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8-K - FORM 8-K - MONARCH COMMUNITY BANCORP INC | k49988e8vk.htm |
EXHIBIT 99.1
Monarch
Community Banks positive trend turns to profitability in the 4th quarter of 2010.
COLDWATER, MICHIGAN, January 25, 2011 Monarch Community Bancorp, Inc. (Nasdaq Capital
Market:MCBF), the parent company of Monarch Community Bank, announced today that it returned to
profitability in the fourth quarter of 2010, after six successive quarters of losses. Net income
for the quarter was $76,934, compared to a loss of $(17.5) million for the same period a year ago.
Basic and diluted earnings (loss) per share in the fourth quarter of 2010 were $.04, compared to
($8.90) reported for the fourth quarter of 2009. For the year, net loss in 2010 was $(10.8) million
compared to net loss of $(19.7) million in 2009. Basic and diluted loss per share for the full year
were $(5.44) in 2010 compared to $(10.03) in 2009. Improvement in net income reflects continued
improvement in the quality of the loan portfolio and increasing traction from the Banks focus on
problem loan resolution.
We realize that much work lies ahead to be accomplished, stated Richard J. DeVries,
Monarchs President & CEO, but we are pleased with our progress. The level of non-performing
loans has declined significantly by $6 million, we just completed a second very satisfactory
commercial loan review performed by an outside consulting firm, and we are poised to continue our
focus on helping our customers retire wealthy while providing fun, easy banking. We have an
outstanding team of enthusiastic employees and we are hopeful that 2011 will yield continued
progress for the National and Michigan economies, for our customers and for us.
The net interest margin for the fourth quarter of 2010 decreased 11 basis points to 2.98% compared
to 3.09% for the same period in 2009. The decline in the margin is largely due to the decline in
earning assets. The Bank has seen a downward trend in the mortgage portfolio as loan originations
have moved into the secondary market, (see further discussion below). The elevated level of
nonperforming loans and the associated nonaccrual interest adjustment have also significantly
impacted the margin. The yield on loans decreased to 5.69% for the quarter compared to 6.04% for
the same period in 2009.
The net interest margin decreased 14 basis points to 2.96% for the year ending December 31, 2010
compared to 3.10% for the same period in 2009. The decline in margin year over year is mainly due
to the reasons mentioned previously. Cost of funds has decreased to 2.1% as the Company remains
focused on deposit pricing strategies and growing core deposits to reduce its reliance on wholesale
funding.
The provision for loan losses was $(106,000) for the fourth quarter in 2010 compared to $7.9
million for the same period in 2009. The reversal of provision was possible due to the level of
allowance for loan and lease losses relative to the current estimated risk in the loan portfolio.
The provision for loan losses was $11.5 million for the year ending December 31, 2010 compared to
$13.3 million for 2009. Net charge offs totaled $724,000 for the quarter compared to $8.1 million
for the same period in 2009 and $8.4 million for 2010 compared to $10.3 million in 2009.
Non-performing assets were $20.1 million at December 31, 2010 compared to $18.4 million at December
31, 2009 and $26.4 million at September 30, 2010.
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Non-interest income decreased $164,000 or 15.5% from $1.1 million during the fourth quarter of 2009
to $895,000 for the fourth quarter of 2010. The decrease was largely due to an impairment charge of
$338,500 taken on a low cost housing investment which was purchased for potential tax credits.
Mortgage banking income increased for the quarter, which was attributable to the decline in
interest rates in the second half of the year. A decrease in overdraft fee income also
significantly impacted non-interest income. Overdraft fee income decreased from $324,000 for the
fourth quarter in 2009 to $262,000 for the fourth quarter in 2010. The decrease comes as a result
of; 1) customers managing their finances more closely in order to reduce overdraft fees because of
the current challenging economic conditions, and 2) the new rules regarding Regulation E, which
went into effect August 15, 2010. Non-interest income for the year ending December 31, 2010
decreased $1.3 million or 26%, compared to the same period a year ago primarily due to the reduced
level of mortgage refinancing.
Noninterest expense decreased $9.9 million for the quarter ended December 31, 2010 primarily due to
the one time impairment charge of $9.6 million to goodwill in the last quarter of 2009. Salaries
and employee benefits decreased largely due to the reduction in staffing. Costs associated with
foreclosed properties such as collection and maintenance costs, and impairment charges related to
the disposition of other real estate declined as management continues to focus on aggressively
marketing the properties for sale. Other general and administrative expenses increased primarily
due to an increase in FDIC insurance expense. Increases in professional services for the quarter
are attributable to the outsourcing of the internal audit function and the continued need for legal
services associated with nonperforming loans. Increases in mortgage banking expenses are
attributable to an increase in amortization of mortgage servicing rights due to an increase in
mortgage loan payoffs as a result of an upsurge in refinancing. Non-interest expense decreased
$10.0 million for the year ended December 31, 2010 compared to the same period a year ago for the
reasons mentioned previously.
Total assets were $257.3 million at December 31, 2010 compared to $283.2 million at December 31,
2009. This decrease of 9.2% was due primarily to a decrease in net loans of $38.3 million and a
decrease in securities of $4.6 million offset by an increase in cash, and cash equivalents of $18.3
million.
Stockholders equity decreased to $12.5 million at December 31, 2010 from $23.2 million at December
31, 2009 primarily due to the net loss of $10.8 million for the year.
The Monarch Community Bancorp, Inc. Annual Meeting of Shareholders will be held at 7:00 p.m. on
Tuesday, April 26, 2011 at the Companys main office at 375 North Willowbrook Road in Coldwater,
Michigan.
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Monarch Community Bank is headquartered in Coldwater, Michigan and operates five full service
retail offices in Branch, Calhoun and Hillsdale counties.
For additional information, visit Monarch Community Bancorps website at www.monarchcb.com.
Contacts: |
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Richard J. DeVries, CEO |
Rebecca S. Crabill, CFO | |
(517) 279-3978 |
(517) 279-3956 |
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