Attached files
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| 8-K - 8-K - Monarch Financial Holdings, Inc. | d639035d8k.htm |
 Investor Presentation
As of September 30, 2013
December 4, 2013
Page 1
Exhibit 99.1 |
 Page 2
Forward-Looking Statements
Certain
information
contained
in
this
discussion
may
include
“forward-looking
statements”
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933,
as
amended,
and
Section
21E
of
the
Securities
Exchange
Act
of
1934,
as
amended.
These
forward-looking
statements
relate
to
the
Company’s
future
operations
and
are
generally
identified
by
phrases
such
as
“the
Company
expects,”
“the
Company
believes”
or
words
of
similar
import.
Although
the
Company
believes
that
its
expectations
with
respect
to
the
forward-looking
statements
are
based
upon
reliable
assumptions
within
the
bounds
of
its
knowledge
of
its
business
and
operations,
there
can
be
no
assurance
that
actual
results,
performance
or
achievements
of
the
Company
will
not
differ
materially
from
any
future
results,
performance
or
achievements
expressed
or
implied
by
such
forward-looking
statements.
For
details
on
factors
that
could
affect
expectations,
see
the
Company’s
most
recently
issued
Annual
Report
on
Form
10-K,
as
filed
with
the
Securities
and
Exchange
Commission. |
 Page 3
Brad E. Schwartz
Chief Executive Officer
E. Neal Crawford, Jr.
President
William T. Morrison
CEO, Monarch Mortgage
Introduction |
 Page 4
Corporate Profile
Monarch Financial Holdings is a financial
services company headquartered in
Chesapeake, Virginia:
–
$1.0 billion in assets
–
$698 million in loans held for investment
–
$120 million in loans held for sale
–
$886 million in deposits
Monarch Bank, founded in 1998, has 12 offices
in Hampton Roads and is the second largest
community bank by deposits in the MSA.
OBX Bank, a division of Monarch Bank, opened
in May 2007 to serve the local needs of the
Outer Banks NC market with 2 offices.
Monarch Mortgage drives significant non-
interest income through retail residential
mortgage origination with 30+ offices.
Monarch Bank Private Wealth opened in
September 2002 to capture investment and
trust business with Raymond James Financial.
|
 Page 5
Monarch Franchise
OBX Bank Offices:
Kitty Hawk, NC
Nags Head, NC
Monarch Bank Private Wealth / Monarch Investments:
Williamsburg, VA (NEW 2012)
Virginia Beach, VA
Monarch Bank Offices:
Chesapeake, VA (2)
Suffolk, VA (2012)
Norfolk, VA (2)
Williamsburg, VA (2012)
Virginia Beach, VA (5)
Newport News, VA/LPO (2013)
Monarch Mortgage Offices:
Chesapeake, VA (3)
Norfolk, VA (3)
Virginia Beach, VA (4)
Suffolk, VA
Richmond, VA (2)
Fredericksburg, VA
Fairfax, VA (2)
Newport News, VA
Bowie, MD
Crofton, MD
Gaithersburg, MD
Greenbelt, MD
Rockville, MD (2)
Towson, MD
Waldorf, MD
Annapolis, MD
Charlotte, NC (2)
Kitty Hawk, NC
Wilmington, NC (2)
Elizabeth City, NC
Greenwood, SC |
 Outside Recognition
Page 6
KBW Honor Roll Award winner 2011 (top 40), 2012 (top 45) and 2013
(top 48). One of two banks in Virginia to win all three
years. Sandler O’Neil Sm-all Star Award for 2012
financial performance. SNL Top 100 Community Banks in
2012 BB&T Capital Markets/Scott and Stringfellow
“Buy” recommendation
Bauer top 5-STAR bank rating since 2009
Recognized as “Rising 20”
top growth company in Hampton Roads (3x)
Recognized by Inside Business as one of the “Best Places to
Work” in
Hampton Roads in 2007, 2009, 2011, 2012
|
 Our senior management team consists of 24 experienced bankers with an
average of 28 years experience in the financial services
industry. Bank loan production and risk is managed via
specialization for real estate lending and a scalable market
president approach. –
10% Directors and Executive Management stock ownership
Page 7
Experienced Management Team
* Serves as a director of Monarch Bank and Monarch Financial
Holdings, Inc. Years
Name
Position
Experience
Brad E. Schwartz (51) *
Chief Executive Officer
29
E. Neal Crawford, Jr. (51)*
President
28
William T. Morrison (51)*
CEO, Monarch Mortgage
29
Denys J. Diaz (47)
Executive Vice President & Chief Information Officer
21
Lynette P. Harris (56)
Executive Vice President & Chief Financial Officer
31
Andrew N. Lock (49)
Executive Vice President & Chief Risk Officer
21
James Ferber
President
Real Estate Finance Group
31
Jack Lane
President
Monarch Mortgage
21
Steve Layden
President
Commercial Banking
Group
35
Jeremy Starkey
President
Commercial Real Estate Finance Group
22
David Ropp
Market
President/Banker Chesapeake
29
Chas Wright
Market
President/Banker Virginia Beach
10
Craig Reilly
Market
President/Banker Norfolk
16
Adam Goldblatt
Market
President/Banker Suffolk
27
David McGlaughon
Market
President/Banker OBX Bank
33
William Carr
Market
President/Banker Newport News/Peninsula
33
Bernie Ngo
Market Pres./Managing Dir.
