Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Monarch Financial Holdings, Inc. | d8k.htm |
Exhibit 99.1
MONARCH FINANCIAL REPORTS RECORD 3RD QUARTER
PROFITABILITY AND CONTINUED ASSET GROWTH
Chesapeake, VA - Monarch Financial Holdings, Inc. (Nasdaq: MNRK), the bank holding company for Monarch Bank, reported the best third quarter profits in the company’s history, along with strong mortgage growth and good asset quality. Third quarter 2010 highlights are:
| • | Record 3rd quarter net income of $1,511,726, up 31.1% from 2009 |
| • | Net Interest margin expansion to 4.36%, up from 3.62% one year prior |
| • | Assets growth of $86 million, total assets reach $876 million |
| • | Deposit growth of $32 million |
| • | Non-performing assets at 1.23% of total assets |
| • | Closed $504 million in mortgage loans |
Net income was $1,511,726 for the third quarter of 2010, up 31.1% from the same period in 2009, which was the company’s previous record quarter with $1,152,782 in net income. The quarterly annualized return on average equity (ROE) was 8.65%, and the annualized return on average assets (ROA) was 0.74%. Quarterly diluted earnings per share were $0.19, compared to $0.17 per share in the third quarter of 2009. For the first nine months of 2010 net income was a record $4,184,451 compared to $3,632,645 for the same period in 2009, a 15.2% increase. The nine month annualized return on average equity (ROE) was 8.14%, and the annualized return on average assets (ROA) was 0.75%.
“It is exciting to announce the seventh consecutive quarter for record profits at Monarch, especially with credit costs weighing so heavily on our true earnings potential. The economy remained sluggish and we continued to aggressively charge off poorly performing loans while building our loan loss reserves this quarter, growing our reserves by $1.7 million. Reduced funding costs coupled with a record quarter for Monarch Mortgage closings and profitability was critical to our success. Asset quality remains extremely favorable compared to other local and regional banks. It was again an excellent quarter for growth in earnings, net interest margin expansion, mortgage production, and deposit growth.” stated Brad E. Schwartz, Chief Executive Officer.
Total assets at September 30, 2010 grew to $876.2 million, up $85.8 million for the quarter and up $224.4 million or 34.4% from the same period in 2009. Record low interest rates, growth in our mortgage production capacity and the volume of refinanced mortgage loans were the primary drivers of our asset growth during the past two quarters. We anticipate total assets to decline in the fourth quarter as
mortgage production typically slows at the end of the year. Total mortgage loans held for sale increased $88.3 million since the second quarter of 2010, and are up $166.6 million since the third quarter of 2009. Loans held for investment grew $39.0 million, up 7.5% from the same period in 2009. Deposits increased $31.5 million since the second quarter of 2010, and have grown 25.0% or $134.9 million from the same period in 2009. To support this strong asset growth our dedicated mortgage line of credit with the Federal Home Loan Bank of Atlanta grew to $111.3 million, while only $1.5 million was outstanding on the Bank’s lines of credit with the FHLB and other banks.
“Our Monarch and OBX Bank teams delivered another fine quarter for deposit and loan production. While loans held for investment show limited net dollar growth over the previous quarter, loan demand and production remained strong and more than offset loan payments and pay downs. We see great opportunity to handle the banking needs of the many business clients who are disenchanted with the larger bank’s pullback in our markets” stated Neal Crawford, President of Monarch Bank.
The company continues to experience significantly better asset quality performance than its local, state, and national peer group. Non-performing assets equaled 1.23% of total assets, up from 1.03% at the end of the second quarter but down from 1.34% one year prior. Non-performing assets were $10.8 million, comprised of $1.0 million in loans 90 days or more past due and still accruing interest, $7.5 million in non-accrual loans and $2.3 million in other real estate owned. The Company was aggressive in recognizing losses and disposing of non-performing assets during the quarter, with net charge-offs of $1.3 million and $3.0 million expensed to further build the allowance for loan losses. The allowance for loan losses represents 1.83% of total loans held for investment, up from 1.55% in the second quarter of 2010.
Average equity to average assets was 8.56% during the third quarter of 2010, compared to 10.18% one year prior. Total risk-based capital to risk weighted assets equaled 12.55%, significantly higher than what is required to meet the highest rating of “Well Capitalized” by federal banking regulators. In September 2010 Monarch was once again awarded the 5-Star “Superior” rating by Bauer Financial, an independent third-party bank ratings agency that rates banks on safety and soundness. In December 2009 Monarch fully repaid $14.7 million in the U.S. Treasury’s CPP/TARP program and issued $20 million in new convertible preferred stock.
