MNRK..$7.15.. Great earnings..
Monarch Financial Reports Record Profits And New Hilltop Banking Office
PR Newswire - Oct 15 at 16:36 NONE
Company Symbols: NASDAQ-SMALL:MNRK
CHESAPEAKE, Va., Oct. 15 /PRNewswire-FirstCall/ -- Monarch Financial Holdings, Inc. (Nasdaq: MNRK), the bank holding company for Monarch Bank, reported the best third quarter and nine month profits in the company's history. Net income was $1,153,699 for the third quarter of 2009, up 49.4% from the same period in 2008 when net income was $772,333. The quarterly annualized return on average equity (ROE) was 7.25%, and the annualized return on average assets (ROA) was 0.74%. Quarterly basic and diluted earnings per share were $0.17, a 21.4% improvement over the third quarter of 2008 when basic and diluted earnings per share were $0.14.
For the first nine months of 2009 net income was a record $3,633,562 compared to $2,667,561 for the same period in 2008, a 36.3% increase. The nine month annualized return on average equity (ROE) was 7.84 %, and the annualized return on average assets (ROA) was 0.75%. Year-to-date 2009 diluted earnings per share were $0.53, compared to $0.51 the previous year, despite the issuance of additional shares in June of 2008.
"I am pleased to again report record earnings that were achieved despite the challenges of this very tough economy. We improved our banking operations during the quarter and have had a great year of performance from our mortgage businesses. We continue to produce record profits despite significant expense increases including higher provision for loan loss expenses and much higher FDIC deposit insurance expenses," stated Brad E. Schwartz, Chief Executive Officer of Monarch Bank. "Our asset quality remains significantly better than our local and national peers, and our capital accounts are strong. In the past year we have created 91 net new jobs, which we feel is critical to improving the economy. Our talented people, capital strength and deposit base have allowed us to continue to lend and grow in all our communities."
The company also announced a new banking office in the Hilltop/First Colonial area of Virginia Beach, which is the top deposit market in the city. E. Neal Crawford, President of Monarch Bank, stated, "We are excited to soon have an office in not only the largest deposit market in Virginia Beach, but also in one of the top growing markets. This puts us in the center of the major retail, business, medical and professional corridor of northeastern Virginia Beach. Our new office will be located at 1635 Laskin Road and will open in the first quarter of 2010."
Total assets at September 30, 2009 grew to $651.8 million, up $57.0 million or 9.6% from the same period in 2008. Total loans held for investment increased $21.3 million to $522.3 million, up 4.2% from the same period in 2008. Loans held for sale through our mortgage operations increased $34.8 million to $71.2 million, up 95.7% from the same period in 2008. Deposits increased $41.4 million to $540.1 million, up 8.3% from the same period in 2008. Lower cost demand deposit accounts represent 19% of total deposits.
Non-performing assets were $8,765,000 or 1.34 % of total assets as of September 30, 2009, an increase from 0.76% of total assets at June 30, 2009, but in line with 1.35% reported at December 31, 2008. The increase for the quarter was primarily due to two relationships, with potential losses accounted for in our allowance for loan losses. Non-performing assets consist of $837,000 in loans 90 days or more past due and still accruing interest, $6,851,000 in non-accrual loans and seven residential properties totaling $1,077,000 carried in Other Real Estate Owned.
Our allowance for loan losses as of September 30, 2009 represents 1.83% of total loans, up significantly from 1.00% one year prior. Management continues to aggressively build the allowance for loans losses and manage non-performing assets. All Other Real Estate Owned as of June 30, 2009 has been sold except for one parcel carried at $67,000, which is under contract for sale and expected to close in October. Two of the remaining six properties held as Other Real Estate Owned are already under contract to close in the fourth quarter.
The Company's capital position remains extremely strong with total capital of $63.5 million and regulatory capital of $78.7 million at September 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, with total risk based capital to total assets of 13.94%, up 15.1% from one year prior. On October 14, 2009, Monarch announced the filing of a registration statement with the U.S. Securities and Exchange Commission in connection with a proposed public offering of 650,000 shares of noncumulative convertible perpetual preferred stock with a public offering price and liquidation value of $25.00 per share.
