Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Monarch Financial Holdings, Inc. | d384374d8k.htm |
Exhibit 99.1
MONARCH FINANCIAL REPORTS GROWTH
AND RECORD 2ND QUARTER PROFITS
Chesapeake, VA - Monarch Financial Holdings, Inc. (Nasdaq: MNRK, MNRKP), the bank holding company for Monarch Bank, reported their best all-time and second quarter profits in the Company’s history. Second quarter 2012 highlights are:
| • | Record 2nd quarter net income of $2,776,987, up 67% |
| • | Net income available to common shareholders was up 88% |
| • | Basic earnings per share of $0.40, up 90% |
| • | Total assets reach $995 million, with annual asset growth of $86 million |
| • | Non-performing assets of 0.85% of total assets |
| • | $606 million in mortgage loans closed |
“Our second quarter 2012 represents the 14th record quarterly improvement in our profitability, and it was also the most profitable quarter in Monarch’s history. The leading drivers of our performance were record mortgage loan closings and strong net interest income from our banking operations. A high level of deposit growth focused on checking and money market accounts were used to support our strong bank and mortgage loan growth.” stated Brad E. Schwartz, Chief Executive Officer. “Our asset quality improved with non-performing assets dropping below one percent, which is a great achievement in the current environment. Our shareholders have been rewarded this year with an improved stock price, increased cash dividends, and major increases in our earnings per share, which have almost doubled from the previous year”.
Net income was $2,776,987 for the second quarter of 2012, up 67% from the same period in 2011, which was the Company’s previous record second quarter with $1,661,091 in net income. The quarterly annualized return on average equity (ROE) was 14.14%, and the quarterly return on average assets (ROA) was 1.18%. Quarterly basic earnings per share were $0.40, compared to $0.21 per share in the same quarter of 2011, a 90% improvement. Diluted earnings per share were $0.33, compared to $0.19 per share in the same quarter of 2011, a 74% improvement.
For the first six months of 2012 net income was a record $5,293,093 compared to $3,034,348 for the same period in 2011, a 74% increase. The six month annualized return on average equity (ROE) was 13.63%, and the annualized return on average assets (ROA) was 1.14%. Year to date basic earnings per share were $0.75 compared to $0.38 for the same period in 2011. Diluted earnings per share were $0.62 compared to $0.35 per share in the same quarter of 2011, a 77% improvement.
Total assets at June 30, 2012 increased to $995 million driven by increases in bank loans held for investment and mortgage loans held for sale. Portfolio loans held for investment grew $38 million year over year, while mortgage loans held for sale grew $166 million. Deposits increased $123 million year over year, primarily in checking and time deposit accounts. Short term time deposits and borrowings have been used to support the fluctuations in our short-term loans held for sale portfolio. This funding strategy, coupled with our focus on generating commercial demand deposits through our cash management team, continues to drive down overall funding costs and protect our net interest margin.
“We are pleased to report net loan growth, given the extremely competitive lending environment, especially with our higher credit standards. Deposit growth continued with checking and money market account growth leading the way.” stated Neal Crawford, President of Monarch Bank. “We are bullish on the future and our client-focused approach to doing business.”
Non-performing assets were 0.85%, which is significantly below that of our local, state, and national peer group. This was down from 1.20% in the first quarter of 2012 and 1.16% one year ago. Non-performing assets were $8.4 million, comprised of $715 thousand in loans 90 days or more past due and still accruing interest, $5.7 million in non-accrual loans and $2.0 million in other real estate owned. There were only three residential properties held at quarter end in other real estate owned, and one of those properties was sold in early July. The Company was aggressive in recognizing losses and disposing of non-performing assets during the quarter. Provision expense for the second quarter was $1.5 million compared to $1.1 million for the same period in 2011. The allowance for loan losses represents 1.71% of total loans held for investment and 167% of non-performing loans.
