Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Monarch Financial Holdings, Inc. | d8k.htm |
Exhibit 99.1
MONARCH FINANCIAL REPORTS SOLID GROWTH
AND RECORD 2ND QUARTER PROFITABILITY
Chesapeake, VA - Monarch Financial Holdings, Inc. (Nasdaq: MNRK, MNRKP), the bank holding company for Monarch Bank, reported the best second quarter profits in the company’s history, along with strong loan and deposit growth, as well as improved asset quality. Second quarter 2011 highlights are:
| • | Record 2nd quarter net income of $1,661,091, up 7% from 2010 |
| • | Net income available to common shareholders up 9% |
| • | Annual asset growth of $41 million, total assets at $832 million |
| • | Annual loan growth of $34 million, up 6.1% |
| • | Annual deposit growth of $87 million, up 13.5% |
| • | Non-performing assets remain low at 1.16% of total assets |
| • | Closed $347 million in mortgage loans during the 2nd quarter |
“I am pleased to report continued financial performance for Monarch and all our companies for the second quarter and for the year. I am most pleased with our loan growth, with over $35 million in new commercial loans originated during the second quarter. Many banks are still not lending and most are actually shrinking their loan portfolios. We are doing our part to get this economy going again, and we are adding a great number of strong and credit worthy clients.” stated Brad E. Schwartz, Chief Executive Officer. “Mortgage production continues to be a major contributor to our bottom line. All major areas improved including our net interest margin, overall profitability, liquidity, core deposit growth, and of course our asset quality. We remain bullish on having another great year for our shareholders”.
Net income was $1,661,091 for the second quarter of 2011, up 7% from the same period in 2010, which was the company’s previous record second quarter with $1,552,908 in net income. The quarterly annualized return on average equity (ROE) was 9.12%, and the annualized return on average assets (ROA) was 0.87%. Quarterly earnings per share were $0.21, compared to $0.20 per share in the same quarter of 2010. For the first six months of 2011 net income was a record $3,034,348 compared to $2,672,725 for the same period in 2010, a 13.5% increase. The six month annualized return on average equity (ROE) was 8.44%, and the annualized return on average assets (ROA) was 0.79%. Year to date earnings per share were $0.38 compared to $0.33 for the same period in 2010.
Total assets at June 30, 2011 grew to $831.7 million, up $30.4 million for the quarter and up $41.3 million or 5.2% from the same period in 2010. Portfolio loans and investments grew and were offset slightly by lower balances of mortgage loans held for sale. Loans held for investment grew $22.3 million for the quarter and $34.0 million, or 6.1%, from the same period in 2010. Deposits increased $86.7 million since the second quarter of 2010, with growth focused on checking and money market accounts. Our deposit mix continues to improve as we position the Company for the eventual rise in interest rates.
“Our Monarch Bank and OBX Bank teams delivered the best quarter of the past year for commercial loan production and net loan growth. Not having to focus all of our time on problem loans has given us an edge in attracting and lending to new client relationships who in the past would have dealt with our larger bank competition. In addition, we have a seven-member dedicated team of cash management bankers who continue to improve our deposit mix and service levels for our business banking clients” stated Neal Crawford, President of Monarch Bank.
The Company continues to experience significantly better asset quality performance than its local, state, and national peer group. Non-performing assets equaled 1.16% of total assets, down from 1.26% reported as of March 31, 2011, but up from 1.03% one year prior. Non-performing assets were $9.6 million, comprised of $165,000 in loans 90 days or more past due and still accruing interest, $7.8 million in non-accrual loans and $1.6 million in other real estate owned. The Company was aggressive in recognizing losses and disposing of non-performing assets during the quarter. The allowance for loan losses represents 1.61% of total loans held for investment, up from 1.55% in the second quarter of 2010.
Average equity to average assets was 9.51% during the second quarter of 2011, up from 9.10% one year prior. Total risk-based capital to risk weighted assets equaled 13.23%, significantly higher than what is required 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 ratings agency that rates banks on safety and soundness. During the second quarter of 2011 Monarch increased their semi-annual cash dividend to common shareholders to $0.08 per share.
