2007 Annual Report
10 Years Of Superior Service
MARLIN’S MISSION
MARLIN BuSINeSS SeRvIceS cORp. IS A
cOMpANY Of dedIcAted eMpLOYeeS
cOMMItted tO the deLIveRY Of quALItY
cRedIt pROductS tO SMALL BuSINeSSeS
wIth exceptIONAL cuStOMeR SeRvIce
ANd cONveNIeNce...
ONe cuStOMeR At A tIMe.
Marlin Business Services Corp. invests in growth by building deeper
relationships with our 23,000 equipment dealers and 187,000 small
business customers. We serve our customers by providing equipment
financing and working capital loans, which enable business expansion
and the ability to invest in updated equipment or technology to help
keep their businesses running efficiently.
Marlin Business Services Corp., with total
assets of $960 million at year-end 2007, is a
solution oriented financing company who has
served more than 23,000 equipment dealers and
187,000 small business customers nationwide.
Marlin Business Services Corp. is the parent
company of Marlin Leasing Corporation, which
offers small-ticket (up to $250,000) lease
financing options to small businesses. Marlin
Leasing focuses on the small business segment
with personalized service, easy documentation
and fast application processing. In addition to our
headquarters in Mount Laurel, NJ, we maintain five
regional offices located throughout the US, and a
lease processing center in Philadelphia, PA. Our
leasing strategy also includes dedicated sales
teams for the Office Equipment and Healthcare
customer segments.
Marlin Business Services Corp. also provides
working capital loans to small businesses through
Marlin Business Lending. This product is comple-
mentary to our lease financing product. Business
lending enables us to partner with our customers
with a different product, but with the same level
of personalized customer service and expedient
transaction processing.
In addition, the Marlin Business Bank is operational
and will provide immediate benefits to our corporate
funding strategy. The benefits include funding
diversification and reduced cost of funds for our
operations.
Marlin Business Services Corp. is headquartered in Mount
Laurel, NJ and employs more than 357 people. Visit Marlin
Business Services Corp. online at www.marlincorp.com.
BuSINeSS pARtNeR
fOR the
SMALL BuSINeSS OwNeR
Since our inception, Marlin Business Services Corp. has quickly and steadily
emerged as a leader in equipment financing, satisfying the financial needs of
small business owners.
We understand small businesses sometimes get overlooked and underserved
by traditional lenders. That’s why we make it our business to focus on simple
processes and fast turnaround times for the small business owner.
Marlin has never lost sight of what has made us successful – the small
business owner. That’s why we’re constantly finding better ways to train our
employees, streamline processes, and enhance services so as to ensure
that the financial needs of our customers are met quickly and efficiently.
2007 OVErVIEW
Dear Fellow Shareholders:
2007 was a challenging year for the financial services industry starting with the
sub-prime meltdown and a major, unprecedented dislocation in the capital markets.
The economy, after five years of solid growth, began to slow down. Under the
weight of so much uncertainty, businesses began to pull back on their capital
investment spending plans. This hostile environment took a toll on our business;
new asset growth slowed and a greater number of customers defaulted on their
payments.
While performance in 2007 did not meet our overall expectations, we did take
action to navigate through these uncertain times. For one, to protect asset quality, we
became much more selective in our underwriting standards. Secondly, we success-
fully implemented our funding plans and received final approval for our Industrial Bank.
During this past year we also strengthened our senior management team with
several new hires. While there’s more work to be done, I’m confident we are taking
the necessary steps to build a stronger, more competitive company that will deliver
opportunities for our business and returns to shareholders in the years ahead.
To recap our financial results, we delivered net income of $18.3 million and diluted
earnings per share of $1.49. Our capital base grew to $150.1 million; equal to $12.31 of
book value per share. For the year, we delivered a 12.57% return on average capital.
STrATEgy
Our business is all about serving the credit needs of small businesses. We do this
in a number of ways: offering lease programs to equipment dealers and lease
brokers, and offering equipment leases and working capital loans to businesses.
We have been quite successful with this strategy, having grown into one of the
largest small-ticket leasing companies operating in the U.S.
Our success is wrapped in the conviction that sustainable competitive strength
comes from several key areas:
Delivering exceptional service to our customers – Convenience and delivering
a personalized level of service is what we are all about. This basic principle attracts
new customers and retains existing relationships.
