BLOOMINGTON, Ind., Oct. 23, 2007 (PRIME NEWSWIRE) -- Monroe Bancorp (the "Company") (Nasdaq:MROE), the independent Bloomington-based holding company for Monroe Bank (the "Bank"), today reported net income of $6,200,000 or $0.977 per diluted common share, for the nine months ended September 30, 2007, compared to $5,767,000 or $0.871 per diluted common share for the same period in 2006. This represents a 7.5 percent increase in net income and a 12.2 percent increase in diluted earnings per share. Return on average assets (ROAA) and return on average equity (ROAE) were 1.11 percent and 15.80 percent, respectively, for the first nine months of 2007 compared to 1.06 percent and 14.91 percent, respectively, for the first nine months of 2006.
"I am pleased with the growth of year-to-date earnings, but at the same time mindful of the importance of keeping asset quality management issues at the forefront of our efforts to grow the Company," said Mark D. Bradford, President and Chief Executive Officer.
The Company also reported net income of $1,998,000 or $0.319 per diluted common share, for the quarter ended September 30, 2007, compared to $2,053,000 or $0.311 per diluted common share for the same period in 2006. This represents a 2.7 percent decrease in net income and a 2.6 percent increase in diluted earnings per share. Return on average assets (ROAA) and return on average equity (ROAE) for the third quarter of 2007 were 1.05 percent and 15.27 percent, respectively, compared to 1.11 percent and 15.62 percent respectively for the third quarter of 2006.
Net income for the third quarter of 2007 decreased by $192,000 or 8.8 percent compared to net income for the second quarter of 2007. The decline in net income between the linked quarters is largely the result of a $149,000 decline in net interest income and a $90,000 increase in the loan loss provision. Both of these results can be linked to the increase in nonperforming loans that occurred during the third quarter.
Financial Performance
Net interest income after the provision for loan losses increased $395,000 or 2.5 percent to $16,403,000 for the nine months ended September 30, 2007 compared to $16,008,000 for the same period in 2006. The tax-equivalent net interest margin for the first nine months of 2007 was 3.40 percent, compared to 3.42 percent for the first nine months of 2006.
Net interest income after the provision for loan losses decreased 2.5 percent to $5,359,000 for the three months ended September 30, 2007 compared to $5,494,000 for the same period in 2006. A $45,000 increase in the provision for loan losses accounted for 33.3 percent of the decrease in net interest income between the two periods. The tax-equivalent net interest margin for the quarter ended September 30, 2007 was 3.31 percent, compared to 3.44 percent for the quarter ended June 30, 2007 and 3.43 percent for the third quarter of 2006. The tax-equivalent net interest margin for the third quarter of 2007 was reduced by approximately seven basis points due to the impact of loans being placed on non-accrual during the quarter.
Noninterest income totaled $7,783,000 for the first nine months of 2007 compared to $7,117,000 for the same period of 2006. Excluding the effect of the Company's deferred compensation plan, discussed in the "Use of Non-GAAP Financial Information" section of this release, noninterest income totaled $7,561,000 for the first nine months of 2007 compared to $7,006,000 for the same period of 2006. The $555,000 or 7.9 percent increase over the same period of 2006 was primarily the result of a $391,000 increase in trust fees.
Noninterest income totaled $2,651,000 for the third quarter of 2007 compared to $2,497,000 for the same period of 2006. Excluding the effect of the Company's deferred compensation plan, noninterest income totaled $2,594,000 for the third quarter of 2007 compared to $2,432,000 for the same period of 2006, an increase of $162,000 or 6.7 percent. The increase in noninterest income was driven by a $182,000 increase in trust fees.
Trust fees grew 41.8 percent to $617,000 for the three months ended September 30, 2007 compared to $435,000 for the same period of 2006. The increase in trust fees was driven by growth in trust assets under management. Trust assets under management reached $348,653,000 at September 30, 2007, growing 28.3 percent, or $76,887,000 over the $271,766,000 at December 31, 2006 and by 33.7 percent, or $87,805,000 over the September 30, 2006 total of $260,848,000. Management does not anticipate that trust assets will sustain this rate of growth on an ongoing basis.
Noninterest expense totaled $15,642,000 for the first nine months of 2007 compared to $14,785,000 for the same period of 2006. Noninterest expense, excluding the effect of the Company's deferred compensation plan, was $15,341,000 for the first nine months of 2007, compared to $14,609,000 for the same period of 2006. The $732,000 or 5.0 percent increase is largely the result of a $411,000 or 4.6 percent increase in total compensation expense.
