supplemental disclosures of cash flow information:Cash paid for interest on deposits and borrowings
    
    $
    4,246
    
    
    $
    7,195Cash paid (refunds received) for income taxes
    
    $
    (3,051
    )
    
    $
    13
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MARLIN BUSINESS SERVICES CORP. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  Organization
 Description
   NOTE 2  Basis of Financial Statement Presentation and Critical Accounting Policies
  FASB Accounting Standards Codification
 Use of estimates.
 Income recognition.
 Fee income.
   - 6 -




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Insurance income
 Other income.
 Initial direct costs and fees.
 Lease residual values.
 Allowance for credit losses. ,
   - 7 -




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Securitizations.
 Derivatives.
     Common stock and equity.
 Stock-based compensation.
  - 8 -




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Income taxes.
    Earnings per share.
   - 9 -




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NOTE 3  Net Investment in Leases and Loans
  March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Minimum lease payments receivable
    
    $
    448,268
    
    
    $
    494,954Estimated residual value of equipment
    
    
    42,044
    
    
    
    43,928Unearned lease income, net of initial
direct costs and fees deferred
    
    
    (68,046
    )
    
    
    (74,823
    )Security deposits
    
    
    (6,858
    )
    
    
    (7,681
    )Loans, including unamortized deferred
fees and costs
    
    
    3,050
    
    
    
    4,425Allowance for credit losses
    
    
    (10,253
    )
    
    
    (12,193
    )$
    408,205
    
    
    $
    448,610
    Minimum LeasePayments
    
    
    IncomeReceivable
    
    
    Amortization(Dollars in thousands)Period Ending December 31:2010
    
    $
    169,158
    
    
    $
    30,7362010
    
    
    155,424
    
    
    
    23,1362011
    
    
    81,745
    
    
    
    10,1292012
    
    
    32,551
    
    
    
    3,3432013
    
    
    8,718
    
    
    
    680Thereafter
    
    
    672
    
    
    
    22$
    448,268
    
    
    $
    68,046
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NOTE 4  Allowance for Credit Losses
   Three Months Ended March 31,2010
    
    
    2009(Dollars in thousands)Allowance for credit losses, beginning of period
    
    $
    12,193
    
    
    $
    15,283Charge-offs
    
    
    (5,926
    )
    
    
    (9,398
    )Recoveries
    
    
    863
    
    
    
    676Net charge-offs
    
    
    (5,063
    )
    
    
    (8,722
    )Provision for credit losses
    
    
    3,123
    
    
    
    8,748Allowance for credit losses, end of period
    
    $
    10,253
    
    
    $
    15,309
 NOTE 5  Other Assets
  March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)Accrued fees receivable
    
    $
    3,039
    
    
    $
    3,189Deferred transaction costs
    
    
    2,437
    
    
    
    1,893Prepaid expenses
    
    
    1,472
    
    
    
    1,360Income taxes receivable
    
    
    
    
    
    
    5,178Other
    
    
    1,342
    
    
    
    1,550$
    8,290
    
    
    $
    13,170
 NOTE 6  Commitments and Contingencies
  NOTE 7  Short-term and Long-term Borrowings
   Principal
    
    
    Interest(1)(Dollars in thousands)Period Ending December 31,2010
    
    $
    118,929
    
    
    $
    7,6592011
    
    
    88,012
    
    
    
    5,1002012
    
    
    53,830
    
    
    
    1,7912013
    
    
    7,397
    
    
    
    1072014
    
    
    265
    
    
    
    3Thereafter
    
    
    1
    
    
    
    Total
    
    $
    268,434
    
    
    $
    14,660
 
 (1)
    
    Interest on the variable-rate long-term loan facility is assumed at the March 31,
2010 rate for the remaining term.  - 11 -




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NOTE 8  Deposits
  ScheduledMaturities(Dollars in thousands)Period Ending
December 31,2010
    
    $
    24,9062010
    
    
    27,7002011
    
    
    19,0282012
    
    
    10,8542013
    
    
    2,448Thereafter
    
    
    199$
    85,135
  NOTE 9  Derivative Financial Instruments
     - 12 -




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For Active Agreements:
 August,
    