During the first nine months of 2009, the Company paid $557,375 in dividends directly to the US Treasury for the $14.7 million investment by the Capital Purchase Program last December. Despite this dividend payment in 2009, the company was able to report an increase in both quarterly and year to date earnings per share. Monarch has used the Capital Purchase Program funds primarily to support growth in funding mortgage loans, and since receipt of the funds last December has funded over $965 million in residential mortgage loans.
Net interest income increased 28.6% or $3.5 million in 2009, due to higher 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 was 3.60% for the third quarter of 2009 compared to 3.18% for the same period in 2008. Improved market and risk-based loan pricing coupled with major declines in the cost of deposits continued to improve net interest income. We do anticipate improved asset yields and further declines in funding costs as the majority of our time deposits reprice to lower market rates.
Non-interest income grew 81.3% during 2009 compared to the same period in 2008, fueled by increased production at Monarch Mortgage. Monarch Mortgage closed $265 million in mortgage loans during the third quarter of 2009, and $904 million for the first nine months of 2009, which is greater than all the loans closed for the entire year in 2008. For the third quarter of 2009 mortgage loan applications were $406 million. Monarch Mortgage is focused on the retail A-paper mortgage market and does not originate sub-prime mortgages or purchase loans in the wholesale mortgage market. Non-interest income represented 52.5% of total revenues in 2009, compared to 38.5% in 2008.
Non-interest expense grew 52.2% due to increased mortgage commission expense, FDIC insurance expense, legal expenses related to loan collections, and general expansion. Our largest non-interest expense percentage increase for 2009 is our FDIC deposit insurance premiums and special assessments, which was up $874,545 or 414.1% in 2009 compared to the same nine months of 2008.
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 eighteen offices with locations in Chesapeake, Norfolk, Virginia Beach (2), Fredericksburg, Suffolk, and Richmond, Virginia as well as Rockville (2), Bowie, Waldorf, Crofton, Gaithersburg and Greenbelt, Maryland, and Kitty Hawk, Charlotte, and Wilmington, North Carolina and Greenwood, South 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), Monarch Investments (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".
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.
Consolidated Balance Sheets
Monarch Financial Holdings, Inc. and Subsidiaries
(In thousands)
Unaudited
September
2009 2008
---- ----
ASSETS:
Cash and due from banks $14,004 $14,060
Interest bearing bank balances 4,407 94
Federal funds sold 7,749 -
Investment securities:
Securities available for sale 5,762 17,290
Securities held to maturity 500 500
--- ---
Total investment securities 6,262 17,790
----- ------
Mortgage loans held for sale 71,232 36,395
Loans 522,333 501,052
Less: allowance for loan losses (9,550) (4,991)
------ ------
Net loans 512,783 496,061
------- -------
Bank premises and equipment 8,253 8,574
Restricted equity securities 7,017 3,757
Bank owned life insurance 6,981 6,724
Goodwill 775 775
Intangible assets 863 1,042
Accrued interest receivable and other assets 11,448 9,562
------ -----
Total assets $651,774 $594,834
======== ========
LIABILITIES:
Demand deposits--non-interest bearing $84,389 $73,379
Demand deposits--interest bearing 19,171 16,873
Money market deposits 139,115 110,475
Savings deposits 27,684 14,295
Time deposits 269,732 283,682
------- -------
Total deposits 540,091 498,704
FHLB borrowings 33,082 31,700
Federal funds purchased - 4,790
Trust preferred subordinated debt 10,000 10,000
Accrued interest payable and other liabilities 5,133 3,237
----- -----
Total liabilities 588,306 548,431
------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $5 par value, 1,985,300 shares
authorized, none issued - -
Cumulative perpetual preferred stock, series A,
$1,000 par value, 14,700 issued and outstanding 14,511 -
Common stock, $5 par, 20,000,000 shares
authorized, issued 5,792,914 shares outstanding
at September 30, 2009 and 5,688,580 shares
outstanding at September 30, 2008 28,965 28,443
Capital in excess of par value 8,230 7,810
Retained earnings 11,603 10,087
Accumulated other comprehensive income 56 (47)
-- ---
Total Monarch Financial Holdings, Inc.