Net interest income, our number one driver of profitability, increased 10.4% or $754,007 during the second quarter of 2011 compared to the same quarter in 2010 due to earning asset growth, changes in the mix of loans and deposits, as well as reduced funding costs. The net interest margin improved to 4.55% compared to 4.14% in 2010, and was up from 4.23% in the second quarter of 2011.
Mortgage revenue drove non-interest income slightly higher for the quarter compared to the previous year. Monarch Mortgage and their related mortgage companies closed $347 million in mortgage loans during the quarter, compared to $358 million during the
same quarter of 2010. Year to date the mortgage group has closed over $642 million in mortgage loans compared to $592 million for the first six months of 2010. Non-interest expense grew 12.6%, with the majority of the increase related to increased expenses related to mortgage production, facilities expansion, salary and benefits, and loan expense.
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 Carolin a, 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), 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 21, 2011 |
Consolidated Balance Sheets
Monarch Financial Holdings, Inc. and Subsidiaries
(In thousands)
Unaudited
| June 30 | ||||||||
| 2011 | 2010 | |||||||
| ASSETS: |
||||||||
| Cash and due from banks |
$ | 17,890 | $ | 22,471 | ||||
| Interest bearing bank balances |
1,629 | 6,841 | ||||||
| Federal funds sold |
13,034 | 10,035 | ||||||
| Investment securities |
49,301 | 8,457 | ||||||
| Loans held for sale |
115,704 | 149,527 | ||||||
| Loans held for investment, net of unearned income |
588,785 | 554,797 | ||||||
| Less: allowance for loan losses |
(9,480 | ) | (8,575 | ) | ||||
| Net loans |
579,305 | 546,222 | ||||||
| Bank premises and equipment |
22,833 | 16,302 | ||||||
| Restricted equity securities |
7,175 | 7,296 | ||||||
| Bank owned life insurance |
7,472 | 7,192 | ||||||
| Goodwill |
775 | 775 | ||||||
| Intangible assets |
551 | 729 | ||||||
| Accrued interest receivable and other assets |
16,010 | 14,526 | ||||||
| Total assets |
$ | 831,679 | $ | 790,373 | ||||
| LIABILITIES: |
||||||||
| Demand deposits—non-interest bearing |
$ | 117,181 | $ | 104,503 | ||||
| Demand deposits—interest bearing |
30,769 | 22,068 | ||||||
| Money market deposits |
307,466 | 214,541 | ||||||
| Savings deposits |
20,847 | 22,905 | ||||||
| Time deposits |
253,902 | 279,471 | ||||||
| Total deposits |
730,165 | 643,488 | ||||||
| FHLB borrowings |
9,026 | 60,636 | ||||||
| Trust preferred subordinated debt |
10,000 | 10,000 | ||||||
| Accrued interest payable and other liabilities |
8,379 | 6,969 | ||||||
| Total liabilities |
757,570 | 721,093 | ||||||
| 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 - 5,951,839 shares (includes nonvested shares of 3,500) at June 30, 2011 and 5,875,534 shares outstanding at June 30, 2010 |
29,742 | 29,378 | ||||||
| Capital in excess of par value |
22,374 | 22,249 | ||||||
| Retained earnings |