    
    August,Inception Date
    
    2007
    
    
    2006
 October,
    
    
    October,Commencement Date
    
    2008
    
    
    2008(Dollars in thousands)Notional amount:March 31, 2010
    
    $
    50,000
    
    
    $
    50,000December 31, 2009
    
    $
    50,000
    
    
    $
    50,000For active agreements:Fair value recorded in other assets (liabilities)March 31, 2010
    
    $
    (574
    )
    
    $
    (634
    )December 31, 2009
    
    $
    (1,145
    )
    
    $
    (1,263
    )Unrealized gain, net of tax, recorded in equityMarch 31, 2010
    
    $
    
    
    
    $
    December 31, 2009
    
    $
    
    
    
    $
    
 For Terminated Agreements:
 June/January,
    
    
    December,
    
    
    March,
    
    
    August,
    
    
    September,Inception Date
    
    2008
    
    
    2007
    
    
    2008
    
    
    2006/2007
    
    
    2005
 October,
    
    
    October,
    
    
    October,
    
    
    October,
    
    
    September,Commencement Date
    
    2009
    
    
    2009
    
    
    2009
    
    
    2007
    
    
    2006
 October,
    
    
    October,
    
    
    May,
    
    
    October,
    
    
    September,Termination Date
    
    2009
    
    
    2009
    
    
    2009
    
    
    2007
    
    
    2006(Dollars in thousands)Notional amount
    
    $
    25,000
    
    
    $
    100,000
    
    
    $
    25,000
    
    
    $
    300,000
    
    
    $
    225,000Realized gain (loss) at termination
    
    $
    (1,254
    )
    
    $
    (5,287
    )
    
    $
    (775
    )
    
    $
    (2,683
    )
    
    $
    3,732Deferred gain (loss), net of tax,
recorded in equity:March 31, 2010
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (284
    )
    
    $
    42December 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (357
    )
    
    $
    90Amortization recognized as
increase (decrease) in interest
expense:Three months ended March 31, 2010
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    121
    
    
    $
    (79
    )Year ended December 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    699
    
    
    $
    (514
    )Expected amortization during next
12 months as increase (decrease)
in interest expense
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    316
    
    
    $
    (71
    )
  - 14 -




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##### Table of Contents



NOTE 10  Fair Value Measurements
    
    
    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 UsingLevel 2March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)AssetsInterest-rate caps purchased
    
    $
    40
    
    
    $
    119LiabilitiesInterest-rate swaps
    
    
    1,208
    
    
    
    2,408
   - 15 -




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##### Table of Contents



Disclosures about the Fair Value of Financial Instruments
    March 31, 2010
    
    
    December 31, 2009Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(Dollars in thousands)Assets:Cash and cash equivalents
    
    $
    44,334
    
    
    $
    44,334
    
    
    $
    37,057
    
    
    $
    37,057Restricted interest-earning deposits with banks
    
    
    65,521
    
    
    
    65,521
    
    
    
    63,400
    
    
    
    63,400Loans
    
    
    2,780
    
    
    
    2,578
    
    
    
    4,026
    
    
    
    3,969Interest-rate caps purchased
    
    
    40
    
    
    
    40
    
    
    
    119
    
    
    
    119Liabilities:Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    62,541
    
    
    
    62,541Long-term borrowings
    
    
    268,434
    
    
    
    277,710
    
    
    
    244,445
    
    
    
    244,477Deposits
    
    
    85,135
    
    
    
    86,620
    
    
    
    80,288
    
    
    
    81,903Accounts payable and accrued expenses (1)
    
    
    15,020
    
    
    
    15,020
    
    
    
    11,846
    
    
    
    11,846Interest-rate swaps
    
    
    1,208
    
    
    
    1,208
    
    
    
    2,408
    
    
    
    2,408
 
 (1)
    
    Includes sales and property taxes payable.  (a) Cash and Cash Equivalents
  (b) Restricted Interest-earning Deposits with Banks
  (c) Loans
   - 16 -




