Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Monarch Financial Holdings, Inc. | d8k.htm |
Exhibit 99.1
MONARCH FINANCIAL REPORTS RECORD
FIRST QUARTER PERFORMANCE
Chesapeake, VA - Monarch Financial Holdings, Inc. (Nasdaq: MNRK, MNRKP), the bank holding company for Monarch Bank, reported record first quarter profitability, along with annual loan, deposit and asset growth. First quarter 2011 highlights are:
| • | Net income of $1,373,257, up 22.6% from 2010 |
| • | Diluted earnings per share of $0.16, up from $0.13 one year prior |
| • | Improved deposit mix with growth in checking and money market accounts |
| • | Closed $295 million in mortgage loans |
| • | Non-performing assets of 1.26% remain low and below our peers |
Net income for the first quarter of 2011 was $1,373,257, compared to $1,119,817 for the same period in 2010. The annualized return on average equity (ROE) was 7.74%, and the annualized return on average assets (ROA) was 0.71%. Diluted earnings per share were $0.16, compared to $0.13 the previous year, a 23.1% increase.
“The first quarter of 2011 was another period of record quarterly earnings performance. We had great success in growing core deposits, maintaining our asset quality, and improving our mortgage banking revenue. Year over year we improved our profitability, shareholder return, and loan and deposit mix, all while maintaining a strong capital position.” stated Brad Schwartz, Chief Executive Officer.
Total assets at March 31, 2011 were $801.3 million, up $96.6 million or 13.7% from one year prior. Total loans held for investment increased $9.7 million to $566 million. Mortgage loans held for sale increased $12.6 million to $95 million, up 15% from 2010. Deposits increased $90 million to $670 million, up 15.7% from 2010. Deposit growth occurred primarily in money market and checking accounts offsetting a planned decline in certificates of deposit.
“Our focus for 2011 is to grow our loan portfolio while improving the core deposit mix. Our five dedicated cash management experts have been successful at delivering a business deposit platform that is on par with the larger banks in our markets. With the continued pullback in lending by banks both large and small, we have been successful at building new client relationships that should result in increasing loan and deposit growth during the year” stated Neal Crawford, President of Monarch Bank.
The company continues to experience strong asset quality. Non-performing assets represented 1.26% of total assets on March 31, 2011, down from 1.30% on December 31, 2010 but up slightly from a two year low of 1.05% reported one year prior. The allowance for loan losses now represents 1.68% of total loans held for investment, compared to 1.55% one year earlier. Total risk-based capital to risk-weighted assets, a measurement used by regulators to determine if a banking company is well capitalized, equaled 13.56%, significantly higher than the 10% required to be “Well Capitalized”, the highest rating of capital strength by bank regulatory standards.
Net interest income increased 19.7% or $1.2 million in 2011 compared to 2010 due to a combination of improved asset yields, earning asset growth, and declines in funding costs. The net interest margin improved to 4.23% for 2011 compared to 4.13% in 2010. Non-interest income in 2011 grew 17.1% compared to 2010, primarily driven by increased production at Monarch Mortgage. Non-interest income represented 50% of total revenues in 2011, compared to 49% in 2010. Monarch Mortgage and our related mortgage operations closed $295 million in mortgage loans, up from $230 million in 2010. Monarch Mortgage is a retail mortgage lender. Non-interest expense grew 21%, with the majority of the increase related to both banking growth and increased production at Monarch Mortgage.
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: | April 28, 2011 |
Consolidated Balance Sheets
Monarch Financial Holdings, Inc. and Subsidiaries
(In thousands)
Unaudited
| March 31 | ||||||||
| 2011 | 2010 | |||||||
| ASSETS: |
||||||||
| Cash and due from banks |
$ | 14,650 | $ | 15,803 | ||||
| Interest bearing bank balances |