17,702 | 13,841 | ||||||
| Accumulated other comprehensive loss |
(351 | ) | (309 | ) | ||||
| Total Monarch Financial Holdings, Inc. stockholders’ equity |
73,467 | 69,159 | ||||||
| Noncontrolling interest |
642 | 121 | ||||||
| Total equity |
74,109 | 69,280 | ||||||
| Total liabilities and stockholders’ equity |
$ | 831,679 | $ | 790,373 | ||||
Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| INTEREST INCOME: |
||||||||||||||||
| Interest on federal funds sold |
$ | 12,960 | $ | 15,906 | $ | 40,001 | $ | 24,283 | ||||||||
| Interest on other bank accounts |
29 | 1,513 | 1,104 | 1,889 | ||||||||||||
| Dividends on restricted securities |
50,933 | 29,087 | 83,448 | 47,252 | ||||||||||||
| Interest & dividends on investment securities |
49,589 | 49,029 | 90,140 | 103,575 | ||||||||||||
| Interest and fees on loans |
9,600,504 | 9,416,922 | 19,043,714 | 17,887,849 | ||||||||||||
| Total interest income |
9,714,015 | 9,512,457 | 19,258,407 | 18,064,848 | ||||||||||||
| INTEREST EXPENSE: |
||||||||||||||||
| Interest on deposits |
1,575,088 | 1,903,582 | 3,332,763 | 3,764,947 | ||||||||||||
| Interest on trust preferred subordinated debt |
124,200 | 124,200 | 245,700 | 245,700 | ||||||||||||
| Interest on other borrowings |
19,108 | 243,063 | 42,093 | 425,761 | ||||||||||||
| Total interest expense |
1,718,396 | 2,270,845 | 3,620,556 | 4,436,408 | ||||||||||||
| NET INTEREST INCOME |
7,995,619 | 7,241,612 | 15,637,851 | 13,628,440 | ||||||||||||
| PROVISION FOR LOAN LOSSES |
1,099,696 | 1,504,948 | 2,101,150 | 2,832,818 | ||||||||||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
6,895,923 | 5,736,664 | 13,536,701 | 10,795,622 | ||||||||||||
| NON-INTEREST INCOME: |
||||||||||||||||
| Service charges on deposit accounts |
424,829 | 429,025 | 811,149 | 823,356 | ||||||||||||
| Mortgage banking income |
11,205,023 | 11,024,864 | 20,209,260 | 18,700,016 | ||||||||||||
| Investment and insurance commissions |
85,305 | 67,585 | 171,705 | 141,905 | ||||||||||||
| Other income |
208,223 | 253,425 | 425,772 | 387,202 | ||||||||||||
| Total non-interest income |
11,923,380 | 11,774,899 | 21,617,886 | 20,052,479 | ||||||||||||
| NON-INTEREST EXPENSE: |
||||||||||||||||
| Salaries and employee benefits |
5,615,748 | 5,283,733 | 11,014,592 | 8,972,728 | ||||||||||||
| Commissions and incentives |
5,181,545 | 5,035,667 | 9,033,205 | 9,271,218 | ||||||||||||
| Occupancy and equipment |
1,385,880 | 1,300,842 | 2,772,913 | 2,369,267 | ||||||||||||
| Loan expense |
1,595,597 | 1,475,466 | 2,951,020 | 2,476,650 | ||||||||||||
| Data processing |
278,015 | 222,533 | 583,848 | 418,069 | ||||||||||||
| Other expenses |
2,005,091 | 1,855,196 | 3,832,053 | 3,299,261 | ||||||||||||
| Total non-interest expense |
16,061,876 | 15,173,437 | 30,187,631 | 26,807,193 | ||||||||||||
| INCOME BEFORE TAXES |
2,757,427 | 2,338,126 | 4,966,956 | 4,040,908 | ||||||||||||
| Income tax provision |
(981,457 | ) | (749,331 | ) | (1,680,931 | ) | (1,319,031 | ) | ||||||||
| NET INCOME |