Maintaining a disciplined operating culture – The foundation of our business
is built on a strong credit and risk management culture that delivers consistent,
predictable performance and allows us to navigate during times of uncertainty.
Offering customers value at reasonable prices – Our service proposition allows
us to offer customers competitive pricing while producing attractive risk-adjusted
margins for our business.
PEOPLE
Our business is a people business. For that reason, we seek to attract talented,
energetic people who want to be a part of a success minded company. Our
managers are expected to lead by example and make a difference in what they
do. For the people we hire, we seek to create an environment where they can
advance in their careers. Training, development and giving our employees the
tools to be successful are of paramount importance. We strive to be an employer
of choice.
LOOkINg AHEAD
Looking out over the years to the come, we see tremendous opportunity to
grow our business and better serve the borrowing needs of small businesses.
The U.S. economy is resilient and while conditions are less than favorable at the
moment, we belive business conditions will eventually improve, leading to a
stronger, much healthier economy with increased demand for financing. For credit
lenders, it is likely to lead to a new era in which well-managed, well-capitalized
lenders will gain market share on terms that reward risk taking on the money
they lend. We’re poised to take advantage of these opportunities that lie right
around the corner.
In closing, I wish to extend a heartfelt thank you to all our employees for their
effort and dedication this past year. To our customers, thank you for your loyal
support and we will continue to work hard to earn your business in the year
ahead. And finally to our shareholders, our mission is to maintain your trust in
creating long term value for you.
Daniel P. Dyer
Chairman and Chief Executive Officer
Total Originations (Leases and Loans)
$388.7
$388.4
$272.3
$318.5
$242.3
$400
$350
$300
$250
$200
$150
$100
$50
$0
george D. Pelose
Chief Operating Officer
“Strength in Service”
Marlin’s strength lies in our dedication to serving the small business marketplace
as a full service finance company. Our team of dedicated professionals has the
knowledge and expertise to effectively originate thousands of financial transactions
each month. Since we handle all aspects of each transaction internally, our
commitment to provide “best-in-class” service to our vendor and broker partners,
as well as our end-user customers, never waivers. Small businesses will always
need financing to acquire equipment or otherwise fund their growth. Our experience
and financial strength enables us to make sound business decisions to help satisfy
the needs of our customers, regardless of the economic environment. In 2008 and
beyond, Marlin will continue its commitment to being a premier finance company
for small businesses, while providing the excellent customer service that our
vendors, brokers and end-user customers have come to expect.
Total Available Funding Sources
Term Note
Securitization
$773.1mm
Outstanding
Marlin Business
Bank $68mm
revolving Bank
Facility $40mm
CP Conduits
$175mm
Lynne Wilson
Chief Financial Officer
“Strong Balance Sheet; Diversified Funding Strategy”
In these challenging times, Marlin is financially sound and stable. Our balance sheet
is very strong, we are conservatively leveraged, and Marlin’s liquidity position is solid
with committed funding through 2008. Additionally, we are pleased to announce we
have opened our new Industrial Bank, Marlin Business Bank. The bank provides
further funding flexibility and diversity, ensuring that we will continue to have the
resources to help our small business customers meet their financing needs.
BuILdINg deepeR
cuStOMeR ReLAtIONShIpS
Marlin believes the best way to serve its customers is to know them, know their business, understand
their goals and anticipate their needs. Our goal is to develop long-term relationships.
At Marlin Business Services Corp., we view every transaction as an opportunity to build deeper
relationships with our customers. We do not pressure customers. Instead, we listen, we learn, and
we try to better understand every customer. This is what sets us apart from other business financing
companies.
Our customers’ goals are our goals. Our employees are knowledgeable, responsive and thorough.
They live our mission statement of being committed to providing exceptional one-on-one personal
service. We realize that while our customers consist of small businesses, they are, in fact, comprised
of individuals, each with their own unique set of needs.
We have developed new, more comprehensive reporting and tracking programs which enable our
employees to understand a customer’s full relationship with Marlin. This enables more advantageous
financing solutions for the customer.
We have launched new incentive plans that encourage and reward our sales and customer service
representatives to make Marlin the choice of every customer. We continually monitor and improve our
service through feedback from “Voice of the Customer” surveys.
cuStOMeR SeRvIce IS MARLIN
“Satisfying needs one customer at a time.”
Marlin Business Services Corp. understands the challenges facing small business owners today.
Whether it’s billing, equipment issues, additional financing, or understanding buyout options, we handle
their questions with speed and accuracy.