Net interest income increased 49.6% or $2.7 million during the third quarter of 2010 compared to the same quarter in 2009 due to earning asset growth and reduced funding costs. The net interest margin improved to 4.36% compared to 3.62% in 2009, and was up from 4.14% in the second quarter of 2010.
Non-interest income grew 94.6% from the same period in 2009, fueled by record quarterly mortgage production and margins. Monarch Mortgage and their related mortgage companies closed $504
million in mortgage loans during the quarter, compared to $265 million during the same quarter of 2009. Year to date the mortgage group originated over $1.7 billion in new loan applications and closed over $1.0 billion in mortgage loans. Monarch Mortgage is focused on the retail A-paper mortgage market and does not participate in the sub-prime or wholesale mortgage markets. Non-interest expense grew 76.9%, with the majority of the increase related to mortgage production-based variable expenses including mortgage commissions, salary and benefits, and mortgage loan expense.
Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with nine banking offices in Chesapeake, Virginia Beach, and Norfolk, Virginia. OBX Bank, a division of Monarch Bank, operates offices in Kitty Hawk and Nags Head, North Carolina. Services are also provided through over fifty ATMs located in the South Hampton Roads area and the Outer Banks of North Carolina, and “Monarch Online” consumer and business internet banking (monarchbank.com). Monarch Mortgage and our affiliated mortgage companies have over twenty offices with locations in Virginia, North Carolina, Maryland, and South Carolina. Our subsidiaries/ divisions include Monarch Bank, OBX Bank, Monarch Mortgage (secondary mortgage origination), Coastal Home Mortgage, LLC (secondary mortgage origination), Regional Home Mortgage, LLC (secondary mortgage origination), Monarch Home Funding, LLC (secondary mortgage origination), Monarch Investments (investment and insurance solutions), Real Estate Security Agency, LLC (title agency) and Monarch Capital, LLC (commercial mortgage brokerage). The shares of common stock of Monarch Financial Holdings, Inc. are publicly traded on the Nasdaq Capital Market under the symbol “MNRK”, and shares of our convertible preferred stock are publicly traded on the Nasdaq Capital Market under the symbol “MNRKP”.
This press release may contain “forward-looking statements,” within the meaning of federal securities laws that involve significant risks and uncertainties. Statements herein are based on certain assumptions and analyses by the Company and are factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in the economic scenario: significant changes in regulatory requirements; and significant changes in securities markets. Consequently, all forward-looking statements made herein are qualified by these cautionary statements and the cautionary language in the Company’s most recent Form 10-K and 10-Q reports and other documents filed with the Securities and Exchange Commission. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
##
| Contact: | Brad E. Schwartz – (757) 389-5111, www.monarchbank.com | |
| Date: | October 27, 2010 |
Consolidated Balance Sheets
Monarch Financial Holdings, Inc. and Subsidiaries
(In thousands)
Unaudited
| September | ||||||||
| 2010 | 2009 | |||||||
| ASSETS: |
||||||||
| Cash and due from banks |
$ | 14,327 | $ | 14,004 | ||||
| Interest bearing bank balances |
6,561 | 4,407 | ||||||
| Federal funds sold |
3,730 | 7,749 | ||||||
| Investment securities: |
||||||||
| Securities available for sale |
7,898 | 5,762 | ||||||