1,775,970 | 1,588,795 | 3,286,025 | 2,721,877 | ||||||||||||
| Less: Net income attributable to noncontrolling interest |
(114,879 | ) | (35,887 | ) | (251,677 | ) | (49,152 | ) | ||||||||
| NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC |
$ | 1,661,091 | $ | 1,552,908 | $ | 3,034,348 | $ | 2,672,725 | ||||||||
| Preferred stock dividend and accretion of preferred stock discount |
(390,000 | ) | (390,000 | ) | (780,000 | ) | (780,000 | ) | ||||||||
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ | 1,271,091 | $ | 1,162,908 | $ | 2,254,348 | $ | 1,892,725 | ||||||||
| NET INCOME PER COMMON SHARE: |
||||||||||||||||
| Basic |
$ | 0.21 | $ | 0.20 | $ | 0.38 | $ | 0.33 | ||||||||
| Diluted |
$ | 0.19 | $ | 0.20 | $ | 0.35 | $ | 0.33 | ||||||||
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
| (Dollars in thousands, except per share data) | Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
| EARNINGS |
||||||||||||||||||||||||
| Interest income |
$ | 9,714 | $ | 9,512 | 2.1 | % | $ | 19,258 | $ | 18,065 | 6.6 | % | ||||||||||||
| Interest expense |
1,718 | 2,271 | (24.4 | ) | 3,621 | 4,436 | (18.4 | ) | ||||||||||||||||
| Net interest income |
7,996 | 7,241 | 10.4 | 15,637 | 13,629 | 14.7 | ||||||||||||||||||
| Provision for loan losses |
1,100 | 1,505 | (26.9 | ) | 2,101 | 2,833 | (25.8 | ) | ||||||||||||||||
| Noninterest income |
11,923 | 11,775 | 1.3 | 21,618 | 20,052 | 7.8 | ||||||||||||||||||
| Noninterest expense |
16,062 | 15,173 | 5.9 | 30,187 | 26,807 | 12.6 | ||||||||||||||||||
| Pre-tax net income |
2,757 | 2,338 | 17.9 | 4,967 | 4,041 | 22.9 | ||||||||||||||||||
| Minority interest in net income |
115 | 36 | 219.4 | 252 | 49 | 414.3 | ||||||||||||||||||
| Income taxes |
981 | 749 | 31.0 | 1,681 | 1,319 | 27.4 | ||||||||||||||||||
| Net income |
1,661 | 1,553 | 7.0 | 3,034 | 2,673 | 13.5 | ||||||||||||||||||
| PER COMMON SHARE |
||||||||||||||||||||||||
| Earnings per share - basic |
$ | 0.21 | $ | 0.20 | 5.0 | % | $ | 0.38 | $ | 0.33 | 15.2 | % | ||||||||||||
| Earnings per share - diluted |
0.19 | 0.20 | (5.0 | ) | 0.35 | 0.33 | 6.1 | |||||||||||||||||
| Book value |
8.98 | 8.37 | 7.3 | |||||||||||||||||||||
| Tangible book value |
8.76 | 8.11 | 8.0 | |||||||||||||||||||||
| Closing market price (adjusted) |
7.90 | 7.92 | (0.3 | ) | ||||||||||||||||||||
| Average Basic Shares Outstanding |
5,967,652 | 5,704,974 | 4.6 | 5,967,038 | 5,702,619 | 4.6 | ||||||||||||||||||
| Average Diluted Shares Outstanding |
8,562,757 | 5,795,852 | 47.7 | 8,565,699 | 5,781,141 | 48.2 | ||||||||||||||||||
| FINANCIAL RATIOS |
||||||||||||||||||||||||
| Return on average assets |
0.87 | % | 0.82 | % | 6.1 | % | 0.79 | % | 0.75 | % | 5.3 | % | ||||||||||||
| Return on average stockholders’ equity |
9.12 | 9.05 | 0.8 | 8.44 | 7.88 | 7.1 | ||||||||||||||||||
| Net interest margin (FTE) |
4.55 | 4.14 | 9.9 | 4.41 | 4.14 | 6.5 | ||||||||||||||||||
| Non-interest revenue/Total revenue |
55.1 | 55.3 | (0.4 | ) | 52.9 | 52.6 | 0.6 | |||||||||||||||||
| Efficiency - Consolidated |
