Monarch Financial Reports Record Profits and Continued Growth
CHESAPEAKE, Va., Jan. 26 /PRNewswire-FirstCall/ -- Monarch Financial Holdings , Inc. (Nasdaq: MNRK), the bank holding company for Monarch Bank, reported record annual and fourth quarter profitability, along with continued loan, deposit and asset growth. Annual and fourth quarter 2009 highlights are:
- Record annual net income of $4,855,672, up 329% from 2008
- 2009 Earnings per share $0.66, up from $0.21 one year prior
- Record 4th quarter net income of $1,223,027
- Addition of $20 million in new capital, repayment of U.S. Treasury TARP Capital
- Annual asset growth of $92 million, up 15.4%
- Closed over $1.1 billion in mortgage loans in 2009
- Non-performing assets 1.32% to total assets, remain significantly below peer
Net income for 2009 was $4,855,672 compared to $1,132,883 for the previous year. The annualized return on average equity (ROE) was 7.55%, and the annualized return on average assets (ROA) was 0.75%. Year-to-date 2009 diluted earnings per share were $0.66, compared to $0.21 the previous year. The cost of repaying the U.S. Treasury preferred shares related to warrants issued reduced earnings per common share in the fourth quarter and year-to-date by $0.03 per share. For the fourth quarter of 2009, net income was $1,223,027, a major increase compared to the loss of ($1,534,678) for the same period in 2008. The quarterly annualized return on average equity (ROE) was 7.15 %, and the annualized return on average assets (ROA) was 0.73%. Quarterly diluted earnings per share were $0.13, an improvement over the fourth quarter of 2008 when the basic and diluted loss per share was ($0.28).
"We accomplished so much in a year that challenged all banks. We reached record profitability, fully repaid the U.S. Treasury preferred stock investment, and oversubscribed and raised $20 million in new capital. Monarch Mortgage had a record year for applications and closed mortgage loans, and was a major contributor to our performance. We produced these record results despite historically higher credit costs and approximately one million dollars in additional FDIC deposit insurance expense," stated Brad Schwartz, Chief Executive Officer of Monarch Bank.
Total assets at December 31, 2009 were $689 million, up $92 million or 15.4% from $597 million one year prior. Total loans held for investment increased $33 million to $538 million, up 6.5% from 2008. Mortgage loans held for sale increased $25 million to $79 million, up 45.3% from 2008. Deposits increased $44 million to $540 million, up 8.9% from 2008. Borrowings also grew in 2009, primarily to fund growth in our mortgage pipeline. "Our growth and overall performance further differentiates us from our competitors, and positions us for growth opportunities in 2010 and beyond," stated Neal Crawford, President of Monarch Bank.
The company continues to experience better asset quality performance than its local and national peer group. Non-performing assets represented 1.32% of total assets at year end 2009, down from 1.35% on December 31, 2008. There was one $203,000 loan 90 days or more past due and still accruing, $6.8 million in non-accrual loans, and $2.1 million in other real estate owned. The Company was aggressive in recognizing losses and disposing of non-performing assets throughout the year. The allowance for loan losses represents 1.73% of total loans held for investment, compared to 1.59% one year earlier.
Monarch repaid in full $14.7 million in preferred stock issued under the U.S. Treasury's CPP/TARP program in late December 2009. The company also issued $20 Million in new convertible preferred stock in December 2009. Equity to assets was 9.86% as of December 31, 2009, compared to 10.03% one year prior. Total risk-based capital to risk weighted assets equaled 14.21%, significantly higher than what is required to be meet "Well Capitalized" standards, the highest rating of capital strength by bank regulatory standards.
Net interest income increased 36.8% or $5.9 million in 2009 compared to 2008 due to a combination of improved asset yields, earning asset growth, and declines in funding costs. The net interest margin improved to 3.64% for 2009 compared to 3.11% in 2008, with the net interest margin improving to 3.99% for the fourth quarter of 2009 compared to 2.83% for the same period in 2008.
Non-interest income grew 80% from the same period in 2008, fueled by increased production at Monarch Mortgage and growth in banking fee income. Non-interest income represented 52% of total revenues in 2009, compared to 39% in 2008. Monarch Mortgage closed $1.19 Billion in mortgage loans in 2009, up from $577 million in 2008. Monarch Mortgage is focused on the retail A-paper mortgage market and does not participate in the sub-prime or wholesale mortgage markets. Non-interest expense grew 55%, with the majority of the increase related to the expansion and increased production of Monarch Mortgage and a 333% or close to a one million dollar increase in FDIC insurance expense.
Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with eight 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 twenty-three 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), 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 common stock 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 |
|||
December |
|||
2009 |
2008 |
||
ASSETS: |
|||
Cash and due from banks |
$ 17,130 |
$ 8,418 |
|
Interest bearing bank balances |
2,541 |
112 |
|
Federal funds sold |
14,680 |
66 |
|
Investment securities: |
|||
Securities available for sale |
7,190 |
5,847 |
|
Securities held to maturity |
- |
500 |
|
Total investment securities |
7,190 |
6,347 |
|
Mortgage loans held for sale |
78,998 |
54,369 |
|
Loans |
537,700 |
504,712 |
|
Less: allowance for loan losses |
(9,300) |
(8,046) |
|
Net loans |
528,400 |
496,666 |
|
Bank premises and equipment |
8,973 |
8,386 |
|
Restricted equity securities |
7,020 |
3,575 |
|
Bank owned life insurance |
7,050 |
6,788 |
|
Goodwill |
775 |
775 |
|
Intangible assets |
818 |
997 |
|
Accrued interest receivable and other assets |
15,764 |
10,699 |
|
Total assets |
$ 689,339 |
$ 597,198 |
|
LIABILITIES: |
|||
Demand deposits--non-interest bearing |
$ 76,169 |
$ 78,894 |
|
Demand deposits--interest bearing |
19,671 |
15,363 |
|
Money market deposits |
157,309 |
129,287 |
|
Savings deposits |
22,812 |
20,444 |
|
Time deposits |
264,078 |
252,098 |
|
Total deposits |
540,039 |
496,086 |
|
FHLB borrowings |
66,159 |
27,675 |
|
Federal funds purchased |
- |
385 |
|
Trust preferred subordinated debt |
10,000 |
10,000 |
|
Accrued interest payable and other liabilities |
5,164 |
3,164 |
|
Total liabilities |
621,362 |
537,310 |
|
STOCKHOLDERS' EQUITY: |
|||
Preferred stock, $5 par value, 1,185,300 shares authorized, |
|||
none issued |
- |
- |
|
Noncumulative perpetual preferred stock, series B, $25 par value, |
|||
800,000 issued and outstanding |
20,000 |
- |
|
Cumulative perpetual preferred stock, series A, $1,000 par value, |
|||
14,700 issued, 0 outstanding at December 31, 2009 |
- |
14,700 |
|
14,700 issued and outstanding December 31, 2008 |
|||
Unearned discount on Series A cumulative perpetual preferred stock |
- |
(219) |
|
Common stock, $5 par, 20,000,000 shares authorized, issued |
|||
5,865,534 shares outstanding at December 31, 2009 and |
|||
5,735,007 shares outstanding at December 31, 2008 |
29,328 |
28,675 |
|
Capital in excess of par value |
6,345 |
8,066 |
|
Retained earnings |
12,360 |
8,528 |
|
Accumulated other comprehensive income |
(163) |
27 |
|
Total Monarch Financial Holdings, Inc. stockholders' equity |
67,870 |
59,777 |
|
Noncontrolling interest |
107 |
111 |
|
Total equity |
67,977 |
59,888 |
|
Total liabilities and stockholders' equity |
$ 689,339 |
$ 597,198 |
|
Consolidated Statements of Income Monarch Financial Holdings, Inc. and Subsidiaries Unaudited |
|||||
Three Months Ended |
Year Ended |
||||
December 31 |
December 31 |
||||
2009 |
2008 |
2009 |
2008 |
||
INTEREST INCOME: |
|||||
Interest on federal funds sold |
$ 8,707 |
$ 6,374 |
$ 18,694 |
$ 23,818 |
|
Interest on other bank accounts |
264 |
493 |
2,166 |
65,533 |
|
Dividends on restricted securities |
20,753 |
27,480 |
101,306 |
189,686 |
|
Interest and dividends on investment securities |
53,351 |
115,898 |
234,890 |
483,547 |
|
Interest and fees on loans |
8,388,129 |
7,282,011 |
32,160,603 |
30,104,748 |
|
Total interest income |
8,471,204 |
7,432,256 |
32,517,659 |
30,867,332 |
|
INTEREST EXPENSE: |
|||||