| Securities held to maturity |
— | 500 | ||||||
| Total investment securities |
7,898 | 6,262 | ||||||
| Loans held for sale |
237,803 | 71,232 | ||||||
| Loans held for investment, net of unearned income |
561,355 | 522,333 | ||||||
| Less: allowance for loan losses |
(10,246 | ) | (9,550 | ) | ||||
| Net loans |
551,109 | 512,783 | ||||||
| Bank premises and equipment |
18,865 | 8,253 | ||||||
| Restricted equity securities |
8,704 | 7,017 | ||||||
| Bank owned life insurance |
7,265 | 6,981 | ||||||
| Goodwill |
775 | 775 | ||||||
| Intangible assets |
685 | 863 | ||||||
| Accrued interest receivable and other assets |
18,447 | 11,448 | ||||||
| Total assets |
$ | 876,169 | $ | 651,774 | ||||
| LIABILITIES: |
||||||||
| Demand deposits—non-interest bearing |
$ | 95,831 | $ | 84,389 | ||||
| Demand deposits—interest bearing |
29,932 | 19,171 | ||||||
| Money market deposits |
231,370 | 139,115 | ||||||
| Savings deposits |
21,753 | 27,684 | ||||||
| Time deposits |
296,145 | 269,732 | ||||||
| Total deposits |
675,031 | 540,091 | ||||||
| FHLB borrowings |
111,320 | 33,082 | ||||||
| Trust preferred subordinated debt |
10,000 | 10,000 | ||||||
| Accrued interest payable and other liabilities |
9,288 | 5,452 | ||||||
| Total liabilities |
805,639 | 588,625 | ||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Preferred stock, $5 par value, 1,185,300 shares authorized; none issued |
— | — | ||||||
| Noncumulative perpetual preferred stock, series B, liquidation value of $20.0 million, $5 par value; 800,000 shares authorized, issued and outstanding |
4,000 | — | ||||||
| Cumulative perpetual preferred stock, series A, liquidation value of $14.7 million, no par value; 14,700 shares authorized, issued and outstanding |
— | 14,511 | ||||||
| Common stock, $5 par, 20,000,000 shares authorized; issued - 5,904,139 shares outstanding at September 30, 2010 and 5,792,914 shares outstanding at September 30, 2009 |
29,521 | 28,965 | ||||||
| Capital in excess of par value |
22,381 | 8,230 | ||||||
| Retained earnings |
14,963 | 11,603 | ||||||
| Accumulated other comprehensive loss |
(456 | ) | (263 | ) | ||||
| Total Monarch Financial Holdings, Inc. stockholders’ equity |
70,409 | 63,046 | ||||||
| Noncontrolling interest |
121 | 103 | ||||||
| Total equity |
70,530 | 63,149 | ||||||
| Total liabilities and stockholders’ equity |
$ | 876,169 | $ | 651,774 | ||||
Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| INTEREST INCOME: |
||||||||||||||||
| Interest on federal funds sold |
$ | 2,959 | $ | 6,728 | $ | 27,242 | $ | 9,987 | ||||||||
| Interest on other bank accounts |
1,597 | 494 | 3,486 | 1,902 | ||||||||||||
| Dividends on restricted securities |
30,054 | 41,705 | 77,306 | 80,553 | ||||||||||||
| Interest & dividends on investment securities |
43,218 | 53,794 | 146,793 | 181,539 | ||||||||||||
| Interest and fees on loans |
10,347,387 | 7,960,150 | 28,235,236 | 23,772,474 | ||||||||||||
| Total interest income |
10,425,215 | 8,062,871 | 28,490,063 | 24,046,455 | ||||||||||||
| INTEREST EXPENSE: |
||||||||||||||||
| Interest on deposits |
1,827,209 | 2,184,747 | 5,592,156 | 7,149,718 | ||||||||||||
| Interest on trust preferred subordinated debt |
124,200 | 56,158 | 369,900 | 205,216 | ||||||||||||
| Interest on other borrowings |
191,086 | 285,887 | 616,847 | 864,998 | ||||||||||||
| Total interest expense |
2,142,495 | 2,526,792 | 6,578,903 | 8,219,932 | ||||||||||||
| NET INTEREST INCOME |
8,282,720 | 5,536,079 | 21,911,160 | 15,826,523 | ||||||||||||
| PROVISION FOR LOAN LOSSES |
3,000,992 | 1,546,788 | 5,833,810 | 4,084,936 | ||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