stockholders' equity 63,365 46,293
Noncontrolling interest 103 110
--- ---
Total equity 63,468 46,403
------ ------
Total liabilities and stockholders' equity $651,774 $594,834
======== ========
Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
---- ---- ---- ----
INTEREST INCOME:
Interest on federal funds
sold $6,728 $5,560 $9,987 $17,444
Interest on other bank
accounts 494 10,060 1,902 65,040
Dividends on restricted
securities 41,705 41,852 80,553 162,206
Interest and dividends on
investment securities 53,794 141,123 181,539 367,649
Interest and fees on
loans 7,960,150 7,670,563 23,772,474 22,822,737
--------- --------- ---------- ----------
Total interest
income 8,062,871 7,869,158 24,046,455 23,435,076
--------- --------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 2,184,747 2,962,457 7,149,718 9,471,758
Interest on trust
preferred subordinated
debt 56,158 112,460 205,216 384,789
Interest on other
borrowings 285,887 435,059 864,998 1,272,451
------- ------- ------- ---------
Total interest
expense 2,526,792 3,509,976 8,219,932 11,128,998
--------- --------- --------- ----------
NET INTEREST INCOME 5,536,079 4,359,182 15,826,523 12,306,078
PROVISION FOR LOAN LOSSES 1,546,788 480,581 4,084,936 1,244,613
--------- ------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,989,291 3,878,601 11,741,587 11,061,465
--------- --------- ---------- ----------
NON-INTEREST INCOME:
Service charges on
deposit accounts 395,981 357,395 1,052,808 1,021,517
Mortgage banking income 7,975,961 3,988,190 23,902,036 11,995,944
Investment and insurance
commissions 163,761 294,671 677,433 991,095
Security gains, net - - - 10,801
Other income 94,676 173,174 928,772 631,621
------ ------- ------- -------
Total non-interest
income 8,630,379 4,813,430 26,561,049 14,650,978
--------- --------- ---------- ----------
NON-INTEREST EXPENSE:
Salaries and employee
benefits 7,389,031 4,714,837 22,354,849 14,222,938
Occupancy and equipment 982,943 876,062 2,793,119 2,544,368
Loan Expense 1,067,668 386,727 2,574,562 1,311,311
Data processing 186,930 156,888 600,581 489,318
FDIC Insurance 255,000 95,940 1,085,755 211,210
Other expenses 941,997 1,183,471 3,258,306 2,679,800
------- --------- --------- ---------
Total non-interest
expense 10,823,569 7,413,925 32,667,172 21,458,945
---------- --------- ---------- ----------
INCOME BEFORE TAXES 1,796,101 1,278,106 5,635,464 4,253,498
Income tax provision 619,870 412,700 1,833,770 1,327,500
------- ------- --------- ---------
NET INCOME 1,176,231 865,406 3,801,694 2,925,998
Less: Net income
attributable to
noncontrolling
interest (22,532) (93,073) (168,132) (258,437)
------- ------- -------- --------
NET INCOME ATTRIBUTABLE
TO MONARCH FINANCIAL
HOLDINGS, INC. $1,153,699 $772,333 $3,633,562 $2,667,561
---------- -------- ---------- ----------
Preferred stock dividend
and accretion of preferred
stock discount 197,766 - 586,807 -
------- --- ------- ---
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS $955,933 $772,333 $3,046,755 $2,667,561
======== ======== ========== ==========
NET INCOME PER COMMON SHARE:
Basic $0.17 $0.14 $0.54 $0.52
Diluted $0.17 $0.14 $0.53 $0.51
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
(Dollars in thousands,
except per share data)
Three Months Ended
September 30
2009 2008 Change
---- ---- ------
EARNINGS
Interest Income $8,063 $7,869 2.5%
Interest expense 2,527 3,510 (28.0)
Net interest income 5,536 4,359 27.0
Provision for loan losses 1,547 481 221.6
Noninterest income 8,630 4,814 79.3