Average equity to average assets was 8.34% during the second quarter of 2012, down from 9.51% one year prior. Total risk-based capital to risk weighted assets at Monarch Bank equaled 12.76%, significantly higher than the required level to meet the highest rating of “Well Capitalized” by federal banking regulators. Monarch again was awarded the highest 5-Star “Superior” rating by Bauer Financial, an independent third-party bank rating agency that rates banks on safety and soundness.
Net interest income, our number one driver of profitability, increased 20% or $1,560,064 during the second quarter of 2012 compared to the same quarter in 2011. Our net interest margin was 4.39% compared to 4.55% in 2011, and was 4.43% year to date compared to 4.41% during the same period of 2011. The higher volume of lower rate mortgage loans held for sale, while providing incremental interest income, also contributed to the decline in this ratio since the end of 2011.
Non-interest income grew by $9.0 million during the second quarter over the previous year, while non-interest expenses grew by $8.4 million, reducing net overhead expense by $557 thousand for the second quarter compared to the previous year. Mortgage revenue continues to be the number one driver of non-interest income. $606 million in mortgage loans were closed during the quarter, which was a new Company record. Home purchase mortgage loans represented 52% of total closed loans, despite the strong refinance market driven by historically low rates.
“Not only did we have a record quarter for closed mortgage loans, we also surpassed $1.1 billion in loans for the first half of the year.” stated William T. Morrison, CEO of Monarch Mortgage. “We remain focused on loan quality and having the best team of mortgage bankers on the streets in all of our markets, from Maryland to North Carolina. Based on our current application levels we should easily surpass the previous record of $1.6 billion in loans we closed during 2011.”
Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with ten banking offices in Chesapeake, Virginia Beach, Norfolk, and Suffolk, 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. 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), OBX Bank 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: | July 19, 2012 |
Consolidated Balance Sheets
Monarch Financial Holdings, Inc. and Subsidiaries
(In thousands)
Unaudited
| June 30, 2012 |
December 31, 2011 |
June 30, 2011 |
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| ASSETS: |
||||||||||||
| Cash and due from banks |
$ | 20,511 | $ | 20,091 | $ | 17,890 | ||||||
| Interest bearing bank balances |
47 | 1,467 | 1,629 | |||||||||
| Federal funds sold |
6,142 | 10,188 | 13,034 | |||||||||
| Investment securities, at fair value |
10,820 | 9,187 | 49,301 | |||||||||
| Loans held for sale |
282,014 | 211,555 | 115,704 | |||||||||
| Loans held for investment, net of unearned income |
626,464 | 607,612 | 588,785 | |||||||||
| Less: allowance for loan losses |
(10,724 | ) | (9,930 | ) | (9,480 | ) | ||||||
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| Net loans |
615,740 | 597,682 | 579,305 | |||||||||
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| Bank premises and equipment, net |
23,210 | 23,094 | 22,833 | |||||||||
| Restricted equity securities, at cost |
4,885 | 6,421 | 7,175 | |||||||||
| Bank owned life insurance |
7,069 | 6,946 | 7,472 | |||||||||
| Goodwill |
775 | 775 | 775 | |||||||||
| Intangible assets, net |
372 | 461 | 551 | |||||||||
| Accrued interest receivable and other assets |
23,649 | 20,920 | 16,320 | |||||||||
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| Total assets |
$ | 995,234 | $ | 908,787 | $ | 831,989 | ||||||
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| LIABILITIES: |