Williamsburg/Private Wealth 30
Patrick Faulkner
EVP/Managing
Director Private Wealth/Investments
27
Barbara Lane
Executive Vice
President Property Management
43
Barry Mathias
Executive Vice
President Chief Credit Officer
42
Karyn Mercier
Senior Vice
President Banking Office Leader
35
Theresa Ruby
Senior Vice
President Cash Management
28
Mary Anderson
Senior Vice
President Human Resources
27
Nancy Porter
Senior Vice
President Marketing and Training
23 |
 Continue to Grow
Banking
Franchises
Page 8
Our “Smart Growth”
Business Strategy
Grow Core
Deposits
Maintain Risk
Management
Focus
Grow Non-
Interest Income
Lines of Business
Maintain
Financial
Discipline
Use
Market
Presidents
and
advisory
boards
for
product
and
service
delivery
in
existing
and
new
markets
of
the
Peninsula,
Suffolk
and
Williamsburg,
along
the
I-664/I-64
pathway.
Focus
on
organic
growth
and
acquisition
of
bank
and
non-interest
income
company
and
team
lift-out
opportunities.
Continue
to
conservatively
underwrite
loans
with
strong
committee
structure
and
aggressively
manage
problem
assets.
Maintain
strong
risk
management
focus
with
mortgage
origination
business,
and
use
compliance
as
a
strategic
advantage
in
shrinking
competitor
pool.
Private
Banking/Cash
Management
Group
focused
on
core
deposit
generation
and
service
of
business
deposits,
focused
on
checking
account
growth.
Focus
on
office
repositioning
and
franchise
coverage.
Target
of
$50
million
or
more
per
depository
office,
currently
average
$66k
per
office.
Build
and
maintain
sustainable
revenue
and
net
income
sources
incremental
to
our
spread
income
through
significant
residential
mortgage
origination
and
investment
management
income
activities,
all
with
bottom
line
mentality.
Deliver
high
performance
shareholder
returns
through
strict
adherence
to
risk
management
and
pricing
philosophy.
Remain
a
shareholder
focused
company
with
annual
EPS
and
dividend
growth. |
 Management’s Focus in 2013
Ramping up Monarch Bank Private Wealth
Growing Bank/Mortgage/Private Wealth in new markets of Newport News,
Williamsburg, and Suffolk
Building Advance Mortgage team with #1 residential realtor Rose and
Womble Realty. (prior partner for 17 years was Wells
Fargo) Structuring mortgage operations for a lower volume
market Loan growth and client engagement
Growing core transaction deposits
Engaging all 170 Directors across 9 Boards of Directors
Dividend policy adjustments post-preferred stock
conversion Regulatory compliance/risk management as a
competitive advantage Page 9 |
 Page 10
Financial Highlights
Q312 - 2007
($ in millions)
Q3 2013
2012
2011
2007
CAGR
Total Assets
$1,011.9
$1,215.6
$908.7
$503.1
18%
Loans, HFI
697.5
661.1
607.6
419.2
12%
Loans, HFS
120.4
419.1
211.6
18.8
94%
Total Deposits
886.1
901.8
740.0
389.7
22%
Stockholders Equity
96.8
88.9
76.8
36.5
29%
Net Interest Income
$29.9
$40.6
$33.6
$16.1
25%a
Non-Interest Income
55.5
89.8
54.7
8.5
128a%
Pre-Tax Pre-Provision Income 15.1
26.0
17.3
5.8
42%a
Net Income
8.9
12.8
7.1
3.2
45%a
N.I. Available to Common Shareholders 8.9
11.4
5.6
3.2
45%a
Return on Equity
13.07%
15.84%
9.66%
8.86%
8%
Basic Earnings per Share
$0.89
$1.54
$0.78
$0.55
16%a
Diluted Earnings per Share
$0.85
$1.25
$0.70
$0.53
19a%
Tangible Book Value per Share
$9.03
$8.68
$7.64
$5.92
9%
Net Interest Margin
4.04%
4.29%
4.51%
4.29%
NPAs & 90 PD / Total Assets
0.30%
0.30%
0.85%
0.10%
Loan Loss Reserves / Loans, HFI
1.61%
1.65%
1.63%
0.95%
Total Risk Based Capital/RBA
13.68%