Noninterest expense 10,824 7,414 46.0
Pre-tax net income 1,795 1,278 40.5
Minority interest in net income 23 93 (75.3)
Income taxes 619 413 49.9
Net income 1,153 772 49.4
PER COMMON SHARE
Earnings per share - basic $0.17 $0.14 21.4%
Earnings per share - diluted 0.17 0.14 21.4
FINANCIAL RATIOS
Return on average assets 0.74% 0.53% 39.6%
Return on average stockholders' equity 7.25 6.67 8.7
Net interest margin (FTE) 3.60 3.18 13.2
Non-interest revenue/Total revenue 51.7 38.0 36.1
Efficiency - Consolidated 76.1 80.3 (5.2)
Efficiency - Bank only 49.7 75.1 (33.8)
Average equity to average assets 10.18 7.90 28.9
AVERAGE BALANCES
Total loans $519,461 $496,082 4.7%
Interest-earning assets 622,856 555,671 12.1
Assets 619,701 582,623 6.4
Total deposits 514,189 464,878 10.6
Other borrowings 59,711 66,068 (9.6)
Stockholders' equity 63,079 46,050 37.0
ALLOWANCE FOR LOAN LOSSES
Beginning balance $9,030 $4,621 95.4%
Provision for loan losses 1,547 481 221.6
Charge-offs 1,050 138 660.9
Recoveries 23 27 (14.8)
Ending balance 9,550 4,991 91.3
Net charge-off loans to average loans 0.20 0.02 783.6
Nine Months Ended
September 30
2009 2008 Change
---- ---- ------
EARNINGS
Interest Income $24,046 $23,435 2.6%
Interest expense 8,220 11,129 (26.1)
Net interest income 15,826 12,306 28.6
Provision for loan losses 4,085 1,245 228.1
Noninterest income 26,561 14,651 81.3
Noninterest expense 32,667 21,459 52.2
Pre-tax net income 5,635 4,253 32.5
Minority interest in net income 168 258 (34.9)
Income taxes 1,833 1,328 38.0
Net income 3,634 2,667 36.3
PER COMMON SHARE
Earnings per share - basic $0.54 $0.52 3.8%
Earnings per share - diluted 0.53 0.51 3.9
Book value 8.42 8.16 3.2
Tangible book value 8.14 8.16 (0.2)
Closing market price (adjusted) 7.45 7.70 (3.2)
FINANCIAL RATIOS
Return on average assets 0.75% 0.65% 15.4%
Return on average stockholders' equity 7.84 8.79 (10.8)
Net interest margin (FTE) 3.49 3.20 9.1
Non-interest revenue/Total revenue 52.5 38.5 36.4
Efficiency - Consolidated 76.8 79.1 (2.9)
Efficiency - Bank only 57.1 75.5 (24.4)
Average equity to average assets 9.62 7.40 30.0
Total risk based capital -
Consolidated 13.94 12.11 15.1
Total risk based capital - Bank only 11.36 12.11 (6.2)
PERIOD END BALANCES
Total loans held for sale $71,232 $36,395 95.7%
Total loans held for investment 522,333 501,052 4.2
Interest-earning assets 625,981 565,812 10.6
Assets 651,774 594,834 9.6
Total deposits 540,091 498,704 8.3
Other borrowings 43,082 46,490 (7.3)
Stockholders' equity 63,468 46,403 36.8
AVERAGE BALANCES
Total loans $512,639 $468,461 9.4%
Interest-earning assets 620,000 523,462 18.4
Assets 644,363 547,479 17.7
Total deposits 506,890 442,371 14.6
Other borrowings 66,246 66,068 0.3
Stockholders' equity 61,967 40,516 52.9
ALLOWANCE FOR LOAN LOSSES
Beginning balance $8,046 $3,976 102.4%
Provision for loan losses 4,085 1,245 228.1
Charge-offs 2,662 294 805.4
Recoveries 81 64 26.6
Ending balance 9,550 4,991 91.3
Net charge-off loans to average loans 0.50 0.05 925.5
ASSET QUALITY RATIOS
Nonperforming assets to total assets 1.34% 0.89% 45.0 bp
Allowance for loan losses to total
loans 1.83 1.00 82.8 bp
Allowance for loan losses to
nonperforming loans 124.22 101.92 21.9%
COMPOSITION OF RISK ASSETS
Nonperforming loans:
90 days past due $837 $931 (10.1)%
Nonaccrual 6,851 3,966 72.7
OREO 1,077 410 162.7
----- ---
Nonperforming assets 8,765 5,307 65.2%
===== =====
bp - Change is measured as difference in basis points.
SOURCE Monarch Financial Holdings, Inc.