---



##### Table of Contents



(d) Short-term and Long-term Borrowings
  (e) Deposits
  (f) Accounts Payable and Accrued Expenses
  (g) Interest-Rate Swaps and Interest-Rate Caps
 Fair Value Measurements
 NOTE
11  Earnings Per Common Share (EPS)
    Three Months Ended March 31,2010
    
    
    2009(Dollars in thousands, exceptper-share data)Net income (loss)
    
    $
    1,237
    
    
    $
    (879
    )Weighted average common shares outstanding
    
    
    11,807,733
    
    
    
    11,677,264Add: Unvested restricted stock awards considered participating
securities
    
    
    970,730
    
    
    
    Adjusted weighted average common shares used in computing basic EPS
    
    
    12,778,463
    
    
    
    11,677,264Add: Effect of dilutive stock options
    
    
    55,180
    
    
    
    Adjusted weighted average common shares used in computing diluted EPS
    
    
    12,833,643
    
    
    
    11,677,264Net earnings (loss) per common share:Basic
    
    $
    0.10
    
    
    $
    (0.08
    )Diluted
    
    $
    0.10
    
    
    $
    (0.08
    )
  - 17 -




---



##### Table of Contents



NOTE 12  Comprehensive Income (Loss)
  Three Months Ended March 31,2010
    
    
    2009(Dollars in thousands)Net income (loss), as reported
    
    $
    1,237
    
    
    $
    (879
    )Other comprehensive income:Change in fair value of derivatives
    
    
    
    
    
    
    Amortization of net deferred
losses (gains) on cash flow hedge
derivatives
    
    
    42
    
    
    
    19Tax effect
    
    
    (17
    )
    
    
    (8
    )Total other comprehensive income
    
    
    25
    
    
    
    11Comprehensive income (loss)
    
    $
    1,262
    
    
    $
    (868
    )
 NOTE 13  Stockholders Equity
 Stockholders Equity
    Regulatory Capital Requirements
    - 18 -




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##### 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.
    
    
    27.69
    %
    
    $
    150,761
    
    
    
    4
    %
    
    $
    21,780
    
    
    
    5
    %
    
    $
    27,225Marlin Business Bank
    
    
    16.41
    %
    
    $
    17,077
    
    
    
    5
    %
    
    $
    5,205
    
    
    
    5
    %
    
    $
    5,205Tier 1 Risk-based CapitalMarlin Business Services Corp.
    
    
    33.35
    %
    
    $
    150,761
    
    
    
    4
    %
    
    $
    18,083
    
    
    
    6
    %
    
    $
    27,125Marlin Business Bank
    
    
    16.77
    %
    
    $
    17,077
    
    
    
    6
    %
    
    $
    6,108
    
    
    
    6
    %
    
    $
    6,108Total Risk-based CapitalMarlin Business Services Corp.
    
    
    34.61
    %
    
    $
    156,469
    
    
    
    8
    %
    
    $
    36,166
    
    
    
    10
    %
    
    $
    45,208Marlin Business Bank
    
    
    17.81
    %
    
    $
    18,128
    
    
    
    15
    %
    
    $
    15,270
    
    
    
    10
    %(1)
    
    $
    10,180
 
 (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
  - 19 -




---



##### Table of Contents




    
    prohibiting the payment of principal and interest on subordinated debt;
 
    
    prohibiting the holding company from making distributions without prior regulatory
approval;
 
    
    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.
   Dividends
 NOTE 14  Stock-Based Compensation
   Stock Options
   - 20 -




---



##### Table of Contents



WeightedAverageNumber of
    
    
    Exercise PriceOptions
    
    Shares
    
    
    Per ShareOutstanding, December 31, 2009
    
    
    778,161
    
    
    $
    12.20Granted
    
    
    
    
    
    
    Exercised
    
    
    (28,503
    )
    
    
    3.99Forfeited
    
    
    (30,982
    )
    
    
    21.60Expired
    
    
    
    
    