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| Demand deposits - non-interest bearing |
$ | 178,520 | $ | 133,855 | $ | 117,181 | ||||||
| Demand deposits - interest bearing |
41,219 | 40,930 | 30,769 | |||||||||
| Money market deposits |
307,392 | 269,750 | 307,466 | |||||||||
| Savings deposits |
19,633 | 17,916 | 20,847 | |||||||||
| Time deposits |
306,649 | 277,641 | 253,902 | |||||||||
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| Total deposits |
853,413 | 740,092 | 730,165 | |||||||||
| FHLB borrowings |
31,325 | 70,927 | 9,026 | |||||||||
| Short term borrowings |
5,000 | — | — | |||||||||
| Trust preferred subordinated debt |
10,000 | 10,000 | 10,000 | |||||||||
| Accrued interest payable and other liabilities |
14,256 | 10,921 | 8,689 | |||||||||
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| Total liabilities |
913,994 | 831,940 | 757,880 | |||||||||
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| STOCKHOLDERS’ EQUITY: |
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| 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, 793,300 issued and outstanding at June 30, 2012, 800,000 issued and outstanding at December 31, 2011 and June 30, 2011 |
3,967 | 4,000 | 4,000 | |||||||||
| Common stock, $5 par, 20,000,000 shares authorized; issued - 6,029,475 shares (includes nonvested shares of 87,550) at June 30, 2012 and 5,999,989 shares (includes nonvested shares of 83,550) at December 31, 2011 and 5,951,839 shares (includes nonvested shares of 3,500) at June 30, 2011 |
29,709 | 29,582 | 29,742 | |||||||||
| Capital in excess of par value |
22,728 | 22,476 | 22,374 | |||||||||
| Retained earnings |
24,512 | 20,538 | 17,702 | |||||||||
| Accumulated other comprehensive loss |
(299 | ) | (363 | ) | (351 | ) | ||||||
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| Total Monarch Financial Holdings, Inc. stockholders’ equity |
80,617 | 76,233 | 73,467 | |||||||||
| Noncontrolling interest |
623 | 614 | 642 | |||||||||
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| Total equity |
81,240 | 76,847 | 74,109 | |||||||||
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| Total liabilities and stockholders’ equity |
$ | 995,234 | $ | 908,787 | $ | 831,989 | ||||||
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Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| INTEREST INCOME: |
||||||||||||||||
| Interest on federal funds sold |
$ | 8,903 | $ | 12,960 | $ | 15,162 | $ | 40,001 | ||||||||
| Interest on other bank accounts |
4,898 | 29 | 8,446 | 1,104 | ||||||||||||
| Dividends on equity securities |
64,974 | 50,933 | 102,474 | 83,448 | ||||||||||||
| Interest on investment securities |
51,090 | 49,589 | 97,321 | 90,140 | ||||||||||||
| Interest and fees on loans |
10,853,754 | 9,600,504 | 21,734,790 | 19,043,714 | ||||||||||||
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| Total interest income |
10,983,619 | 9,714,015 | 21,958,193 | 19,258,407 | ||||||||||||
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| INTEREST EXPENSE: |
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| Interest on deposits |
1,266,904 | 1,575,088 | 2,548,691 | 3,332,763 | ||||||||||||
| Interest on trust preferred subordinated debt |
123,425 | 124,200 | 246,275 | 245,700 | ||||||||||||
| Interest on other borrowings |
37,607 | 19,108 | 100,114 | 42,093 | ||||||||||||
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| Total interest expense |
1,427,936 | 1,718,396 | 2,895,080 | 3,620,556 | ||||||||||||
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| NET INTEREST INCOME |
9,555,683 | 7,995,619 | 19,063,113 | 15,637,851 | ||||||||||||
| PROVISION FOR LOAN LOSSES |
1,484,400 | 1,099,696 | 3,415,079 | 2,101,150 | ||||||||||||