Monarch Financial Reports Record Profits And New Hilltop Banking Office
PR Newswire - Oct 15 at 16:36 NONE
Company Symbols: NASDAQ-SMALL:MNRK
CHESAPEAKE, Va., Oct. 15 /PRNewswire-FirstCall/ -- Monarch Financial Holdings, Inc. (Nasdaq: MNRK), the bank holding company for Monarch Bank, reported the best third quarter and nine month profits in the company's history. Net income was $1,153,699 for the third quarter of 2009, up 49.4% from the same period in 2008 when net income was $772,333. The quarterly annualized return on average equity (ROE) was 7.25%, and the annualized return on average assets (ROA) was 0.74%. Quarterly basic and diluted earnings per share were $0.17, a 21.4% improvement over the third quarter of 2008 when basic and diluted earnings per share were $0.14.
For the first nine months of 2009 net income was a record $3,633,562 compared to $2,667,561 for the same period in 2008, a 36.3% increase. The nine month annualized return on average equity (ROE) was 7.84 %, and the annualized return on average assets (ROA) was 0.75%. Year-to-date 2009 diluted earnings per share were $0.53, compared to $0.51 the previous year, despite the issuance of additional shares in June of 2008.
"I am pleased to again report record earnings that were achieved despite the challenges of this very tough economy. We improved our banking operations during the quarter and have had a great year of performance from our mortgage businesses. We continue to produce record profits despite significant expense increases including higher provision for loan loss expenses and much higher FDIC deposit insurance expenses," stated Brad E. Schwartz, Chief Executive Officer of Monarch Bank. "Our asset quality remains significantly better than our local and national peers, and our capital accounts are strong. In the past year we have created 91 net new jobs, which we feel is critical to improving the economy. Our talented people, capital strength and deposit base have allowed us to continue to lend and grow in all our communities."
The company also announced a new banking office in the Hilltop/First Colonial area of Virginia Beach, which is the top deposit market in the city. E. Neal Crawford, President of Monarch Bank, stated, "We are excited to soon have an office in not only the largest deposit market in Virginia Beach, but also in one of the top growing markets. This puts us in the center of the major retail, business, medical and professional corridor of northeastern Virginia Beach. Our new office will be located at 1635 Laskin Road and will open in the first quarter of 2010."
Total assets at September 30, 2009 grew to $651.8 million, up $57.0 million or 9.6% from the same period in 2008. Total loans held for investment increased $21.3 million to $522.3 million, up 4.2% from the same period in 2008. Loans held for sale through our mortgage operations increased $34.8 million to $71.2 million, up 95.7% from the same period in 2008. Deposits increased $41.4 million to $540.1 million, up 8.3% from the same period in 2008. Lower cost demand deposit accounts represent 19% of total deposits.
Non-performing assets were $8,765,000 or 1.34 % of total assets as of September 30, 2009, an increase from 0.76% of total assets at June 30, 2009, but in line with 1.35% reported at December 31, 2008. The increase for the quarter was primarily due to two relationships, with potential losses accounted for in our allowance for loan losses. Non-performing assets consist of $837,000 in loans 90 days or more past due and still accruing interest, $6,851,000 in non-accrual loans and seven residential properties totaling $1,077,000 carried in Other Real Estate Owned.
Our allowance for loan losses as of September 30, 2009 represents 1.83% of total loans, up significantly from 1.00% one year prior. Management continues to aggressively build the allowance for loans losses and manage non-performing assets. All Other Real Estate Owned as of June 30, 2009 has been sold except for one parcel carried at $67,000, which is under contract for sale and expected to close in October. Two of the remaining six properties held as Other Real Estate Owned are already under contract to close in the fourth quarter.
The Company's capital position remains extremely strong with total capital of $63.5 million and regulatory capital of $78.7 million at September 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, with total risk based capital to total assets of 13.94%, up 15.1% from one year prior. On October 14, 2009, Monarch announced the filing of a registration statement with the U.S. Securities and Exchange Commission in connection with a proposed public offering of 650,000 shares of noncumulative convertible perpetual preferred stock with a public offering price and liquidation value of $25.00 per share.