1,088 | 4,562 | ||||||
| Federal funds sold |
35,398 | 7,040 | ||||||
| Investment securities |
43,542 | 8,413 | ||||||
| Loans held for sale |
95,306 | 82,664 | ||||||
| Loans held for investment, net of unearned income |
566,456 | 556,784 | ||||||
| Less: allowance for loan losses |
(9,503 | ) | (8,650 | ) | ||||
| Net loans |
556,953 | 548,134 | ||||||
| Bank premises and equipment |
22,561 | 9,198 | ||||||
| Restricted equity securities |
8,859 | 7,020 | ||||||
| Bank owned life insurance |
7,403 | 7,120 | ||||||
| Goodwill |
775 | 775 | ||||||
| Intangible assets |
595 | 774 | ||||||
| Accrued interest receivable and other assets |
14,178 | 13,175 | ||||||
| Total assets |
$ | 801,308 | $ | 704,678 | ||||
| LIABILITIES: |
||||||||
| Demand deposits—non-interest bearing |
$ | 103,434 | $ | 93,571 | ||||
| Demand deposits—interest bearing |
33,369 | 19,980 | ||||||
| Money market deposits |
298,134 | 169,476 | ||||||
| Savings deposits |
19,772 | 23,711 | ||||||
| Time deposits |
215,118 | 272,366 | ||||||
| Total deposits |
669,827 | 579,104 | ||||||
| FHLB borrowings |
41,450 | 42,088 | ||||||
| Trust preferred subordinated debt |
10,000 | 10,000 | ||||||
| Accrued interest payable and other liabilities |
7,177 | 5,031 | ||||||
| Total liabilities |
728,454 | 636,223 | ||||||
| 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 | 4,000 | ||||||
| Common stock, $5 par, 20,000,000 shares authorized; issued - 5,965,339 shares outstanding at March 31, 2011 and 5,876,534 shares outstanding at March 31, 2010 |
29,827 | 29,383 | ||||||
| Capital in excess of par value |
22,251 | 22,166 | ||||||
| Retained earnings |
16,908 | 13,090 | ||||||
| Accumulated other comprehensive loss |
(286 | ) | (300 | ) | ||||
| Total Monarch Financial Holdings, Inc. stockholders’ equity |
72,700 | 68,339 | ||||||
| Noncontrolling interest |
154 | 116 | ||||||
| Total equity |
72,854 | 68,455 | ||||||
| Total liabilities and stockholders’ equity |
$ | 801,308 | $ | 704,678 | ||||
Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
| Three Months Ended March 31 |
||||||||
| 2011 | 2010 | |||||||
| INTEREST INCOME: |
||||||||
| Interest on federal funds sold |
$ | 27,041 | $ | 8,377 | ||||
| Interest on other bank accounts |
1,075 | 376 | ||||||
| Dividends on restricted securities |
32,515 | 18,165 | ||||||
| Interest & dividends on investment securities |
40,551 | 54,546 | ||||||
| Interest and fees on loans |
9,443,210 | 8,470,927 | ||||||
| Total interest income |
9,544,392 | 8,552,391 | ||||||
| INTEREST EXPENSE: |
||||||||
| Interest on deposits |
1,757,675 | 1,861,365 | ||||||
| Interest on trust preferred subordinated debt |
121,500 | 121,500 | ||||||
| Interest on other borrowings |
22,985 | 182,698 | ||||||
| Total interest expense |
1,902,160 | 2,165,563 | ||||||
| NET INTEREST INCOME |
7,642,232 | 6,386,828 | ||||||
| PROVISION FOR LOAN LOSSES |
1,001,454 | 1,327,870 | ||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
6,640,778 | 5,058,958 | ||||||
| NON-INTEREST INCOME: |
||||||||
| Service charges on deposit accounts |
386,320 | 394,331 | ||||||
| Mortgage banking income |
9,004,237 | 7,675,152 | ||||||
| Investment and insurance commissions |
86,400 | 74,320 | ||||||
| Other income |
217,549 | 133,777 | ||||||
| Total non-interest income |
9,694,506 | 8,277,580 | ||||||
| NON-INTEREST EXPENSE: |
||||||||
| Salaries and employee benefits |
5,703,657 | 4,898,966 | ||||||
| Mortgage commissions |
3,546,847 | 3,025,580 | ||||||
| Occupancy and equipment |
1,387,033 | 1,068,425 | ||||||
| Loan expense |
1,355,423 | 1,001,184 | ||||||
| Data processing |
305,833 | 195,536 | ||||||
| Other expenses |
1,826,962 | 1,444,065 | ||||||
| Total non-interest expense |
14,125,755 | 11,633,756 | ||||||
| INCOME BEFORE TAXES |
2,209,529 | 1,702,782 | ||||||
| Income tax provision |
(699,474 | ) | (569,700 | ) | ||||
| NET INCOME |
1,510,055 | 1,133,082 | ||||||
| Less: Net income attributable to noncontrolling interest |
(136,798 | ) | (13,265 | ) | ||||
| NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC. |
$ | 1,373,257 | $ | 1,119,817 | ||||
| Preferred stock dividend and accretion of preferred stock discount |