Our staff of professionals is trained to handle customer concerns immediately, and within the first call. This
helps us maintain an unsurpassed level of service, and guarantees issues are always resolved quickly.
Obtaining a lease or loan from Marlin is simple. We assign a dedicated sales professional to work
with our customers in every step of the process. We call it our “Single-Point-of-Contact” model. Our
customers have told us (through Voice of the Customer surveys) that our fast, simple, Single-Point-
of-Contact model is what sets us apart from competitors.
r
r
M A R L IN e q u I p M e N t L e A S I N g
while the range of products and services we provide has expanded over the years, equipment
leasing has consistently remained the proud cornerstone of Marlin Business Services corp. through
our industry experience, we have created a highly effective strategy that encompasses all channels in the
small ticket equipment leasing marketplace. this comprehensive approach has helped us secure and
maintain our position as a leader in our field.
DEALErS
As with any good business strategy, we begin by going directly to the
source of the business – the equipment dealer. We work on cultivating
partnerships with our dealers that are increasingly beneficial to their sales
and profit margin. We do this by acting as an extension of their sales force,
readily providing tools and training that help them optimize their leasing
activity.
Because we recognize the dealer as not only a vital component of the leasing
transaction, but also as our initial conduit to the leasing customer, we
emphasize superior service as a top priority with each of them. In fact, in a
recent survey, over 90% of dealers cited our personalized service and ease
of transaction as what they like most about their relationship with Marlin.
2007 EqUIPMENT TyPE
CUSTOMErS
Copiers
Security Systems
Commercial & Industrial
Water Coolers
Telephone/Message on Hold
Restaurant
Automotive
Computers
Medical
Cash Registers
Other
Copiers
Security Systems
Commercial & Industrial
Water Coolers
Telephone/Message on Hold
Restaurant
Automotive
Computers
Medical
Cash Registers
Other
Copiers
Security Systems
Commercial & Industrial
Water Coolers
Telephone/Message on Hold
Restaurant
Automotive
Computers
Medical
Cash Registers
Other
While the majority of our customers acquire financing through equipment
dealers, we place high importance on building trusting relationships with
each of our customers directly. They are, themselves, small business own-
ers who are often in need of additional business financing, be it for additional
equipment, equipment upgrades or working capital. This direct line into our
customer encourages them to come to us when these needs arise.
We offer the unique ability to finance a wide variety of equipment types,
essentially creating a “one stop shop” for each of our customers. By ac-
tively cultivating the lessor/lessee relationship through direct mail, email,
and phone, we create an environment where Marlin, the dealers, and our
customers work together to promote small business growth.
BROKERS
Our brokers play an integral role in our continued success in the equipment leasing market. While
our exceptional service and dependability offers them the support with which to expand their business,
our proven track record provides the stability brokers want in a financing partner.
We view our brokers as not only our partners, but our customers as well. To that end, we extend
to them the same one-on-one, personalized attention that our dealers and end-user customers
receive. By actively participating in the broker community, we keep up with their consistently evolving
needs, therefore enabling us to remain the first choice of so many in the industry.
M A R L I N B u S I N e S S Le N d I N g
“Building relationships to help your business succeed.”
We view our working capital loan product as another way to meet the needs of our customers. While the
majority of our business transactions center around equipment leasing, we recognize that our customers
often have additional financing needs. Whether it’s sudden expansion, or the need for new product
development, our working capital loan can help get them to where they’re going.
Our approach to working capital loans follows the same model as equipment leasing:
Dedicated team of sales professionals
Single-Point-of-Contact service
r
Simple loan processing
Highlights of the working capital loan:
Loans from $10,000-$40,000
Fixed interest rates
Terms include 36 and 48 months
Low monthly payments
Simple documentation
Fast funding
Our business capital loan product is just another way we are anticipating the needs of the small business
owner, and in turn, providing superior solutions with excellent service.