12.05%
12.42%
10.05%
Basic WA Shares Out
Split-adjust
10,482,651
7,400,443
7,147,290
4,814,738
Preferred Shares Outstanding
0
481,123
800,000
0
|
 Page 11
Net
Interest
Income
–
Peer
Comparison
Bank Only –
FFIEC Information |
 Page 12
Net
Overhead
–
Peer
Comparison
Bank only –
FFIEC Information |
 Monarch Financial Holdings, Inc. is one bank holding company
(2006) Publicly traded on Nasdaq Capital Market under
MNRK Capital Activities
Page 13
Capital
–
Common Equity 10,482,651 shares
$85,592,000
–
Pooled Trust Preferred at L+160
$10,000,000
Total Capital
$95,592,000
–
Issued $14.7 Million in TARP in December 2008 as an abundance
of caution. Repaid TARP Capital in full in December
2009. –
$20 million of Non-cumulative Perpetual Convertible Preferred
issued in 2009. Force converted to common stock in
early 2013, 800,000 shares of preferred converted to 3.0
million shared of common. –
Began paying common stock dividends in 2010
•
($0.14=2010, $0.16=2011, $0.19=2012, $0.24=2013, raised twice
2013)
–
Performed common stock 6:5 split as of November 2012
|
 Page 14
Balance Sheet 9/30/2013 |
 Page 15
Steady
Balance
Sheet
Growth
–
Total
Assets |
 Page 16
Steady
Balance
Sheet
Growth
–
Loans |
 Page 17
Significant controls in place to actively monitor and manage real
estate exposure –
Centralized residential real estate and construction underwriting
and monitoring –
Centralized Commercial Real Estate Group, with CRE loan brokerage
capacity Mortgage loans held for sale provide additional
spread income and average 35-45 days on the balance
sheet Diversified Loan Portfolio
LOANS HELD FOR INVESTMENT BY
PURPOSE CODE
TOTAL LOANS |
 Non-Performing
Assets
–
Compared
to
Peers
Non-Performing Assets includes loans & debt securities past due 90 days or more
and those placed on non-accrual status, and non-investment OREO.
Page 18 |
 Our
Texas
Ratio
–
Compared
to
Peers
The Texas Ratio is defined as non-current loans & debt securities plus
non-investment OREO divided by tangible equity plus loan loss reserves.
Page 19 |
 Page 20
Steady
Balance
Sheet
Growth
-
Deposits |
 Page 21
Deposits Mix
Core deposit mix is vital to funding our loan growth and preserving
our net interest margin –
Have a 6-person Cash Management Team to rival larger
competitors –
Goal is to sell and service large commercial deposit
relationships 31% of total deposits in DDA
We utilize FHLB, CDARS and brokered deposits for mortgage loan
funding |
 Checking Account Focus = Record Growth
22 |
 Branch
Deposits
2012
Count
in Market
Market Share (%)
Total
Avg. Per
Rank
Institution
(#)
($M)
2013
2007
Growth
Branch
1
Wells Fargo & Company (CA)
56
$ 4,429
20.55%
21.84%
(1.29%)
$ 79,000
2
SunTrust Banks, Inc. (GA)
41
$ 3,561
16.41%
14.19%
2.22%
$ 87,000
3
TowneBank (VA)
24
$ 3,390
15.63%
10.00%
5.63%
$ 141,000
4
BB&T Corporation (NC)
51
$ 3,077
14.18%
14.00%
0.18%
$ 60,000
5
Bank of America Corporation (NC)
39
$ 2,309
10.65%
13.54%
(2.89)
$ 59,000
6
Monarch Financial Holdings, Inc. (VA)
11
$
789 3.64%
1.83%
1.81%
$ 72,000
7
Old Point Financial Corporation (VA)
22
$
731 3.37%
2.12%
1.25%
$ 33,000
8
Hampton Roads Bankshares, Inc. (VA)
20
$
581 2.68%
3.25%
(0.57)
$ 29,000
9
Southern Bank (NC)
10
$
324 1.49%
1.83%
(0.34)
$ 32,000
10
Farmers Bank (VA)
5
$
321 1.48%
1.50%
(0.02)
$ 64,000
Greater Hampton Roads MSA
363
$ 21,693
100.00%
100.00%
Page 23
Deposit
Market
Share
–
Room
for
Growth
Ranked
#6
with
$789
million
or
3.64%
deposit
market
share
in
36
th
Largest
MSA
in
U.S.