80.4 | 79.6 | 1.0 | 80.8 | 79.3 | 1.9 | ||||||||||||||||||
| Efficiency - Bank only |
58.0 | 56.3 | 3.0 | 57.7 | 55.3 | 4.3 | ||||||||||||||||||
| Average equity to average assets |
9.51 | 9.10 | 4.5 | 9.31 | 9.54 | (2.4 | ) | |||||||||||||||||
| Total risk based capital - Consolidated |
13.23 | 13.37 | (1.0 | ) | ||||||||||||||||||||
| Total risk based capital - Bank only |
12.72 | 12.10 | 5.1 | |||||||||||||||||||||
| PERIOD END BALANCES |
||||||||||||||||||||||||
| Total loans held for sale |
$ | 115,704 | $ | 149,527 | (22.6 | )% | ||||||||||||||||||
| Total loans held for investment |
588,785 | 554,797 | 6.1 | |||||||||||||||||||||
| Interest-earning assets |
775,217 | 738,249 | 5.0 | |||||||||||||||||||||
| Assets |
831,679 | 790,373 | 5.2 | |||||||||||||||||||||
| Total deposits |
730,165 | 643,488 | 13.5 | |||||||||||||||||||||
| Other borrowings |
19,026 | 70,636 | (73.1 | ) | ||||||||||||||||||||
| Stockholders’ equity |
73,467 | 69,159 | 6.2 | |||||||||||||||||||||
| AVERAGE BALANCES |
||||||||||||||||||||||||
| Total loans held for investment |
$ | 570,547 | $ | 556,603 | 2.5 | % | $ | 566,406 | $ | 550,584 | 2.9 | % | ||||||||||||
| Interest-earning assets |
714,370 | 711,843 | 0.4 | 725,100 | 674,851 | 7.4 | ||||||||||||||||||
| Assets |
768,170 | 755,927 | 1.6 | 778,206 | 716,731 | 8.6 | ||||||||||||||||||
| Total deposits |
669,385 | 599,399 | 11.7 | 679,122 | 575,459 | 18.0 | ||||||||||||||||||
| Other borrowings |
12,733 | 74,846 | (83.0 | ) | 13,250 | 63,223 | (79.0 | ) | ||||||||||||||||
| Stockholders’ equity |
73,039 | 68,824 | 6.1 | 72,488 | 68,403 | 6.0 | ||||||||||||||||||
| ALLOWANCE FOR LOAN LOSSES |
||||||||||||||||||||||||
| Beginning balance |
$ | 9,503 | $ | 8,650 | 9.9 | % | $ | 9,038 | $ | 9,300 | (2.8 | )% | ||||||||||||
| Provision for loan losses |
1,100 | 1,505 | (26.9 | ) | 2,101 | 2,833 | (25.8 | ) | ||||||||||||||||
| Charge-offs |
1,537 | 1,706 | (9.9 | ) | 2,134 | 3,748 | (43.1 | ) | ||||||||||||||||
| Recoveries |
414 | 126 | 228.6 | 475 | 190 | 150.0 | ||||||||||||||||||
| Ending balance |
9,480 | 8,575 | 10.6 | 9,480 | 8,575 | 10.6 | ||||||||||||||||||
| Net charge-off loans to average loans |
0.20 | 0.28 | (30.7 | ) | 0.29 | 0.65 | (54.7 | ) | ||||||||||||||||
| ASSET QUALITY RATIOS |
||||||||||||||||||||||||
| Nonperforming assets to total assets |
1.16 | % | 1.03 | % | 13.0 | bp | ||||||||||||||||||
| Allowance for loan losses to total loans held for investment |
1.61 | 1.55 | 6.5 | bp | ||||||||||||||||||||
| Allowance for loan losses to nonperforming loans |
118.41 | 126.91 | (6.7 | )% | ||||||||||||||||||||
| COMPOSITION OF RISK ASSETS |
||||||||||||||||||||||||
| Nonperforming loans: |
||||||||||||||||||||||||
| 90 days past due |
$ | 165 | $ | 870 | 100.0 | % | ||||||||||||||||||
| Nonaccrual & Restructured debt |
7,841 | 5,887 | 33.2 | |||||||||||||||||||||
| OREO |
1,625 | 1,417 | 14.7 | |||||||||||||||||||||
| Nonperforming assets |
9,631 | 8,174 | 17.8 | % | ||||||||||||||||||||
bp - Change is measured as difference in basis points.