Noninterest expense was $5,283,000 for the three months ended September 30, 2007, compared to $5,011,000 for the same period of 2006. Noninterest expense, adjusted to remove the effect of the Company's deferred compensation plan, was $5,201,000 for the three months ended September 30, 2007, compared to $4,923,000 for the same period of 2006. The $278,000 or 5.7 percent increase in noninterest expense is largely the result of a $91,000 or 3.0 percent increase in total compensation expense.
Asset Quality
Nonperforming assets and 90-day past due loans totaled $5,159,000 (0.68 percent of total assets) at September 30, 2007 compared to $2,497,000 (0.33 percent of total assets) at December 31, 2006 and $2,795,000 (0.38 percent of total assets) at September 30, 2006. The growth of nonperforming loans reflects the weakness in the housing and residential construction markets. Management believes that emerging economic conditions could result in further deterioration in this pool of assets resulting in the potential for higher delinquencies, non-performing loans and net charge-offs. Management is devoting significant attention to the resolution of problem assets. As of September 30, 2007 the Board of Directors feels that the allowance for loan losses was adequate.
The Company experienced $882,000 of net charge-offs during the first nine months of 2007 compared to $391,000 for the same period of 2006. Net charge-offs for the third quarter of 2007 totaled $686,000 compared to net charge-offs of $22,000 for the third quarter of 2006. The ratio of the reserve for loan losses to total loans was 1.09 percent at September 30, 2007 compared to 1.10 percent at September 30, 2006.
Financial Condition
Total assets were $754,786,000 as of September 30, 2007 compared to $763,377,000 at June 30, 2007 and $729,050,000 as of September 30, 2006. Loans, including loans held for sale, totaled $564,904,000 on September 30, 2007, compared to $563,989,000 at June 30, 2007 and $555,990,000 at September 30, 2006.
"Loan growth has been limited by several factors such as a slowdown in customers' and prospects' need for additional funding, the impact of commercial real estate loans being refinanced by insurance companies, and our efforts to reduce exposure with borrowers experiencing financial stress," said Mr. Bradford.
Total deposits were $611,504,000 as of September 30, 2007 compared to $614,592,000 at June 30, 2007 and $566,107,000 as of September 30, 2006.
Additional Financial Information
Stock Buyback Activity
The Company repurchased 56,042 shares of its common stock during the third quarter at an average price including commission of $17.40. The Company has purchased a total of 417,792 shares at a total cost of $7,224,000 since the program was announced in June of 2006. The average price of these shares, including commission, was $17.29. The Company's repurchase activity was funded with proceeds from a trust preferred subordinated debenture and other debt. Net interest expense during the quarter associated with the trust preferred subordinated debenture totaled $137,000.
The Board recently decided to suspend repurchase activities for the fourth quarter of 2007 and the first quarter of 2008. The Company's most recent stock repurchase transaction took place on August 7, 2007.
Other News
We continue to actively pursue strategies to build business in both our Core market (Monroe, Jackson, and Lawrence Counties) and our Central Indiana market (Hamilton and Hendricks Counties). One strategy that has proven to be an effective business development tool is to host educational seminars relating to our financial services. These seminars put our product experts in front of groups of our best customers and prospects. This strategy has been used in the core market at an increased rate this year and we have started hosting seminars in our Central Indiana market. We are also using other group gatherings to promote the Bank. While a long-standing activity in our core market, we held a Women's Seminar for the first time in August in Hendricks County and this event was very well received. These seminars are intended to educate women about the financial choices available to them.
We also recently introduced a strategy bank-wide of hosting networking mixers to develop stronger relationships with our centers of influence. In Central Indiana, over 200 high net worth customers and prospects attended a function called "Unsurpassed Elegance", hosted by Monroe Bank, where organizations partnering with the Bank showcased luxury and custom aircraft and automobiles. The Bank hosted a series of mixers in South Central Indiana, with each designed to reach a specific center of influence. The mixers are intended to enhance retail, loans and wealth management sales efforts.
While the construction of the Avon and Plainfield banking centers in Hendricks County has been progressing according to plan, Bank employees have been readying themselves for the opening of these full-service banking centers. Plainfield is slated to open on December 10, 2007 and Avon in January 2008.
About Monroe Bancorp
Monroe Bancorp, headquartered in Bloomington, Indiana, is an Indiana bank holding company with Monroe Bank as its wholly owned subsidiary. Monroe Bank was established in Bloomington in 1892, and offers a full range of financial, trust and investment services through its locations in Central and South Central Indiana. The Company's common stock is traded on the NASDAQ(r) Global Stock Market under the symbol MROE.