–
Top five institutions had 77% of deposits in the market, four are
regional/national –
Monarch CAGR 11% past six years in Hampton Roads MSA
–
Held the #9 spot in market share in 2011
|
 Page 24
Non-Interest Income Growth
Our strategy involves building and maintaining sustainable revenue
and net income sources in addition to traditional banking
spread income –
Monarch
Mortgage:
Originates
retail
prime
residential
mortgage
loans
–
Real
Estate
Security
Agency:
residential
and
commercial
title
and
settlement
–
Monarch
Capital:
commercial
mortgage
brokerage
services
–
Monarch
Bank
Private
Wealth:
investment,
trust,
financial
planning
* Operating Revenue defined as non-interest income plus
net-interest income Non-Interest Income
($ in 000s)
2008
2009
2010
2011
2012
YTD
Q313
Mortgage banking revenue
$18,080
$32,477
$50,506
$51,362
$86,338
$52,396
Investment and insurance commissions
1,278
749
290
250
173
717
Service charges and fees
1,370
1,502
1,637
1,630
1,830
1,440
Title company revenue
230
309
599
618
814
664
Other
455
597
472
885
606
313
Total Non-Interest Income
$21,413
$35,634
$53,503
$54,745
$89,761
55,530
Non-Interest Income / Operating Revenue
55.1%
61.7%
63.7%
63.1%
66.9%
62.3% |
 $1,628
$1,186
$1,630
$577
$200
$75
$1,656
$2,703
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
2006
2007
2008
2009
2010
2011
2012
YTD Q313
Page 25
Monarch Mortgage
Monarch
Mortgage,
headquartered
in
Virginia
Beach,
was
founded
in
May
2007.
Retail
origination
of
permanent
residential
mortgage
loans
primarily
sold,
servicing
released,
into
the
secondary
market.
Partnered
with
top
local
residential
realty
company
in
2013
and
opened
8
in-office
locations
trading as Advance Mortgage.
Strong risk management and bank oversight
Experienced and proven management team
Monarch Mortgage operates 33 locations
–
13 in core banking markets
–
20 in mortgage only markets
Significant origination capabilities:
–
$2.7 Billion closed in 2012, $1.6 Billion through Q3 2013
–
Primary focus on purchase market, 59% of closings YTD 2013, 80% in
Q3 2013 –
Minimal legacy loan issues, $3.4 million in operating
reserves Mortgage Originations
In millions |
 Page 26
Monarch Bank Private Wealth
Opened Monarch Bank Private Wealth in September 2012
Hired proven team of 12 from Suntrust Bank
–
Investment Professionals, Private Bankers, Commercial Lender,
CFPs –
Non-compete and non-solicitations expired September
2013 Raymond James Financial Services (RJFS) serves as
Broker-Dealer Target market is retiree and professionals
with $500,000+ in investible assets Through September 30,
2013 –
$170 million in assets under management
–
$42 million of total in discretionary trading accounts
–
143 client relationships, 80% with Goal Planning & Monitoring
plans Plans to integrate/grow the business throughout banking
footprint with offices: –
Williamsburg
–
Virginia Beach |
 Page 27
Risk Management
Company has an Enterprise Risk Management Committee that meets
monthly to ensure risk is properly identified and
managed The credit risk within the company is overseen by our
experienced Chief Risk Officer and Chief Credit Officer
–
All
loans
are
reviewed
and
loan
relationships
that
exceed
$1,500,000
are
approved
by
either
a
management
loan
committee
or
a
board
of
directors’
loan
committee
weekly
–
All
loans
are
risk
rated
with
those
ratings
reviewed
annually
by
an
independent
third-party
loan
review
service
Mortgage
operational
risks
are
managed
through
an
experienced
senior
management
team
at
Monarch
Mortgage
along
with
oversight
from
Monarch
Bank
senior
management.
William
Morrison,
Monarch
Mortgage
CEO,
previously
served
as
a
chief
credit
officer
for
a
local
community
bank
Investment risk oversight of Raymond James Financial Services
Other
than
credit
risk
our
banking
risk
includes
interest
rate
risk,
which
we
manage
through
our
active
Asset/Liability
Management
Committee |
 Interest Rate Risk –
Positioned for Rising Rates
IR Gap Calculated from CALL Report data for Monarch Bank.
Page 28 |
 High performing, diversified financial services company
Attractive franchise in a large top 40 MSA
Strong, highly experienced management team and bankers
Conservative underwriting culture / strong asset quality
Significant mortgage operations with focus on growing
additional non-
interest income lines of business
Outperform peers through disciplined growth and risk
management Continue to take advantage of market dysfunction
through client and employee acquisition growth
Page 29
Why Invest in Monarch? |
 Peer
Group for Specific Peer Charts Page 30
|
 Thank You
Thank You
Page 31 |