During the first nine months of 2009, the Company paid $557,375 in dividends directly to the US Treasury for the $14.7 million investment by the Capital Purchase Program last December. Despite this dividend payment in 2009, the company was able to report an increase in both quarterly and year to date earnings per share. Monarch has used the Capital Purchase Program funds primarily to support growth in funding mortgage loans, and since receipt of the funds last December has funded over $965 million in residential mortgage loans.
Net interest income increased 28.6% or $3.5 million in 2009, due to higher 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 was 3.60% for the third quarter of 2009 compared to 3.18% for the same period in 2008. Improved market and risk-based loan pricing coupled with major declines in the cost of deposits continued to improve net interest income. We do anticipate improved asset yields and further declines in funding costs as the majority of our time deposits reprice to lower market rates.
Non-interest income grew 81.3% during 2009 compared to the same period in 2008, fueled by increased production at Monarch Mortgage. Monarch Mortgage closed $265 million in mortgage loans during the third quarter of 2009, and $904 million for the first nine months of 2009, which is greater than all the loans closed for the entire year in 2008. For the third quarter of 2009 mortgage loan applications were $406 million. Monarch Mortgage is focused on the retail A-paper mortgage market and does not originate sub-prime mortgages or purchase loans in the wholesale mortgage market. Non-interest income represented 52.5% of total revenues in 2009, compared to 38.5% in 2008.
Non-interest expense grew 52.2% due to increased mortgage commission expense, FDIC insurance expense, legal expenses related to loan collections, and general expansion. Our largest non-interest expense percentage increase for 2009 is our FDIC deposit insurance premiums and special assessments, which was up $874,545 or 414.1% in 2009 compared to the same nine months of 2008.
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 eighteen offices with locations in Chesapeake, Norfolk, Virginia Beach (2), Fredericksburg, Suffolk, and Richmond, Virginia as well as Rockville (2), Bowie, Waldorf, Crofton, Gaithersburg and Greenbelt, Maryland, and Kitty Hawk, Charlotte, and Wilmington, North Carolina and Greenwood, South 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), Monarch Investments (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".
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.
Consolidated Balance Sheets
Monarch Financial Holdings, Inc. and Subsidiaries
(In thousands)
Unaudited
September
2009 2008
---- ----
ASSETS:
Cash and due from banks $14,004 $14,060
Interest bearing bank balances 4,407 94
Federal funds sold 7,749 -
Investment securities:
Securities available for sale 5,762 17,290
Securities held to maturity 500 500
--- ---
Total investment securities 6,262 17,790
----- ------
Mortgage loans held for sale 71,232 36,395
Loans 522,333 501,052
Less: allowance for loan losses (9,550) (4,991)
------ ------
Net loans 512,783 496,061
------- -------
Bank premises and equipment 8,253 8,574
Restricted equity securities 7,017 3,757
Bank owned life insurance 6,981 6,724
Goodwill 775 775
Intangible assets 863 1,042
Accrued interest receivable and other assets 11,448 9,562
------ -----
Total assets $651,774 $594,834
======== ========
LIABILITIES:
Demand deposits--non-interest bearing $84,389 $73,379
Demand deposits--interest bearing 19,171 16,873
Money market deposits 139,115 110,475
Savings deposits 27,684 14,295
Time deposits 269,732 283,682
------- -------
Total deposits 540,091 498,704
FHLB borrowings 33,082 31,700
Federal funds purchased - 4,790
Trust preferred subordinated debt 10,000 10,000
Accrued interest payable and other liabilities 5,133 3,237
----- -----
Total liabilities 588,306 548,431
------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $5 par value, 1,985,300 shares
authorized, none issued - -
Cumulative perpetual preferred stock, series A,
$1,000 par value, 14,700 issued and outstanding 14,511 -
Common stock, $5 par, 20,000,000 shares
authorized, issued 5,792,914 shares outstanding
at September 30, 2009 and 5,688,580 shares
outstanding at September 30, 2008 28,965 28,443
Capital in excess of par value 8,230 7,810
Retained earnings 11,603 10,087
Accumulated other comprehensive income 56 (47)
-- ---
Total Monarch Financial Holdings, Inc.