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| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
8,071,283 | 6,895,923 | 15,648,034 | 13,536,701 | ||||||||||||
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| NON-INTEREST INCOME: |
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| Mortgage banking income |
20,152,078 | 11,205,023 | 36,736,289 | 20,209,260 | ||||||||||||
| Service charges and fees |
467,565 | 424,829 | 881,616 | 811,149 | ||||||||||||
| Other income |
304,290 | 293,528 | 702,036 | 597,477 | ||||||||||||
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| Total non-interest income |
20,923,933 | 11,923,380 | 38,319,941 | 21,617,886 | ||||||||||||
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| NON-INTEREST EXPENSE: |
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| Salaries and employee benefits |
7,093,920 | 5,615,748 | 13,724,438 | 11,014,592 | ||||||||||||
| Commissions and incentives |
10,352,665 | 5,181,545 | 19,084,866 | 9,033,205 | ||||||||||||
| Occupancy and equipment |
1,715,098 | 1,385,880 | 3,314,179 | 2,772,913 | ||||||||||||
| Loan expense |
2,184,323 | 1,595,597 | 3,799,454 | 2,951,020 | ||||||||||||
| Marketing expense |
593,526 | 430,272 | 1,003,817 | 704,028 | ||||||||||||
| Data processing |
363,342 | 278,015 | 709,332 | 583,848 | ||||||||||||
| Other expenses |
2,202,905 | 1,574,819 | 3,751,503 | 3,128,025 | ||||||||||||
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| Total non-interest expense |
24,505,779 | 16,061,876 | 45,387,589 | 30,187,631 | ||||||||||||
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| INCOME BEFORE TAXES |
4,489,437 | 2,757,427 | 8,580,386 | 4,966,956 | ||||||||||||
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| Income tax provision |
(1,556,294 | ) | (981,457 | ) | (2,977,835 | ) | (1,680,931 | ) | ||||||||
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| NET INCOME |
2,933,143 | 1,775,970 | 5,602,551 | 3,286,025 | ||||||||||||
| Less: Net income attributable to noncontrolling interest |
(156,156 | ) | (114,879 | ) | (309,458 | ) | (251,677 | ) | ||||||||
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| NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC. |
$ | 2,776,987 | $ | 1,661,091 | $ | 5,293,093 | $ | 3,034,348 | ||||||||
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| Preferred stock dividend and accretion of preferred stock discount |
(390,000 | ) | (390,000 | ) | (780,000 | ) | (780,000 | ) | ||||||||
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| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ | 2,386,987 | $ | 1,271,091 | $ | 4,513,093 | $ | 2,254,348 | ||||||||
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| NET INCOME PER COMMON SHARE: |
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| Basic |
$ | 0.40 | $ | 0.21 | $ | 0.75 | $ | 0.38 | ||||||||
| Diluted |
$ | 0.33 | $ | 0.19 | $ | 0.62 | $ | 0.35 | ||||||||
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (Dollars in thousands, except per share data) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| EARNINGS |
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| Interest income |
$ | 10,983 | $ | 9,714 | $ | 21,958 | $ | 19,258 | ||||||||
| Interest expense |
1,428 | 1,718 | 2,895 | 3,621 | ||||||||||||
| Net interest income |
9,555 | 7,996 | 19,063 | 15,637 | ||||||||||||
| Provision for loan losses |
1,484 | 1,100 | 3,415 | 2,101 | ||||||||||||
| Noninterest income |
20,924 | 11,923 | 38,320 | 21,618 | ||||||||||||
| Noninterest expense |
24,506 | 16,062 | 45,388 | 30,187 | ||||||||||||
| Pre-tax net income |
4,489 | 2,757 | 8,580 | 4,967 | ||||||||||||
| Minority interest in net income |
156 | 115 | 309 | 252 | ||||||||||||
| Income taxes |
1,556 | 981 | 2,978 | 1,681 | ||||||||||||
| Net income |
2,777 | 1,661 | 5,293 | 3,034 | ||||||||||||