5,281,728 | 3,989,291 | 16,077,350 | 11,741,587 | ||||||||||||
| NON-INTEREST INCOME: |
||||||||||||||||
| Service charges on deposit accounts |
398,367 | 395,981 | 1,221,723 | 1,052,808 | ||||||||||||
| Mortgage banking income |
16,468,250 | 7,975,961 | 35,168,266 | 23,902,036 | ||||||||||||
| Investment and insurance commissions |
74,299 | 163,761 | 216,204 | 677,433 | ||||||||||||
| Other income |
111,826 | 227,653 | 411,525 | 894,015 | ||||||||||||
| Total non-interest income |
17,052,742 | 8,763,356 | 37,017,718 | 26,526,292 | ||||||||||||
| NON-INTEREST EXPENSE: |
||||||||||||||||
| Salaries and employee benefits |
5,519,261 | 4,032,250 | 14,466,549 | 11,524,369 | ||||||||||||
| Mortgage commissions |
8,812,459 | 3,356,781 | 18,109,117 | 10,830,480 | ||||||||||||
| Occupancy and equipment |
1,406,739 | 982,943 | 3,688,503 | 2,793,119 | ||||||||||||
| Loan Expense |
1,606,203 | 1,033,829 | 4,082,853 | 2,540,723 | ||||||||||||
| Data processing |
219,226 | 186,930 | 637,295 | 600,581 | ||||||||||||
| Other expenses |
1,822,191 | 1,364,730 | 5,121,452 | 4,344,060 | ||||||||||||
| Total non-interest expense |
19,386,079 | 10,957,463 | 46,105,769 | 32,633,332 | ||||||||||||
| INCOME BEFORE TAXES |
2,948,391 | 1,795,184 | 6,989,299 | 5,634,547 | ||||||||||||
| Income tax provision |
(1,341,006 | ) | (619,870 | ) | (2,660,037 | ) | (1,833,770 | ) | ||||||||
| NET INCOME |
1,607,385 | 1,175,314 | 4,329,262 | 3,800,777 | ||||||||||||
| Less: Net income attributable to noncontrolling interest |
(95,659 | ) | (22,532 | ) | (144,811 | ) | (168,132 | ) | ||||||||
| NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC |
$ | 1,511,726 | $ | 1,152,782 | $ | 4,184,451 | $ | 3,632,645 | ||||||||
| Preferred stock dividend and accretion of preferred stock discount |
(390,000 | ) | (197,766 | ) | (1,170,000 | ) | (586,807 | ) | ||||||||
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ | 1,121,726 | $ | 955,016 | $ | 3,014,451 | $ | 3,045,838 | ||||||||
| NET INCOME PER COMMON SHARE: |
||||||||||||||||
| Basic |
$ | 0.20 | $ | 0.17 | $ | 0.53 | $ | 0.54 | ||||||||
| Diluted |
$ | 0.19 | $ | 0.17 | $ | 0.52 | $ | 0.53 | ||||||||
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
| (Dollars in thousands, except per share data) |
Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
| 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
| EARNINGS |
||||||||||||||||||||||||
| Interest income |
$ | 10,425 | $ | 8,063 | 29.3 | % | $ | 28,490 | $ | 24,046 | 18.5 | % | ||||||||||||
| Interest expense |
2,142 | 2,527 | (15.2 | ) | 6,579 | 8,220 | (20.0 | ) | ||||||||||||||||
| Net interest income |
8,283 | 5,536 | 49.6 | 21,911 | 15,826 | 38.4 | ||||||||||||||||||
| Provision for loan losses |
3,001 | 1,547 | 94.0 | 5,834 | 4,085 | 42.8 | ||||||||||||||||||
| Noninterest income |
17,052 | 8,763 | 94.6 | 37,018 | 26,526 | 39.6 | ||||||||||||||||||
| Noninterest expense |
19,386 | 10,957 | 76.9 | 46,106 | 32,633 | 41.3 | ||||||||||||||||||
| Pre-tax net income |
2,948 | 1,795 | 64.2 | 6,989 | 5,634 | 24.1 | ||||||||||||||||||
| Minority interest in net income |
96 | 23 | 317.4 | 145 | 168 | (13.7 | ) | |||||||||||||||||
| Income taxes |
1,341 | 619 | 116.6 | 2,660 | 1,833 | 45.1 | ||||||||||||||||||
| Net income |
1,511 | 1,153 | 31.0 | 4,184 | 3,633 | 15.2 | ||||||||||||||||||
| PER COMMON SHARE |
||||||||||||||||||||||||
| Earnings per share - basic |
$ | 0.20 | $ | 0.17 | 17.6 | % | $ | 0.53 | $ | 0.54 | (1.9 | )% | ||||||||||||
| Earnings per share - diluted |
0.19 | 0.17 | 11.8 | 0.52 | 0.53 | (1.9 | ) | |||||||||||||||||
| Book value |
8.54 | 8.35 | 2.3 | |||||||||||||||||||||
