FEDERAL DEPOSIT INSURANCE CORPORATION
In Re: Marlin Business Bank (Proposed)
Salt Lake City, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Deposit Insurance Fund)
ORDER
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) has fully
considered all available facts and information relevant to the factors of Section 6 of the Federal
Deposit Insurance Act relating to the application for Federal deposit insurance for Marlin
Business Bank (the Bank), a proposed new Utah industrial bank to be located at 2795 East
Cottonwood Parkway, Suite 120, Salt Lake City, Salt Lake County, Utah, and has concluded that
the application should be approved.
Accordingly, it is hereby ORDERED, for the reasons set forth in the attached Statement, that the
application submitted by the Bank for Federal deposit insurance be and the same hereby is
approved subject to the following conditions:
1. That beginning paid-in capital funds of not less than $21,000,000 be provided.
2. Prior to the effective date of deposit insurance, the Bank, Marlin Business Services
Corporation, and Marlin Leasing Corporation shall enter into a Capital Maintenance and
Liquidity Agreement with the FDIC.
3. That the Bank complete the de novo purchase of up to $75,000,000 of eligible leases from
Marlin Leasing Corporation during the four-month period following the Bank's opening.
4. That Marlin Business Services Corporation shall submit to the FDIC an initial listing of all
of its subsidiaries and update the list annually.
5. That Marlin Business Services Corporation consents to examination by the FDIC of it and
each of its subsidiaries to monitor compliance with the provisions of the Federal Deposit
Insurance Act or any other federal law that the FDIC has specific jurisdiction to enforce
against such company or subsidiary and those governing transactions and relationships
between any depository institution subsidiary and its affiliates.
6. That Marlin Business Services Corporation shall engage, directly or indirectly, only in
financial activities. (For purposes of this agreement, the term "financial activity" means
(a) banking, managing, or controlling banks or savings associations; (2) any activity
permissible for financial holding companies under 12 U.S.C. 1843(k), any specific activity
that is listed as permissible for bank holding companies under 12 U.S.C. 1843(c) and
activities that the Federal Reserve Board has permitted for bank holding companies under
12 C.F.R. 225.28 and 225.86, and (3) any activity permissible for all savings and loan
holding companies under 12 U.S.C. 1467a(c)).
7. That Marlin Business Services Corporation shall submit to the FDIC an annual report
regarding its operations and activities, in the form and manner prescribed by the FDIC,
and such other reports as may be requested by the FDIC to keep the FDIC informed as to
financial condition, systems for monitoring and controlling financial and operating risks,
and transactions with the Bank; and compliance by Marlin Business Services Corporation
or its subsidiaries with applicable provisions of the Federal Deposit Insurance Act or any
other Federal laws that the FDIC has specific jurisdiction to enforce against such company
or subsidiary.
8. That Marlin Business Services Corporation shall maintain such records as the FDIC may
deem necessary to assess the risks to the Bank or to the Deposit Insurance Fund.
9. That Marlin Business Services Corporation shall cause an independent annual audit of the
Bank to be performed during the first three years after the Bank becomes a subsidiary of
the company, and that the Bank shall submit to the FDIC, (i) a copy of the audited annual
financial statements and the independent public auditor's report thereon within 90 days
after the end of the depository institution's fiscal year, (ii) a copy of any other reports by
the independent auditor (including any management letters) within 15 days after their
receipt by the institution, and (iii) written notification within 15 days when a change in the
institution's independent auditor occurs.
10. That Marlin Business Services Corporation will limit its representation, direct and
indirect, on the board of directors of the Bank to no more than 25 percent of the members
of such board of directors, in the aggregate.
11. Prior to the effective date of deposit insurance the Bank and Marlin Business Services
Corporation shall enter into a written agreement with the FDIC whereby Marlin Business
Services Corporation agrees to adhere to the conditions imposed in paragraphs 4 through
10 above.