stockholders' equity 63,365 46,293
Noncontrolling interest 103 110
--- ---
Total equity 63,468 46,403
------ ------
Total liabilities and stockholders' equity $651,774 $594,834
======== ========
Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
---- ---- ---- ----
INTEREST INCOME:
Interest on federal funds
sold $6,728 $5,560 $9,987 $17,444
Interest on other bank
accounts 494 10,060 1,902 65,040
Dividends on restricted
securities 41,705 41,852 80,553 162,206
Interest and dividends on
investment securities 53,794 141,123 181,539 367,649
Interest and fees on
loans 7,960,150 7,670,563 23,772,474 22,822,737
--------- --------- ---------- ----------
Total interest
income 8,062,871 7,869,158 24,046,455 23,435,076
--------- --------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 2,184,747 2,962,457 7,149,718 9,471,758
Interest on trust
preferred subordinated
debt 56,158 112,460 205,216 384,789
Interest on other
borrowings 285,887 435,059 864,998 1,272,451
------- ------- ------- ---------
Total interest
expense 2,526,792 3,509,976 8,219,932 11,128,998
--------- --------- --------- ----------
NET INTEREST INCOME 5,536,079 4,359,182 15,826,523 12,306,078
PROVISION FOR LOAN LOSSES 1,546,788 480,581 4,084,936 1,244,613
--------- ------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,989,291 3,878,601 11,741,587 11,061,465
--------- --------- ---------- ----------
NON-INTEREST INCOME:
Service charges on
deposit accounts 395,981 357,395 1,052,808 1,021,517
Mortgage banking income 7,975,961 3,988,190 23,902,036 11,995,944
Investment and insurance
commissions 163,761 294,671 677,433 991,095
Security gains, net - - - 10,801
Other income 94,676 173,174 928,772 631,621
------ ------- ------- -------
Total non-interest
income 8,630,379 4,813,430 26,561,049 14,650,978
--------- --------- ---------- ----------
NON-INTEREST EXPENSE:
Salaries and employee
benefits 7,389,031 4,714,837 22,354,849 14,222,938
Occupancy and equipment 982,943 876,062 2,793,119 2,544,368
Loan Expense 1,067,668 386,727 2,574,562 1,311,311
Data processing 186,930 156,888 600,581 489,318
FDIC Insurance 255,000 95,940 1,085,755 211,210
Other expenses 941,997 1,183,471 3,258,306 2,679,800
------- --------- --------- ---------
Total non-interest
expense 10,823,569 7,413,925 32,667,172 21,458,945
---------- --------- ---------- ----------
INCOME BEFORE TAXES 1,796,101 1,278,106 5,635,464 4,253,498
Income tax provision 619,870 412,700 1,833,770 1,327,500
------- ------- --------- ---------
NET INCOME 1,176,231 865,406 3,801,694 2,925,998
Less: Net income
attributable to
noncontrolling
interest (22,532) (93,073) (168,132) (258,437)
------- ------- -------- --------
NET INCOME ATTRIBUTABLE
TO MONARCH FINANCIAL
HOLDINGS, INC. $1,153,699 $772,333 $3,633,562 $2,667,561
---------- -------- ---------- ----------
Preferred stock dividend
and accretion of preferred
stock discount 197,766 - 586,807 -
------- --- ------- ---
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS $955,933 $772,333 $3,046,755 $2,667,561
======== ======== ========== ==========
NET INCOME PER COMMON SHARE:
Basic $0.17 $0.14 $0.54 $0.52
Diluted $0.17 $0.14 $0.53 $0.51
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
(Dollars in thousands,
except per share data)
Three Months Ended
September 30
2009 2008 Change
---- ---- ------
EARNINGS
Interest Income $8,063 $7,869 2.5%
Interest expense 2,527 3,510 (28.0)
Net interest income 5,536 4,359 27.0
Provision for loan losses 1,547 481 221.6
Noninterest income 8,630 4,814 79.3