Interest on deposits |
1,838,039 |
3,201,624 |
8,987,757 |
12,673,382 |
|
Interest on trust preferred subordinated debt |
122,850 |
135,537 |
328,066 |
520,326 |
|
Interest on other borrowings |
240,337 |
249,824 |
1,105,335 |
1,522,275 |
|
Total interest expense |
2,201,226 |
3,586,985 |
10,421,158 |
14,715,983 |
|
NET INTEREST INCOME |
6,269,978 |
3,845,271 |
22,096,501 |
16,151,349 |
|
PROVISION FOR LOAN LOSSES |
1,098,811 |
3,769,463 |
5,183,747 |
5,014,076 |
|
NET INTEREST INCOME AFTER PROVISION |
|||||
FOR LOAN LOSSES |
5,171,167 |
75,808 |
16,912,754 |
11,137,273 |
|
NON-INTEREST INCOME: |
|||||
Service charges on deposit accounts |
448,882 |
348,712 |
1,501,690 |
1,370,229 |
|
Mortgage banking income |
8,574,896 |
4,475,397 |
32,476,932 |
16,471,341 |
|
Investment and insurance commissions |
71,989 |
286,513 |
749,422 |
1,277,608 |
|
Security gains, net |
- |
(67,229) |
- |
(56,428) |
|
Other income |
12,198 |
109,814 |
906,213 |
741,435 |
|
Total non-interest income |
9,107,965 |
5,153,207 |
35,634,257 |
19,804,185 |
|
NON-INTEREST EXPENSE: |
|||||
Salaries and employee benefits |
8,477,889 |
4,785,974 |
30,832,738 |
19,008,912 |
|
Occupancy and equipment |
1,077,931 |
857,084 |
3,871,050 |
3,401,452 |
|
Loan expense |
1,258,240 |
611,340 |
3,798,963 |
1,922,651 |
|
Data processing |
181,100 |
179,817 |
781,681 |
669,135 |
|
FDIC insurance |
204,318 |
86,809 |
1,290,073 |
298,019 |
|
Other expenses |
1,201,534 |
1,042,876 |
4,459,839 |
3,722,676 |
|
Total non-interest expense |
12,401,012 |
7,563,900 |
45,034,344 |
29,022,845 |
|
INCOME BEFORE TAXES |
1,878,120 |
(2,334,885) |
7,512,667 |
1,918,613 |
|
Income tax provision |
619,200 |
(823,000) |
2,452,970 |
504,500 |
|
NET INCOME |
1,258,920 |
(1,511,885) |
5,059,697 |
1,414,113 |
|
Less: Net income attributable to noncontrolling interest |
(35,893) |
(22,793) |
(204,025) |
(281,230) |
|
NET INCOME ATTRIBUTABLE TO MONARCH |
|||||
FINANCIAL HOLDINGS, INC |
$ 1,223,027 |
$ (1,534,678) |
$ 4,855,672 |
$ 1,132,883 |
|
Preferred stock dividend and accretion of preferred |
|||||
stock discount |
476,156 |
- |
1,062,963 |
- |
|
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$ 746,871 |
$ (1,534,678) |
$ 3,792,709 |
$ 1,132,883 |
|
NET INCOME PER COMMON SHARE: |
|||||
Basic |
$ 0.13 |
$ (0.28) |
$ 0.67 |
$ 0.21 |
|
Diluted |
$ 0.13 |
$ (0.28) |
$ 0.66 |
$ 0.21 |
|
Financial Highlights |
|||||||||||||||
Monarch Financial Holdings, Inc. and Subsidiaries |
|||||||||||||||
(Dollars in thousands, |
|||||||||||||||
except per share data) |
Three Months Ended December 31 |
Year Ended December 31, |
|||||||||||||
2009 |
2008 |
Change |
2009 |
2008 |
Change |
||||||||||
EARNINGS |
|||||||||||||||
Interest income |
$ 8,471 |
$ 7,432 |
14.0 |
% |
$ 32,518 |
$ 30,867 |
5.3 |
% |
|||||||
Interest expense |
2,201 |
3,587 |
(38.6) |
10,421 |
14,716 |
(29.2) |
|||||||||
Net interest income |
6,270 |
3,845 |
63.1 |
22,097 |
16,151 |
36.8 |
|||||||||
Provision for loan losses |
1,099 |
3,769 |
(70.8) |
5,184 |
5,014 |
3.4 |
|||||||||
Noninterest income |
9,108 |
5,153 |
76.8 |
35,634 |
19,804 |
79.9 |
|||||||||
Noninterest expense |
12,401 |
7,563 |
64.0 |
45,034 |
29,022 |
55.2 |
|||||||||
Pre-tax net income (loss) |
1,878 |
(2,334) |
180.5 |
7,513 |
1,919 |
291.5 |
|||||||||
Minority interest in net income |
36 |
23 |
56.5 |
204 |
281 |
(27.4) |
|||||||||
Income taxes (benefit) |
619 |
(823) |
175.2 |
2,453 |
505 |
385.7 |
|||||||||
Net income |
1,223 |
(1,534) |
179.7 |
4,856 |
1,133 |
328.6 |
