MNRK.. $7.22
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Monarch Financial Reports Record Profits and Improved Asset Quality
CHESAPEAKE, Va., July 16 /PRNewswire-FirstCall/ -- Monarch Financial Holdings, Inc. (Nasdaq: MNRK - News), the bank holding company for Monarch Bank, reported the best quarterly profits in the company's history. Net income was $1,419,592 for the second quarter of 2009, up 53.1% from the same period in 2008 when net income was $927,027. The quarterly annualized return on average equity (ROE) was 9.17 %, and the annualized return on average assets (ROA) was 0.85%. Quarterly diluted earnings per share were $0.21, an improvement over the first quarter of 2009 when basic and diluted earnings per share were $0.16.
For the first six months of 2009 net income was a record $2,479,863 compared to $1,895,228 for the same period in 2008, a 30.8% increase. The six month annualized return on average equity (ROE) was 8.05 %, and the annualized return on average assets (ROA) was 0.76%. Year-to-date 2009 diluted earnings per share were $0.37, compared to $0.38 the previous year.
"I am pleased to report record historic quarterly profits that were achieved in this very challenging environment. Our team at Monarch Mortgage had a record quarter for applications and closed mortgage loans, which drove our improved performance. Our banking group continued to improve the net interest margin through improved deposit and loan pricing. We produced these record profits despite significant expense increases including a higher provision for loan loss expense and a large special FDIC deposit insurance assessment." stated Brad E. Schwartz, Chief Executive Officer of Monarch Bank. "It was a strong quarter for growth in earnings, capital, deposits and liquidity, as well as the growth in our client base."
Total assets at June 30, 2009 grew to $666.1 million, up $31.9 million for the quarter and up $87.5 million or 15.1% from the same period in 2008. Total loans held for investment increased $28.3 million to $515.6 million, up 5.8% from the same period in 2008. Loans held for sale through our mortgage operations increased $57.0 million to $96.5 million, up 144.1% from the same period in 2008. Deposits increased $62.1 million to $526.6 million, up 13.4% from the same period in 2008. Since December 31, 2008 deposits have grown $30.5 million with lower cost demand deposit accounts now representing 19% of total deposits.
Non-performing assets declined from 1.62% of total assets on March 31, 2009 to 0.76% of total assets at June 30, 2009. Non-performing assets consist of $471,000 in loans 90 days or more past due and still accruing interest, $3,819,000 in non-accrual loans and $802,000 in five parcels of other real estate. Total non-performing assets were $5.1 million, down from $10.2 million at March 31, 2009. "We remain aggressive in managing asset quality issues and continue to build our allowance for loan losses and work with troubled borrowers." stated E. Neal Crawford, President of Monarch Bank. "Asset quality improved dramatically during the second quarter with non-performing assets at 0.76% of total assets, a very good number compared to our market and peer banks. We continue to work closely with our relationship clients and will not abandon the marketplace like many of our larger competitors are doing. We remain committed to our clients in good times and bad."
The Company's capital position remains extremely strong with total capital of $62.4 million and regulatory capital of $78.0 million at June 30, 2009. Regulatory capital includes $10 million in trust preferred subordinated debt and the majority of the allowance for loan losses. Monarch is rated as "Well Capitalized," the highest rating of capital strength by bank regulatory standards.
During the first six months of 2009, the Company expensed $370,000 in dividends to pay back the US Treasury for the $14.7 million investment by the Capital Purchase Program last December. Monarch has used the funds primarily to support growth in funding mortgage loans, and since receipt of the funds last December has funded over $700 million in residential mortgage loans.
Net interest income increased 43.1% or $3.1 million in 2009, due to higher yields and balances in both loans held for investment and in loans held for sale, as well as a major decline in our cost of funds. The net interest margin increased to 3.67% for the second quarter of 2009 compared to 2.96% for the same period in 2008, and 3.17% in the first quarter of 2009. Improved market and risk-based loan pricing coupled with major declines in the cost of deposits continued to improve net interest income. We anticipate improved asset yields and further declines in funding costs as our time deposits reprice to lower market rates.
Non-interest income grew 68.7% during 2009 compared to the same period in 2008, fueled by increased production at Monarch Mortgage. Monarch Mortgage closed $351 million in mortgage loans during the second quarter of 2009, and $639 million for the first six months of 2009 which is greater than all the loans closed for the entire year in 2008. For the second quarter of 2009 mortgage loan applications were $492 million. Monarch Mortgage is focused on the retail A-paper mortgage market and does not participate in the sub-prime or wholesale mortgage markets. Investment and Insurance commissions from our Virginia Asset Group subsidiary declined $179,399 or 43.9% in the second quarter compared to the previous year. We recognized an after-tax gain of $199,000 on the sale of excess land adjacent to one of our banking offices during the second quarter of 2009. Non-interest income represented 52.8% of total revenues in 2009, compared to 41.8% in 2008.
Non-interest expense grew 55.4% due to increased mortgage commission expense, FDIC insurance expense, legal expenses related to loan collections, and general expansion. During the second quarter of 2009 the FDIC increased deposit insurance costs for all banks and levied a special assessment to replenish the insurance fund. This increased our insurance expense to $575,254, an increase of $496,644 or 631.8% over the previous year's second quarter.
Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with two offices in Chesapeake, four offices in Virginia Beach, and two offices in Norfolk, Virginia. OBX Bank, a division of Monarch Bank, operates one office in Kitty Hawk, 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 and OBXBank.com). Monarch Mortgage and our affiliated mortgage companies have thirteen offices with locations in Chesapeake, Norfolk, Virginia Beach (2), Fredericksburg, Suffolk, and Richmond, Virginia as well as Rockville (2), Waldorf, Crofton and Greenbelt, Maryland, and Charlotte, North Carolina. Our subsidiaries/divisions include Monarch Bank, OBX Bank, Monarch Mortgage (secondary mortgage origination), Coastal Home Mortgage, LLC (secondary mortgage origination), Home Mortgage Solutions, LLC (secondary mortgage origination), Virginia Asset Group, LLC (investment and insurance solutions), Real Estate Security Agency, LLC (title agency) and Monarch Capital, LLC (commercial mortgage brokerage). The shares of Monarch Financial Holdings, Inc. are publicly traded on the Nasdaq Capital Market under the symbol "MNRK".
AI