    
    Outstanding, March 31, 2010
    
    
    718,676
    
    
    $
    12.12
    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
    
    
    85,925
    
    
    
    2.0
    
    
    $
    3.39
    
    
    $
    581
    
    
    
    85,925
    
    
    
    2.0
    
    
    $
    3.39
    
    
    $
    581$5.01
    
    
    5,050
    
    
    
    0.3
    
    
    
    5.01
    
    
    
    26
    
    
    
    5,050
    
    
    
    0.3
    
    
    
    5.01
    
    
    
    26$7.17  10.18
    
    
    356,839
    
    
    
    4.1
    
    
    
    9.43
    
    
    
    260
    
    
    
    178,602
    
    
    
    3.0
    
    
    
    9.60
    
    
    
    102$14.00  16.01
    
    
    63,484
    
    
    
    3.9
    
    
    
    14.63
    
    
    
    
    
    
    
    57,235
    
    
    
    3.8
    
    
    
    14.57
    
    
    
    $17.52  22.23
    
    
    207,378
    
    
    
    3.3
    
    
    
    19.76
    
    
    
    
    
    
    
    159,166
    
    
    
    3.1
    
    
    
    19.45
    
    
    
    718,676
    
    
    
    3.6
    
    
    
    12.12
    
    
    $
    867
    
    
    
    485,978
    
    
    
    2.9
    
    
    
    12.27
    
    
    $
    709
     - 21 -




---



##### Table of Contents



Restricted Stock Awards
      WeightedAverageGrant-DateNon-vested restricted stock
    
    Shares
    
    
    Fair ValueOutstanding at December 31, 2009
    
    
    1,023,403
    
    
    $
    7.74Granted
    
    
    59,540
    
    
    
    9.52Vested
    
    
    (164,036
    )
    
    
    7.11Forfeited
    
    
    (850
    )
    
    
    6.20Outstanding at March 31, 2010
    
    
    918,057
    
    
    $
    7.97
      - 22 -




---



##### 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, 2009 filed with the Securities and Exchange
Commission (SEC). 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; resulting in changes to 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, 2009 filed
with the SEC.
  Overview
      - 23 -




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##### Table of Contents



Three MonthsEndedMarch 31,
    
    
    As of or For the Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Number of sales account executives
    
    
    53
    
    
    
    38
    
    
    
    86
    
    
    
    118
    
    
    
    100
    
    
    
    103Number of originating sources(1)
    
    
    484
    
    
    
    465
    
    
    
    1,014
    
    
    
    1,246
    
    
    
    1,295
    
    
    
    1,295
 
 (1)
    
    Monthly average of origination sources generating lease volume       - 24 -




---



##### Table of Contents



Critical Accounting Policies
  Income recognition.
      - 25 -




---



##### Table of Contents



Initial direct costs and fees. .
 Lease residual values.
 Allowance for credit losses.
  Securitizations.
 Derivatives.
  - 26 -




---



##### Table of Contents



Stock-based compensation.
   Income taxes.
  - 27 -




---



##### Table of Contents



RESULTS OF OPERATIONS
 Comparison of the Three-Month Periods Ended March 31, 2010 and 2009
 Net income.
      - 28 -




---



##### Table of Contents



Average balances and net interest margin.
 Three Months Ended March 31,2010
    
    
    2009(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
    
    $
    35,278
    
    
    $
    4
    
    
    
    0.04
    %
    
    $
    36,858
    
    
    $
    58
    
    
    
    0.62
    %Restricted interest-earning deposits
with banks
    
    
    63,047
    
    
    
    12
    
    
    
    0.08
    
    
    
    48,871
    
    
    
    141
    
    
    
    1.16Net investment in leases(3)
    
    
    427,416
    
    
    
    12,696
    
    
    
    11.88
    
    
    
    634,314
    
    
    
    18,540
    
    
    
    11.69Loans receivable(3)
    
    
    3,759
    
    
    
    117
    
    
    
    12.45
    
    
    
    11,256
    
    
    
    333
    
    
    
    11.84Total interest-earning assets
    
    
    529,500
    
    
    