|||||||||
PER COMMON SHARE |
|||||||||||||||
Earnings per share - basic |
$ 0.13 |
$ (0.28) |
146.4 |
% |
$ 0.67 |
$ 0.21 |
219.0 |
% |
|||||||
Earnings per share - diluted |
0.13 |
(0.28) |
146.4 |
0.66 |
0.21 |
214.3 |
|||||||||
Book value |
8.18 |
7.92 |
3.3 |
||||||||||||
Tangible book value |
7.91 |
7.61 |
3.9 |
||||||||||||
Closing market price (adjusted) |
6.10 |
6.75 |
(9.6) |
||||||||||||
FINANCIAL RATIOS |
|||||||||||||||
Return on average assets |
0.72 |
% |
(0.10) |
% |
820.0 |
% |
0.75 |
% |
0.20 |
% |
275.0 |
% |
|||
Return on average stockholders' equity |
7.08 |
(12.53) |
156.5 |
7.55 |
2.66 |
183.8 |
|||||||||
Net interest margin (FTE) |
3.99 |
2.83 |
41.0 |
3.64 |
3.11 |
17.0 |
|||||||||
Non-interest revenue/Total revenue |
51.8 |
40.9 |
26.7 |
52.3 |
39.1 |
33.8 |
|||||||||
Efficiency - Consolidated |
80.3 |
83.6 |
(3.9) |
77.7 |
80.2 |
(3.1) |
|||||||||
Efficiency - Bank only |
64.8 |
75.5 |
(14.2) |
58.2 |
71.7 |
(18.8) |
|||||||||
Average equity to average assets |
10.20 |
8.33 |
22.4 |
9.90 |
7.67 |
29.1 |
|||||||||
Total risk based capital - Consolidated |
14.21 |
14.79 |
(3.9) |
||||||||||||
Total risk based capital - Bank only |
10.82 |
11.87 |
(8.8) |
||||||||||||
PERIOD END BALANCES |
|||||||||||||||
Total loans held for sale |
$ 78,998 |
$ 54,369 |
45.3 |
% |
|||||||||||
Total loans held for investment |
537,700 |
504,712 |
6.5 |
||||||||||||
Interest-earning assets |
647,829 |
568,463 |
14.0 |
||||||||||||
Assets |
689,339 |
597,198 |
15.4 |
||||||||||||
Total deposits |
540,039 |
496,086 |
8.9 |
||||||||||||
Other borrowings |
77,159 |
38,060 |
102.7 |
||||||||||||
Stockholders' equity |
67,977 |
59,888 |
13.5 |
||||||||||||
AVERAGE BALANCES |
|||||||||||||||
Total loans held for investment |
$ 525,587 |
$ 502,294 |
4.6 |
% |
$ 515,903 |
$ 477,016 |
8.2 |
% |
|||||||
Interest-earning assets |
633,854 |
552,934 |
14.6 |
618,431 |
530,420 |
16.6 |
|||||||||
Assets |
672,620 |
584,480 |
15.1 |
649,356 |
555,212 |
17.0 |
|||||||||
Total deposits |
532,644 |
492,195 |
8.2 |
513,386 |
455,670 |
12.7 |
|||||||||
Other borrowings |
48,186 |
29,093 |
65.6 |
54,214 |
43,556 |
24.5 |
|||||||||
Stockholders' equity |
68,575 |
48,713 |
40.8 |
64,300 |
42,573 |
51.0 |
|||||||||
ALLOWANCE FOR LOAN LOSSES |
|||||||||||||||
Beginning balance |
$ 9,550 |
$ 4,991 |
91.3 |
% |
$ 8,046 |
$ 3,976 |
102.4 |
% |
|||||||
Provision for loan losses |
1,099 |
3,769 |
(70.8) |
5,184 |
5,014 |
3.4 |
|||||||||
Charge-offs |
1,359 |
738 |
84.1 |
4,022 |
1,033 |
289.4 |
|||||||||
Recoveries |
10 |
24 |
(58.3) |
92 |
89 |
3.4 |
|||||||||
Ending balance |
9,300 |
8,046 |
15.6 |
9,300 |
8,046 |
15.6 |
|||||||||
Net charge-off loans to average loans |
0.26 |
0.14 |
80.6 |
0.76 |
0.20 |
284.9 |
|||||||||
ASSET QUALITY RATIOS |
|||||||||||||||
Nonperforming assets to total assets |
1.32 |
% |
1.35 |
% |
(3.0) |
bp |
|||||||||
Allowance for loan losses to total loans |
1.73 |
1.59 |
13.5 |
bp |
|||||||||||
Allowance for loan losses to nonperforming loans |
132.59 |
107.19 |
23.7 |
% |
|||||||||||
COMPOSITION OF RISK ASSETS |
|||||||||||||||
Nonperforming loans: |
|||||||||||||||
90 days past due |
$ 203 |
$ - |
100.0 |
% |
|||||||||||
Nonaccrual |
6,811 |
7,506 |
(9.3) |
||||||||||||
OREO |
2,116 |
533 |
297.0 |
||||||||||||
Nonperforming assets |
9,130 |
8,039 |
13.6 |
% |
|||||||||||
bp - Change is measured as difference in basis points. |
|||||||||||||||
SOURCE Monarch Financial Holdings, Inc.
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