12. This approval is conditioned on the facts as currently known by the FDIC. If there are any
material events prior to the opening of the Bank for business, including, for example, any
person or group obtaining ownership, control, or the ability to vote 10 percent or more of
any class of voting shares of the Bank or any company that controls the Bank, the Bank
shall notify the FDIC as soon as the Bank becomes aware of the event, and this approval
may be withdrawn or modified.
13. Subsequent to the opening of the Bank for business, Marlin Business Services Corporation
shall provide written notification to the FDIC within 30 days of Marlin Business Services
Corporation becoming aware of any investor who acquires control, directly or indirectly,
of 10 percent or more of the voting shares of Marlin Business Services Corporation.
14. Prior to the effective date of deposit insurance, the Bank shall have appointed and shall
thereafter maintain a Board of Directors who possess the knowledge, experience, and
capability to carry out the responsibilities of the position in a safe and sound manner and
independently of the activities of Marlin Business Services Corporation and its affiliated
entities.
15. The Bank shall obtain written approval from the FDIC prior to adding or replacing a
member of the Bank's Board of Directors or any senior executive officer during the first
three years of operation.
16. Prior to the effective date of deposit insurance, the Bank shall have appointed and shall
thereafter retain senior executive officers who possess the knowledge, experience, and
capability to carry out the responsibilities of the position in a safe and sound manner and
independently of the activities of Marlin Business Services Corporation and its affiliated
entities. Further, absent the prior written non-objection of the FDIC, each such officer's
permanent place of work shall be physically located at the Bank's main office located in
Salt Lake City, Utah, such that the individuals shall be capable of providing ongoing and
direct oversight of the Bank's activities. At a minimum, such senior executive oflicers
shall include (or be similarly qualified and titled) the President/Chief Executive Officer,
Chief Credit Officer, and Chief Financial Officer.
17. The Bank shall obtain written approval from the FDIC prior to employing a senior
executive officer who is associated in any manner (e.g., as a director, officer, employee,
agent, owner, partner, or consultant) with an affiliate of the Bank.
18. The Bank shall obtain written approval from the FDIC prior to entering into any contract
for essential services with Marlin Business Services Corporation or any of its affiliated
entities.
19. The Bank shall notify the FDIC of any material nonperformance under any contract for
essential services with Marlin Business Services Corporation or any of its affiliated
entities within 15 days.
20. The Bank shall conduct business pursuant to operating policies that are commensurate
with the proposed business plan, independent from those of affiliated entities, and adopted
by the Board of Directors of the Bank. Also, the Board of Directors shall adopt controls
reasonably designed to ensure compliance with and enforcement of such policies. Further,
the Board of Directors shall ensure that executive officers are delegated reasonable
authority to implement and enforce the policies independently of Marlin Business Services
Corporation and its affiliated entities. At a minimum, such operating policies and
procedures shall encompass the Bank's leasing, investment, liquidity, and asset-liability
management activities.
21. The Bank shall adhere to U.S. Generally Accepted Accounting Principles, adopt an
accrual accounting system for maintaining the books of the depository institution, and
maintain separate accounting and other business records, including customer account
records, and that the Bank's books and records are maintained under the control and
direction of authorized Bank officials and available for review by the FDIC at the Bank's
main office located in Salt Lake City, Utah. Further, the Bank's books and records shall
be suficiently detailed and maintained in a manner that provides Bank officials with the
objective and transparent information necessary to administer the Bank's affairs.
22. Prior to the opening of the Bank for business, any changes in proposed management shall
be approved by the FDIC.
23. Federal deposit insurance shall not become effective until the Bank is authorized to
operate as a State bank by the State of Utah.
24. The Bank shall pay no dividends during the first three years of operations without the
prior written approval of the FDIC and the State of Utah.
25. Prior to the effective date of Federal deposit insurance, the Bank shall obtain surety bond
coverage in a sufficient amount to conform to generally accepted banking practices.
26. That Federal deposit insurance shall not become effective unless WCI (Private Equity)
LLC and Peachtree Equity Investment Management, Inc. executes a passivity agreement
between WCI (Private Equity) LLC and Peachtree Equity Investment Management, Inc.
and the FDIC substantially in the form of Exhibit A within 90 days of the date of this
Order.