    12,829
    
    
    
    9.69
    
    
    
    731,299
    
    
    
    19,072
    
    
    
    10.43Non-interest-earning assets:Cash and due from banks
    
    
    1,836
    
    
    
    
    
    
    
    
    
    
    
    1,650Property and equipment, net
    
    
    2,363
    
    
    
    
    
    
    
    
    
    
    
    2,954Property tax receivables
    
    
    1,481
    
    
    
    
    
    
    
    
    
    
    
    2,553Other assets(4)
    
    
    6,615
    
    
    
    
    
    
    
    
    
    
    
    12,218Total non-interest-earning assets
    
    
    12,295
    
    
    
    
    
    
    
    
    
    
    
    19,375Total assets
    
    $
    541,795
    
    
    
    
    
    
    
    
    
    
    $
    750,674Interest-bearing liabilities:Short-term borrowings(5)
    
    $
    28,854
    
    
    $
    325
    
    
    
    4.51
    %
    
    $
    107,969
    
    
    $
    1,165
    
    
    
    4.32
    %Long-term borrowings(5)
    
    
    255,611
    
    
    
    3,705
    
    
    
    5.80
    
    
    
    392,441
    
    
    
    6,019
    
    
    
    6.13Deposits
    
    
    81,363
    
    
    
    628
    
    
    
    3.09
    
    
    
    67,239
    
    
    
    648
    
    
    
    3.86Total interest-bearing liabilities
    
    
    365,828
    
    
    
    4,658
    
    
    
    5.09
    
    
    
    567,649
    
    
    
    7,832
    
    
    
    5.52Non-interest-bearing liabilities:Fair value of derivatives
    
    
    1,796
    
    
    
    
    
    
    
    
    
    
    
    10,984Sales and property taxes payable
    
    
    3,769
    
    
    
    
    
    
    
    
    
    
    
    5,497Accounts payable and accrued expenses
    
    
    5,120
    
    
    
    
    
    
    
    
    
    
    
    3,655Net deferred income tax liability
    
    
    15,950
    
    
    
    
    
    
    
    
    
    
    
    15,696Total non-interest-bearing
liabilities
    
    
    26,635
    
    
    
    
    
    
    
    
    
    
    
    35,832Total liabilities
    
    
    392,463
    
    
    
    
    
    
    
    
    
    
    
    603,481Stockholders equity
    
    
    149,332
    
    
    
    
    
    
    
    
    
    
    
    147,193Total liabilities and
stockholders equity
    
    $
    541,795
    
    
    
    
    
    
    
    
    
    
    $
    750,674Net interest income
    
    
    
    
    
    $
    8,171
    
    
    
    
    
    
    
    
    
    
    $
    11,240Interest rate spread(6)
    
    
    
    
    
    
    
    
    
    
    4.60
    %
    
    
    
    
    
    
    
    
    
    
    4.91
    %Net interest margin(7)
    
    
    
    
    
    
    
    
    
    
    6.17
    %
    
    
    
    
    
    
    
    
    
    
    6.15
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    
    
    
    
    
    
    
    
    144.74
    %
    
    
    
    
    
    
    
    
    
    
    128.83
    %
 
 (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.  - 29 -




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##### Table of Contents



Three Months Ended March 31, 2010 Compared ToThree Months Ended March 31, 2009Increase (Decrease) Due To:(Dollars in thousands)Volume(1)
    
    
    Rate(1)
    
    
    TotalInterest income:Interest-earning deposits with banks
    
    $
    (2
    )
    
    $
    (52
    )
    
    $
    (54
    )Restricted interest-earning deposits with banks
    
    
    32
    
    
    
    (161
    )
    
    
    (129
    )Net investment in leases
    
    
    (6,141
    )
    
    
    297
    
    
    
    (5,844
    )Loans receivable
    
    
    (232
    )
    
    
    16
    
    
    
    (216
    )Total interest income
    
    
    (4,966
    )
    
    
    (1,277
    )
    
    
    (6,243
    )Interest expense:Short-term borrowings
    
    
    (889
    )
    