FinanCiaL HiGHLiGHTS
Year
($ in Thousands)
NET INCOME
rEVENUES
NET INVESTMENT IN LEASES AND LOANS
TOTAL ASSETS
TOTAL STOCkHOLDErS' EqUITy
2003
2004
2005
2006
2007
$2,847
$59,826
$419,160
$487,709
$73,871
$13,459
$75,551
$489,678
$554,693
$90,350
$16,248
$90,211
$572,581
$670,989
$112,609
$18,634
$103,456
$693,911
$795,452
$134,289
$18,286
$118,911
$765,938
$959,654
$150,145
TOTAL OrIgINATIONS (LEASES AND LOANS)
$242,278
$272,271
$318,413
$388,661
$388,376
TOTAL NUMBEr OF NEW LEASES AND
LOANS OrIgINATED
TOTAL NUMBEr OF LEASES AND LOANS
NET INTErEST AND FEE MArgIN
EFFICIENCy rATIO
NET CHArgE-OFFS(1)
30,258
81,503
10.53%
43.15%
1.90%
31,818
95,096
12.19%
41.63%
1.99%
32,754
103,278
12.35%
43.36%
1.74%
34,214
109,511
11.68%
44.77%
1.56%
33,141
115,883
10.65%
41.83%
2.00%
(1) As a percentage of average net investment in direct financing leases and loans.
(2) Net Income in 2003 includes $5.7 million of non-recurring expense relating to the change in fair value of warrants no longer outstanding
Total Stockholders' Equity
$150.1
$134.3
$112.6
$90.4
$73.9
Total Assets
$795.5
$671.0
$959.7
$554.7
$487.7
$160
$140
$120
$100
$80
$60
$40
$20
$0
$1000
$800
$600
$400
$200
$0
Net Income
$18.6
$18.3
$16.2
$13.5
$2.8
Revenues
$103.5
$90.2
$118.9
$75.6
$59.8
$20
$15
$10
$5
$0
$120
$100
$80
$60
$40
$20
$0
cORpORAte OffIceRS
DaniEl P. DyER
chAIRMAN Of the BOARd
chIef executIve OffIceR
GEORGE D. PElOSE
executIve vIce pReSIdeNt, chIef OpeRAtINg OffIceR,
geNeRAL cOuNSeL & SecRetARY
lynnE C. WilSOn
SeNIOR vIce pReSIdeNt
chIef fINANcIAL OffIceR & tReASuReR
EDWaRD J. SiCilianO
SeNIOR vIce pReSIdeNt
chIef SALeS OffIceR
PhiliP a. BRunO
SeNIOR vIce pReSIdeNt
chIef MARketINg OffIceR
VinCEnt DROBniaK
SeNIOR vIce pReSIdeNt-cRedIt uNdeRwRItINg &
OpeRAtIONS & chIef cRedIt OffIceR
MiChaEl h. McGinlEy
SeNIOR vIce pReSIdeNt
AccOuNt SeRvIcINg
JOSEPh F. DyER
vIce pReSIdeNt
tReASuRY & ASSIStANt SecRetARY
KathRyn liStERMan
vIce pReSIdeNt
AccOuNtINg & cONtROLLeR
JOhn C. FaRREll
vIce pReSIdeNt
RetAIL cRedIt
DaViD E. laFFERty
vIce pReSIdeNt
INdIRect cRedIt
MaRK E. SCaRDiGli
vIce pReSIdeNt
heALthcARe
ROBERt a. halEy
vIce pReSIdeNt
SALeS
RalPh P. ManGO
vIce pReSIdeNt
BROkeR SeRvIceS
JaMES J. ShERlOCK
vIce pReSIdeNt
INfORMAtION techNOLOgIeS
BOARd Of dIRectORS
DaniEl P. DyER
JOhn J. CalaMaRi
laWREnCE J. DEanGElO
KEVin J. MCGinty
EDWaRD GRzEDzinSKi
MatthEW J. SulliVan
JaMES W. WERt
Executive Offices & Northeastern Division
300 Fellowship Road
Mount Laurel, NJ 08054
P (888) 479-9111 F (888) 479-1100
Southeastern Division
6470 East Johns Crossing, Suite 430
Johns Creek, GA 30097
P (888) 479-9111 F (800) 535-8576
Mountain Division
6021 S. Syracuse Way, Suite 200
Greenwood Village, CO 80111
P (877) 479-9111 F (877) 479-1100
Midwestern Division
203 North La Salle Street, Suite 2310
Chicago, IL 60601
P (866) 462-7546 F (866) 627-5462
Western Division & Marlin Business Bank
2795 E. Cottonwood Pkwy., Suite 125
Salt Lake City, UT 84121
P (888) 479-9111 F (877) 870-6756
Lease Processing Center
520 Walnut Street, Suite 1150
Philadephia PA, 19106
P (888) 479-9111 F (800) 303-9545