27. That during the first three years of operation, the Bank shall obtain written approval from
the FDIC prior to consummating any proposed major deviation or material change from its
business plan.
28. Until the conditional commitment herein granted becomes effective, the FDIC shall have
the right to alter, suspend, or withdraw the said commitment should any interim
development warrant such action.
29. The consent granted herein shall expire if Federal deposit insurance has not become
effective within twelve months from the date of this ORDER, unless the FDIC approves a
request for an extension of the deadline prior to the expiration.
By Order of the Board of Directors of the Federal Deposit Insurance Corporation.
Dated at Washington, D.C. this 20th day of March, 2007.
FEDERAL, DEPOSIT INSURANCE CORPORATION
BY: Robert E. Feldman
Executive Secretary
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FEDERAL DEPOSIT INSURANCE CORPORATION
In Re: Marlin Business Bank (Proposed)
Salt Lake City, Salt Lake County, Utah
Application for Federal Deposit Insurance
(Deposit Insurance Fund)
STATEMENT
Pursuant to the provisions of Section 5 of the Federal Deposit Insurance Act (12 U.S.C. §1815, an
application for Federal deposit insurance has been filed for Marlin Business Bank (the Bank), a
proposed new Utah industrial bank, to be located at 2795 East Cottonwood Parkway, Suite 120, Salt
Lake City, Salt Lake County, Utah.
The Bank will be a wholly-owned subsidiary of Marlin Business Services Corporation, a
publicly traded company with its principal offices in Mount Laurel, New Jersey (MBSC).
MBSC is a holding company for Marlin Leasing Corporation, Mount Laurel, New Jersey
(Marlin). Marlin has been in operation since 1997, and is the primary operating subsidiary of
MBSC. Marlin provides nationwide equipment leasing primarily to the small-ticket segment of
the market.
The activities of MBSC and its subsidiaries are considered financial in nature, but MBSC is not
subject to consolidated Federal bank supervision. Therefore, in order to protect the safety and
soundness of the Bank and to protect the Deposit Insurance Fund, approval of the application is
conditioned on MBSC executing one or more written agreements that incorporate some or all of
the conditions and requirements contained in the FDIC's recently proposed rules regarding
certain industrial banks. See 72 Fed. Reg. 5217 (February 5, 2007). The written agreements
incorporate those conditions and requirements detailed in the proposed rules that are appropriate
for this application.
An institutional investor owns at least 10 percent but less than 25 percent of MBSC. This
institutional investor is engaged in commercial activities that are not permissible for a financial
holding company or savings and loan holding company. Further, this institutional investor
would indirectly control the Bank under the rebuttable presumption of control provisions of the
Change in Bank Control Act, 12 C.F.R. §303.82(b)(2), because it owns over 10% of MBSC,
which is a publicly traded company. In view of the FDIC's moratorium on deposit insurance
applications for industrial banks that will be owned by commercial companies, approval of the
application is conditioned on the investor executing a passivity agreement to eliminate the
investor's ability to control the Bank.
The Bank will engage in the small-ticket commercial lease business with customers nationwide.
The Bank will rely on its parent organization for financial and other support. In addition to
formal written and operating policies, the Bank will ensure that any covered transactions with
affiliates and that all inter-company transactions are conducted in accordance with sections 23A
and 23B of the Federal Reserve Act. The Bank will maintain a board of directors independent of
its holding company and its affiliates.
For the purposes of this proposal, capital and management are considered satisfactory,
projections for future earnings prospects are favorable, and the investment in fixed assets is
reasonable. Corporate powers to be exercised are consistent with the purpose of the Federal
Deposit Insurance Act. No undue risk to the insurance fund is apparent.
Accordingly, based upon careful evaluation of all available facts and information, the Board of
Directors of the Federal Deposit Insurance Corporation has concluded that approval of the
application is warranted, subject to certain prudential conditions.
BOARD OF DIRECTORS
FEDERAL DEPOSIT INSURANCE CORPORATION