    
    49
    
    
    
    (840
    )Long-term borrowings
    
    
    (1,999
    )
    
    
    (315
    )
    
    
    (2,314
    )Deposits
    
    
    122
    
    
    
    (142
    )
    
    
    (20
    )Total interest expense
    
    
    (2,608
    )
    
    
    (566
    )
    
    
    (3,174
    )Net interest income
    
    
    (3,113
    )
    
    
    44
    
    
    
    (3,069
    )
 
 (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 31,2010
    
    
    2009(Dollars in thousands)Interest income
    
    $
    12,829
    
    
    $
    19,072Fee income
    
    
    3,816
    
    
    
    5,034Interest and fee income
    
    
    16,645
    
    
    
    24,106Interest expense
    
    
    4,658
    
    
    
    7,832Net interest and fee income
    
    $
    11,987
    
    
    $
    16,274Average total finance receivables (1)
    
    $
    431,176
    
    
    $
    645,570Percent of average total finance receivables:Interest income
    
    
    11.90
    %
    
    
    11.82
    %Fee income
    
    
    3.54
    
    
    
    3.12Interest and fee income
    
    
    15.44
    
    
    
    14.94Interest expense
    
    
    4.32
    
    
    
    4.86Net interest and fee margin
    
    
    11.12
    %
    
    
    10.08
    %
 
 (1)
    
    Total finance receivables include net investment in direct financing leases and
loans. For the calculations above, the effects of (1) the allowance for credit losses and (2)
initial direct costs and fees deferred are excluded.   - 30 -




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##### Table of Contents



Insurance income.
  - 31 -




---



##### Table of Contents



Other income.
 Gain (loss) on derivatives.
   Salaries and benefits expense.
 General and administrative expense.
 Financing related costs.
 Provision for credit losses.
  Provision for income taxes.
  - 32 -




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##### Table of Contents



FINANCE RECEIVABLES AND ASSET QUALITY
   Three Months Ended
    
    
    Year EndedMarch 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2009(Dollars in thousands)Allowance for credit losses, beginning of period
    
    $
    12,193
    
    
    $
    15,283
    
    
    $
    15,283Charge-offs
    
    
    (5,926
    )
    
    
    (9,398
    )
    
    
    (33,575
    )Recoveries
    
    
    863
    
    
    
    676
    
    
    
    3,296Net charge-offs
    
    
    (5,063
    )
    
    
    (8,722
    )
    
    
    (30,279
    )Provision for credit losses
    
    
    3,123
    
    
    
    8,748
    
    
    
    27,189Allowance for credit losses, end of period(1)
    
    $
    10,253
    
    
    $
    15,309
    
    
    $
    12,193Annualized net charge-offs to average total finance receivables (2)
    
    
    4.70
    %
    
    
    5.40
    %
    
    
    5.42
    %Allowance for credit losses to total finance receivables, end of period (2)
    
    
    2.50
    %
    
    
    2.47
    %
    
    
    2.71
    %Average total finance receivables (2)
    
    $
    431,176
    
    
    $
    645,570
    
    
    $
    558,311Total finance receivables, end of period (2)
    
    $
    409,637
    
    
    $
    618,988
    
    
    $
    450,595Delinquencies greater than 60 days past due
    
    $
    6,288
    
    
    $
    16,824
    
    
    $
    8,334Delinquencies greater than 60 days past due (3)
    
    
    1.39
    %
    
    
    2.38
    %
    
    
    1.67
    %Allowance for credit losses to delinquent accounts greater than 60 days past due (3)
    
    
    163.06
    %
    
    
    91.00
    %
    
    
    146.30
    %Non-accrual leases and loans, end of period
    
    $
    3,399
    
    
    $
    8,263
    
    
    $
    4,557Renegotiated leases and loans, end of period
    
    $
    3,790
    
    
    $
    7,751
    
    
    $
    4,521Accruing leases and loans past due 90 days or more
    
    $
    
    
    
    $
    
    
    
    $
    Interest income included on non-accrual leases and loans(4)
    