Noninterest expense 10,824 7,414 46.0
Pre-tax net income 1,795 1,278 40.5
Minority interest in net income 23 93 (75.3)
Income taxes 619 413 49.9
Net income 1,153 772 49.4
PER COMMON SHARE
Earnings per share - basic $0.17 $0.14 21.4%
Earnings per share - diluted 0.17 0.14 21.4
FINANCIAL RATIOS
Return on average assets 0.74% 0.53% 39.6%
Return on average stockholders' equity 7.25 6.67 8.7
Net interest margin (FTE) 3.60 3.18 13.2
Non-interest revenue/Total revenue 51.7 38.0 36.1
Efficiency - Consolidated 76.1 80.3 (5.2)
Efficiency - Bank only 49.7 75.1 (33.8)
Average equity to average assets 10.18 7.90 28.9
AVERAGE BALANCES
Total loans $519,461 $496,082 4.7%
Interest-earning assets 622,856 555,671 12.1
Assets 619,701 582,623 6.4
Total deposits 514,189 464,878 10.6
Other borrowings 59,711 66,068 (9.6)
Stockholders' equity 63,079 46,050 37.0
ALLOWANCE FOR LOAN LOSSES
Beginning balance $9,030 $4,621 95.4%
Provision for loan losses 1,547 481 221.6
Charge-offs 1,050 138 660.9
Recoveries 23 27 (14.8)
Ending balance 9,550 4,991 91.3
Net charge-off loans to average loans 0.20 0.02 783.6
Nine Months Ended
September 30
2009 2008 Change
---- ---- ------
EARNINGS
Interest Income $24,046 $23,435 2.6%
Interest expense 8,220 11,129 (26.1)
Net interest income 15,826 12,306 28.6
Provision for loan losses 4,085 1,245 228.1
Noninterest income 26,561 14,651 81.3
Noninterest expense 32,667 21,459 52.2
Pre-tax net income 5,635 4,253 32.5
Minority interest in net income 168 258 (34.9)
Income taxes 1,833 1,328 38.0
Net income 3,634 2,667 36.3
PER COMMON SHARE
Earnings per share - basic $0.54 $0.52 3.8%
Earnings per share - diluted 0.53 0.51 3.9
Book value 8.42 8.16 3.2
Tangible book value 8.14 8.16 (0.2)
Closing market price (adjusted) 7.45 7.70 (3.2)
FINANCIAL RATIOS
Return on average assets 0.75% 0.65% 15.4%
Return on average stockholders' equity 7.84 8.79 (10.8)
Net interest margin (FTE) 3.49 3.20 9.1
Non-interest revenue/Total revenue 52.5 38.5 36.4
Efficiency - Consolidated 76.8 79.1 (2.9)
Efficiency - Bank only 57.1 75.5 (24.4)
Average equity to average assets 9.62 7.40 30.0
Total risk based capital -
Consolidated 13.94 12.11 15.1
Total risk based capital - Bank only 11.36 12.11 (6.2)
PERIOD END BALANCES
Total loans held for sale $71,232 $36,395 95.7%
Total loans held for investment 522,333 501,052 4.2
Interest-earning assets 625,981 565,812 10.6
Assets 651,774 594,834 9.6
Total deposits 540,091 498,704 8.3
Other borrowings 43,082 46,490 (7.3)
Stockholders' equity 63,468 46,403 36.8
AVERAGE BALANCES
Total loans $512,639 $468,461 9.4%
Interest-earning assets 620,000 523,462 18.4
Assets 644,363 547,479 17.7
Total deposits 506,890 442,371 14.6
Other borrowings 66,246 66,068 0.3
Stockholders' equity 61,967 40,516 52.9
ALLOWANCE FOR LOAN LOSSES
Beginning balance $8,046 $3,976 102.4%
Provision for loan losses 4,085 1,245 228.1
Charge-offs 2,662 294 805.4
Recoveries 81 64 26.6
Ending balance 9,550 4,991 91.3
Net charge-off loans to average loans 0.50 0.05 925.5
ASSET QUALITY RATIOS
Nonperforming assets to total assets 1.34% 0.89% 45.0 bp
Allowance for loan losses to total
loans 1.83 1.00 82.8 bp
Allowance for loan losses to
nonperforming loans 124.22 101.92 21.9%
COMPOSITION OF RISK ASSETS
Nonperforming loans:
90 days past due $837 $931 (10.1)%
Nonaccrual 6,851 3,966 72.7
OREO 1,077 410 162.7
----- ---
Nonperforming assets 8,765 5,307 65.2%
===== =====
bp - Change is measured as difference in basis points.
SOURCE Monarch Financial Holdings, Inc.
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