(390,000 | ) | (390,000 | ) | ||||
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ | 983,257 | $ | 729,817 | ||||
| NET INCOME PER COMMON SHARE: |
||||||||
| Basic |
$ | 0.17 | $ | 0.13 | ||||
| Diluted |
$ | 0.16 | $ | 0.13 | ||||
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
| (Dollars in thousands, | ||||||||||||
| except per share data) | Three Months Ended March 31 | |||||||||||
| 2011 | 2010 | Change | ||||||||||
| EARNINGS |
||||||||||||
| Interest income |
$ | 9,544 | $ | 8,552 | 11.6 | % | ||||||
| Interest expense |
1,902 | 2,166 | (12.2 | ) | ||||||||
| Net interest income |
7,642 | 6,386 | 19.7 | |||||||||
| Provision for loan losses |
1,001 | 1,328 | (24.6 | ) | ||||||||
| Noninterest income |
9,694 | 8,278 | 17.1 | |||||||||
| Noninterest expense |
14,126 | 11,634 | 21.4 | |||||||||
| Pre-tax net income |
2,209 | 1,702 | 29.8 | |||||||||
| Minority interest in net income |
137 | 13 | 953.8 | |||||||||
| Income taxes |
699 | 569 | 22.8 | |||||||||
| Net income |
1,373 | 1,120 | 22.6 | |||||||||
| PER COMMON SHARE |
||||||||||||
| Earnings per share - basic |
$ | 0.17 | $ | 0.13 | 30.8 | % | ||||||
| Earnings per share - diluted |
0.16 | 0.13 | 23.1 | |||||||||
| Book value |
8.82 | 8.23 | 7.2 | |||||||||
| Tangible book value |
8.59 | 7.96 | 7.9 | |||||||||
| Closing market price (adjusted) |
8.39 | 7.79 | 7.7 | |||||||||
| Average Basic Shares Outstanding |
5,754,299 | 5,700,238 | 0.9 | |||||||||
| Average Diluted Shares Outstanding |
8,359,255 | 5,753,067 | 45.3 | |||||||||
| FINANCIAL RATIOS |
||||||||||||
| Return on average assets |
0.71 | % | 0.67 | % | 6.0 | % | ||||||
| Return on average stockholders’ equity |
7.74 | 6.68 | 15.9 | |||||||||
| Net interest margin (FTE) |
4.23 | 4.13 | 2.4 | |||||||||
| Non-interest revenue/Total revenue |
50.4 | 49.2 | 2.4 | |||||||||
| Efficiency - Consolidated |
81.2 | 79.0 | 2.8 | |||||||||
| Efficiency - Bank only |
57.4 | 54.1 | 6.1 | |||||||||
| Average equity to average assets |
9.13 | 10.05 | (9.2 | ) | ||||||||
| Total risk based capital - Consolidated |
13.56 | 14.07 | (3.6 | ) | ||||||||
| Total risk based capital - Bank only |
12.97 | 12.06 | 7.5 | |||||||||
| PERIOD END BALANCES |
||||||||||||
| Total loans held for sale |
$ | 95,306 | $ | 82,664 | 15.3 | % | ||||||
| Total loans held for investment |
566,456 | 556,784 | 1.7 | |||||||||
| Interest-earning assets |
758,052 | 666,906 | 13.7 | |||||||||
| Assets |
801,308 | 704,678 | 13.7 | |||||||||
| Total deposits |
669,827 | 579,104 | 15.7 | |||||||||
| Other borrowings |
51,450 | 52,088 | (1.2 | ) | ||||||||
| Stockholders’ equity |
72,854 | 68,455 | 6.4 | |||||||||
| AVERAGE BALANCES |
||||||||||||
| Total loans held for investment |
$ | 562,212 | $ | 544,628 | 3.2 | % | ||||||
| Interest-earning assets |
743,155 | 637,447 | 16.6 | |||||||||
| Assets |
787,752 | 676,455 | 16.5 | |||||||||
| Total deposits |
688,967 | 548,685 | 25.6 | |||||||||
| Other borrowings |
13,773 | 51,471 | (73.2 | ) | ||||||||
| Stockholders’ equity |
71,929 | 67,978 | 5.8 | |||||||||
| ALLOWANCE FOR LOAN LOSSES |
||||||||||||
| Beginning balance |
$ | 9,038 | $ | 9,300 | (2.8 | ) % | ||||||
| Provision for loan losses |
1,001 | 1,328 | (24.6 | ) | ||||||||
| Charge-offs |
597 | 2,042 | (70.8 | ) | ||||||||
| Recoveries |
61 | 64 | (4.7 | ) | ||||||||
| Ending balance |
9,503 | 8,650 | 9.9 | |||||||||
| Net charge-off loans to average loans |
0.10 | 0.36 | (73.7 | ) | ||||||||
| ASSET QUALITY RATIOS |
||||||||||||
| Nonperforming assets to total assets |
1.26 | % | 1.05 | % | 21.0 | bp | ||||||
| Allowance for loan losses to total loans held for investment |
1.68 | 1.55 | 12.4 | bp | ||||||||
| Allowance for loan losses to nonperforming loans |
119.97 | 131.16 | (8.5 | ) % | ||||||||
| COMPOSITION OF RISK ASSETS |
||||||||||||
| Nonperforming loans: |
||||||||||||
| 90 days past due |
$ | 430 | $ | — | 100.0 | % | ||||||
| Nonaccrual & Restructured debt |
7,491 | 6,595 | 13.6 | |||||||||
| OREO |
2,176 | 837 | 160.0 | |||||||||
| Nonperforming assets |
10,097 | 7,432 | 35.9 | % | ||||||||
| bp - Change is measured as difference in basis points. |
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