| PER COMMON SHARE |
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| Earnings per share - basic |
$ | 0.40 | $ | 0.21 | $ | 0.75 | $ | 0.38 | ||||||||
| Earnings per share - diluted |
0.33 | 0.19 | 0.62 | 0.35 | ||||||||||||
| Common stock - per share dividends |
0.05 | 0.07 | 0.09 | 0.07 | ||||||||||||
| Book value |
10.08 | 8.98 | ||||||||||||||
| Tangible book value |
9.89 | 8.76 | ||||||||||||||
| Closing market price (adjusted) |
9.85 | 7.90 | ||||||||||||||
| Average Basic Shares Outstanding |
5,990,225 | 5,967,652 | 5,985,857 | 5,967,038 | ||||||||||||
| Average Diluted Shares Outstanding |
8,504,501 | 8,562,757 | 8,492,934 | 8,565,699 | ||||||||||||
| FINANCIAL RATIOS |
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| Return on average assets |
1.18 | % | 0.87 | % | 1.14 | % | 0.79 | % | ||||||||
| Return on average stockholders’ equity |
14.14 | 9.12 | 13.63 | 8.44 | ||||||||||||
| Net interest margin (FTE) |
4.39 | 4.55 | 4.43 | 4.41 | ||||||||||||
| Non-interest revenue/Total revenue |
65.6 | 55.1 | 63.6 | 52.9 | ||||||||||||
| Efficiency - Consolidated |
80.3 | 80.4 | 78.9 | 80.8 | ||||||||||||
| Efficiency - Bank only |
57.0 | 58.0 | 53.6 | 57.7 | ||||||||||||
| Average equity to average assets |
8.34 | 9.51 | 8.36 | 9.31 | ||||||||||||
| Total risk based capital - Consolidated |
12.15 | 13.23 | ||||||||||||||
| Total risk based capital - Bank only |
12.76 | 12.12 | ||||||||||||||
| PERIOD END BALANCES |
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| Total loans held for sale |
$ | 282,014 | $ | 115,704 | ||||||||||||
| Total loans held for investment |
626,464 | 588,785 | ||||||||||||||
| Interest-earning assets |
931,660 | 775,217 | ||||||||||||||
| Assets |
995,234 | 831,989 | ||||||||||||||
| Total deposits |
853,413 | 730,165 | ||||||||||||||
| Other borrowings |
46,325 | 19,026 | ||||||||||||||
| Stockholders’ equity |
80,617 | 73,467 | ||||||||||||||
| AVERAGE BALANCES |
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| Total loans held for sale |
$ | 239,558 | $ | 101,553 | $ | 236,871 | $ | 104,336 | ||||||||
| Total loans held for investment |
613,334 | 570,547 | 607,308 | 566,406 | ||||||||||||
| Interest-earning assets |
884,896 | 714,370 | 874,339 | 725,100 | ||||||||||||
| Assets |
947,060 | 768,170 | 934,122 | 778,206 | ||||||||||||
| Total deposits |
827,258 | 669,385 | 810,469 | 679,122 | ||||||||||||
| Other borrowings |
20,367 | 12,733 | 27,410 | 13,250 | ||||||||||||
| Stockholders’ equity |
78,969 | 73,039 | 78,110 | 72,488 | ||||||||||||
| ALLOWANCE FOR LOAN LOSSES |
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| Beginning balance |
$ | 10,400 | $ | 9,503 | $ | 9,930 | $ | 9,038 | ||||||||
| Provision for loan losses |
1,484 | 1,100 | 3,415 | 2,101 | ||||||||||||
| Charge-offs |
1,403 | 1,537 | 2,897 | 2,134 | ||||||||||||
| Recoveries |
243 | 414 | 276 | 475 | ||||||||||||
| Ending balance |
10,724 | 9,480 | 10,724 | 9,480 | ||||||||||||
| Net charge-off loans to average loans |
0.19 | 0.20 | 0.43 | 0.29 | ||||||||||||
| ASSET QUALITY RATIOS |
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| Nonperforming assets to total assets |
0.85 | % | 1.16 | % | ||||||||||||
| Allowance for loan losses to total loans held for investment |
1.71 | 1.61 | ||||||||||||||
| Allowance for loan losses to nonperforming loans |
167.41 | 118.41 | ||||||||||||||
| COMPOSITION OF RISK ASSETS |
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| Nonperforming loans: |
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| 90 days past due |
$ | 715 | $ | 165 | ||||||||||||
| Nonaccrual & Restructured debt |
5,691 | 7,841 | ||||||||||||||
| OREO |
2,013 | 1,625 | ||||||||||||||
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| Nonperforming assets |
8,419 | 9,631 | ||||||||||||||