    $
    42
    
    
    $
    114
    
    
    $
    493Interest income excluded on non-accrual leases and loans(5)
    
    $
    40
    
    
    $
    199
    
    
    $
    103
 
 (1)
    
    The allowance for credit losses allocated to loans at March 31, 2010, March 31, 2009
and December 31, 2009, was $270,000, $909,000 and $399,000, respectively.(2)
    
    Total finance receivables include net investment in direct financing leases and
loans. 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.(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.   - 33 -




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##### Table of Contents



www.marlincorp.com
  RESIDUAL PERFORMANCE
    LIQUIDITY AND CAPITAL RESOURCES
   
    
    borrowings under a revolving, short-term or long-term bank facility;
    
    financing of leases and loans in various warehouse facilities;
    
    financing of leases through term note securitizations; and
    
    FDIC-insured certificates of deposit issued by our wholly-owned subsidiary, Marlin Business
Bank (MBB).
   - 34 -




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##### Table of Contents



Total Cash and Cash Equivalents.
  - 35 -




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##### Table of Contents



Restricted Interest-earning Deposits with Banks
 Borrowings.
 For the Three Months Ended March 31, 2010Maximum
    
    
    
    
    
    
    
    
    
    
    As of March 31, 2010Maximum
    
    
    Month End
    
    
    Average
    
    
    Weighted
    
    
    
    
    
    
    WeightedFacility
    
    
    Amount
    
    
    Amount
    
    
    Average
    
    
    Amount
    
    
    Average
    
    
    UnusedAmount
    
    
    Outstanding
    
    
    Outstanding
    
    
    Coupon
    
    
    Outstanding
    
    
    Coupon
    
    
    Capacity(1)(Dollars in thousands)Federal funds purchased
    
    $
    1,200
    
    
    $
    
    
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    1,200CP conduit warehouse
facility(2)
    
    
    
    
    
    
    59,692
    
    
    
    28,854
    
    
    
    3.26
    %
    
    
    
    
    
    
    
    
    
    
    Term note securitizations(3)
    
    
    
    
    
    
    265,883
    
    
    
    236,383
    
    
    
    5.30
    %
    
    
    249,117
    
    
    
    4.94
    %
    
    
    Long-term loan facility
    
    
    75,000
    
    
    
    20,413
    
    
    
    19,228
    
    
    
    5.50
    %
    
    
    19,317
    
    
    
    5.50
    %
    
    
    55,683$
    76,200
    
    
    
    
    
    
    $
    284,465
    
    
    
    5.11
    %
    
    $
    268,434
    
    
    
    4.98
    %
    
    $
    56,883
 
 (1)
    
    Does not include MBBs access to the Federal Reserve Discount Window, which is based
on the amount of assets MBB chooses to pledge. Based on assets pledged at March 31, 2010, MBB
had $8.4 million in unused, secured borrowing capacity at the Federal Reserve Discount Window.(2)
    
    Converted from a revolving facility to an amortizing facility in March, 2009, and
was fully repaid in February, 2010.(3)
    
    Our term note securitizations are one-time fundings that pay down over time without
any ability for us to draw down additional amounts. Federal Funds Line of Credit with Correspondent Bank
  Federal Reserve Discount Window (Federal Reserve Advances)
  CP Conduit Warehouse Facility
  Term Note Securitizations
   - 36 -




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##### Table of Contents



Long-term Loan Facility
  Financial Covenants
    Actual(1)
    
    
    RequirementTangible net worth minimum
    
    $150.5 million
    
    
    $81.4 millionDebt-to-equity ratio maximum
    
    
    2.5 to 1
    
    
    
    10.0 to 1Maximum servicer senior leverage ratio
    
    
    2.01 to 1
    
    
    
    4.0 to 1Four-quarter rolling average interest
coverage ratio minimum
    
    
    1.71 to 1
    
    
    