| Tangible book value |
8.29 | 8.06 | 2.9 | |||||||||||||||||||||
| Closing market price (adjusted) |
8.42 | 7.45 | 13.0 | |||||||||||||||||||||
| FINANCIAL RATIOS |
||||||||||||||||||||||||
| Return on average assets |
0.74 | % | 0.74 | % | 0.0 | % | 0.75 | % | 0.75 | % | 0.0 | % | ||||||||||||
| Return on average stockholders’ equity |
8.65 | 7.25 | 19.3 | 8.14 | 7.84 | 3.8 | ||||||||||||||||||
| Net interest margin (FTE) |
4.36 | 3.62 | 20.4 | 4.22 | 3.53 | 19.5 | ||||||||||||||||||
| Non-interest revenue/Total revenue |
62.1 | 52.1 | 19.2 | 56.5 | 52.5 | 7.6 | ||||||||||||||||||
| Efficiency - Consolidated |
76.3 | 76.3 | 0.0 | 78.0 | 76.8 | 1.6 | ||||||||||||||||||
| Efficiency - Bank only |
49.7 | 55.9 | (11.1 | ) | 53.2 | 55.7 | (4.5 | ) | ||||||||||||||||
| Average equity to average assets |
8.56 | 10.18 | (15.9 | ) | 9.17 | 9.62 | (4.7 | ) | ||||||||||||||||
| Total risk based capital - Consolidated |
12.55 | 13.94 | (10.0 | ) | ||||||||||||||||||||
| Total risk based capital - Bank only |
12.02 | 11.32 | 6.2 | |||||||||||||||||||||
| PERIOD END BALANCES |
||||||||||||||||||||||||
| Total loans held for sale |
$ | 237,803 | $ | 71,232 | 233.8 | % | ||||||||||||||||||
| Total loans held for investment |
561,355 | 522,333 | 7.5 | |||||||||||||||||||||
| Interest-earning assets |
825,892 | 618,865 | 33.5 | |||||||||||||||||||||
| Assets |
876,169 | 651,774 | 34.4 | |||||||||||||||||||||
| Total deposits |
675,031 | 540,091 | 25.0 | |||||||||||||||||||||
| Other borrowings |
121,320 | 43,082 | 181.6 | |||||||||||||||||||||
| Stockholders’ equity |
70,409 | 63,046 | 11.7 | |||||||||||||||||||||
| AVERAGE BALANCES |
||||||||||||||||||||||||
| Total loans held for investment |
$ | 553,548 | $ | 519,461 | 6.6 | % | $ | 551,637 | $ | 512,639 | 7.6 | % | ||||||||||||
| Interest-earning assets |
764,469 | 617,094 | 23.9 | 705,052 | 612,983 | 15.0 | ||||||||||||||||||
| Assets |
810,141 | 619,701 | 30.7 | 749,161 | 644,363 | 16.3 | ||||||||||||||||||
| Total deposits |
644,738 | 514,189 | 25.4 | 598,831 | 506,890 | 18.1 | ||||||||||||||||||
| Other borrowings |
85,254 | 59,711 | 42.8 | 70,647 | 66,246 | 6.6 | ||||||||||||||||||
| Stockholders’ equity |
69,386 | 63,079 | 10.0 | 68,733 | 61,967 | 10.9 | ||||||||||||||||||
| ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||
| Beginning balance |
$ | 8,575 | $ | 9,030 | (5.0 | )% | $ | 9,300 | $ | 8,046 | 15.6 | % | ||||||||||||
| Provision for loan losses |
3,001 | 1,547 | 94.0 | 5,834 | 4,085 | 42.8 | ||||||||||||||||||
| Charge-offs |
1,391 | 1,050 | 32.5 | 5,139 | 2,662 | 93.1 | ||||||||||||||||||
| Recoveries |
61 | 23 | 165.2 | 251 | 81 | 209.9 | ||||||||||||||||||
| Ending balance |
10,246 | 9,550 | 7.3 | 10,246 | 9,550 | 7.3 | ||||||||||||||||||
| Net charge-off loans to average loans |
0.24 | 0.20 | 21.5 | 0.89 | 0.50 | 76.0 | ||||||||||||||||||
| ASSET QUALITY RATIOS |
||||||||||||||||||||||||
| Nonperforming assets to total assets |
1.23 | % | 1.34 | % | (11.0 | )bp | ||||||||||||||||||
| Allowance for loan losses to total loans |
1.83 | 1.83 | (0.3 | )bp | ||||||||||||||||||||
| Allowance for loan losses to nonperforming loans |
|
120.30 | 124.22 | (3.2 | )% | |||||||||||||||||||
| COMPOSITION OF RISK ASSETS |
||||||||||||||||||||||||
| Nonperforming loans: |
||||||||||||||||||||||||
| 90 days past due |
$ | 1,061 | $ | 837 | 26.8 | % | ||||||||||||||||||
| Nonaccrual & Restructured debt |
7,456 | 6,851 | 8.8 | |||||||||||||||||||||
| OREO |
2,263 | 1,077 | 110.1 | |||||||||||||||||||||
| Nonperforming assets |
10,780 | 8,765 | 23.0 | % | ||||||||||||||||||||
bp - Change is measured as difference in basis points.