    1.50 to 1Maximum portfolio delinquency ratio
    
    
    1.37
    %
    
    
    3.50
    %Maximum charge-off ratio
    
    
    5.69
    %
    
    
    7.0
    %
 
 (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.  - 37 -




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##### Table of Contents



Bank Capital and Regulatory Oversight
    Capital Adequacy
 i.e.
    - 38 -




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##### Table of Contents



Information on Stock Repurchases
  Contractual Obligations (excluding Deposits)
  Contractual Obligations as of March 31, 2010Operating
    
    
    Leased
    
    
    CapitalPeriod Ending December 31,
    
    Borrowings
    
    
    Interest(1)
    
    
    Leases
    
    
    Facilities
    
    
    Leases
    
    
    Total(Dollars in thousands)2010
    
    $
    118,929
    
    
    $
    7,659
    
    
    $
    8
    
    
    $
    1,153
    
    
    $
    26
    
    
    $
    127,7752011
    
    
    88,012
    
    
    
    5,100
    
    
    
    8
    
    
    
    1,431
    
    
    
    35
    
    
    
    94,5862012
    
    
    53,830
    
    
    
    1,791
    
    
    
    4
    
    
    
    1,460
    
    
    
    18
    
    
    
    57,1032013
    
    
    7,397
    
    
    
    107
    
    
    
    4
    
    
    
    624
    
    
    
    
    
    
    
    8,1322014
    
    
    265
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    271Thereafter
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Total
    
    $
    268,434
    
    
    $
    14,660
    
    
    $
    27
    
    
    
    4,668
    
    
    $
    79
    
    
    $
    287,868
 
 (1)
    
    Interest on the long-term loan facility is assumed at the March 31, 2010 rate for
the remaining term. MARKET INTEREST RATE RISK AND SENSITIVITY
     - 39 -




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##### Table of Contents



.
         Scheduled Maturities by Calendar YearTotal2014 &
    
    
    Carrying2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    Amount(Dollars in thousands)Debt:Fixed-rate debt
    
    $
    118,929
    
    
    $
    88,012
    
    
    $
    34,513
    
    
    $
    7,397
    
    
    $
    266
    
    
    $
    249,117Average fixed rate
    
    
    5.39
    %
    
    
    6.25
    %
    
    
    6.69
    %
    
    
    4.63
    %
    
    
    5.49
    %
    
    
    5.85
    %Variable-rate debt
    
    $
    
    
    
    $
    
    
    
    $
    19,317
    
    
    $
    
    
    
    $
    
    
    
    $
    19,317Average variable rate
    
    
    
    
    
    
    
    
    
    
    5.50
    %
    
    
    
    
    
    
    
    
    
    
    5.50
    %
  - 40 -




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##### Table of Contents



RECENTLY ISSUED ACCOUNTING STANDARDS
 Accounting for Transfers of Financial Assets, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,
 Amendments to FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities,
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
   - 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
      
 Item 3. Defaults Upon Senior Securities
   - 42 -




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##### Table of Contents



Item 4. [Removed and Reserved.]
 
 Item 5. Other Information
  
 Item 6. Exhibits
 ExhibitNumber
    
    Description3.1
    
    
    Amended and Restated Articles of Incorporation (1)3.2
    
    
    Bylaws (2)10.1
    
    Compensation Policy for Non-Employee Independent Directors. (Filed herewith)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)
 
 
    
    Management contract or compensatory plan or arrangement.(1)
    
    Previously filed with the SEC as an exhibit to the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2007 filed on March 5, 2008, and incorporated by
reference herein.(2)
    
    Previously filed with the SEC as an exhibit to the Companys Amendment No. 1 to
Registration Statement on Form S-1 (File No. 333-108530), filed on October 14, 2003 and
incorporated by reference herein.  - 43 -




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##### Table of Contents



SIGNATURES
  MARLIN BUSINESS SERVICES CORP.
(Registrant)By:
    
    /s/ Daniel P. Dyer

Daniel P. Dyer Chief Executive Officer
(Chief Executive Officer)By:
    
    /s/ Lynne C. Wilson

Lynne C. WilsonChief Financial Officer & Senior Vice President
(Principal Financial Officer)
   - 44 -