The Monroe Bancorp logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4316
Use of Non-GAAP Financial Information
To supplement the Company's consolidated condensed financial statements presented on a GAAP basis, the Company has used the following two non-GAAP measures of reporting:
(1) The net interest margin is reported on a tax equivalent basis. The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a marginal income tax rate of 34%. Management believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully tax equivalent basis. Therefore, management believes these measures provide useful information to investors by allowing them to make peer comparisons. A table called 'Reconciliation of GAAP Net Interest Margin to Non-GAAP Net Interest Margin on a Tax-Equivalent Basis', included in this release, reconciles the non-GAAP financial measure "net interest income (tax-equivalent)" with net interest income calculated and presented in accordance with GAAP. The table also reconciles the non-GAAP financial measure "net interest margin (tax-equivalent)" with net interest margin calculated and presented in accordance with GAAP.
(2) Noninterest income and noninterest expense are reported without the effect of income and expenses related to securities held in a rabbi trust for the deferred compensation plan. A table is included at the end of the financial summary which details all the items included in noninterest income and expense associated with the deferred compensation plan / rabbi trust and reconciles the GAAP numbers to the non-GAAP numbers. The activity in the rabbi trust has no effect on the Company's net income, therefore, management believes a more accurate comparison of current and prior year noninterest income and noninterest expense can be made if items related to the rabbi trust are removed.
The Company believes these adjustments are appropriate to enhance an overall understanding of the Company's past financial performance and also its prospects for the future. These adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the underlying operational results and trends and the Company's marketplace performance. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with generally accepted accounting principles in the United States.
Forward-Looking Statements
This release contains forward-looking statements about the Company which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. This release contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may" or words of similar meaning. These forward-looking statements, by their nature, are subject to risks and uncertainties. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions; (2) changes in the interest rate environment; (3) prepayment speeds, charge-offs and loan loss provisions; (4) general economic conditions, either national or in the markets in which the Company does business; (5) legislative or regulatory changes adversely affecting the business of the Company; (6) changes in real estate values or the real estate markets; and (7) the Company's business development efforts in new markets in and around Hendricks and Hamilton Counties. Further information on other factors which could affect the financial results of the Company is included in the Company's filings with the Securities and Exchange Commission.
Monroe Bancorp (MROE) Financial Summary (dollar amounts in thousands except per share data) Quarters Ended Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 ----------------------------------------------------- BALANCE SHEET * Cash and Interest- earning deposits $ 15,071 $ 18,732 $ 27,006 $ 27,743 $ 16,902 Federal Funds Sold 10,149 20,533 4,210 5,803 282 Securities 125,998 121,530 122,372 120,250 119,531 Total Loans 564,904 563,989 562,724 559,463 555,990 Loans Held for Sale 1,875 3,091 2,363 2,545 3,485 Commercial & Industrial 98,596 104,226 98,979 93,912 93,612 Real Estate: Commercial & Residential 309,952 305,692 318,381 320,789 326,978 Construction & Vacant Land 109,951 107,684 99,560 97,006 88,002 Home Equity 25,756 24,642 25,350 26,515 25,303 Installment Loans 18,774 18,654 18,091 18,696 18,610 Reserve for Loan Losses 6,147 6,487 6,216 6,144 6,095 Bank Premises and Equipment 18,343 17,674 15,138 15,411 14,918 Federal Home Loan Bank Stock 2,312 2,312 2,312 2,312 2,391 Interest Receivable and Other Assets 24,156 25,094 24,075 23,355 25,131 Total Assets $ 754,786 $ 763,377 $ 751,621 $ 748,193 $ 729,050 Total Deposits $ 611,504 $ 614,592 $ 595,061 $ 589,328 $ 566,107 Noninterest Checking 77,874 83,136 84,775 79,783 75,800 Interest Bearing Checking & NOW 133,233 121,169 120,339 138,418 124,553 Regular Savings 17,636 18,127 18,354 17,884 19,258 Money Market Savings 97,910 98,966 98,692 105,702 100,719 CDs Less than $100,000 149,127 147,693 131,060 122,037 116,004 CDs Greater than $100,000 134,683 145,142 131,741 112,401 117,465 Other Time 1,041 359 10,100 13,103 12,308 Total Borrowings 80,628 89,204 95,143 98,079 102,342 Federal Funds Purchased - - - 2,075 13,000 Securities Sold Under Repurchase Agreement 52,167 58,699 65,589 70,784 59,841 FHLB Advances 18,349 19,408 19,419 19,430 24,498 Loans Sold Under Repurchase Agreement & Other Debt 1,864 2,849 1,887 2,697 1,910 Subordinated Debentures - Trust Preferred 8,248 8,248 8,248 3,093 3,093 Interest Payable and Other Liabilities 9,732 7,986 9,516 7,281 7,916 Total Liabilities 701,864 711,782 699,720 694,688 676,365 Shareholders Equity 52,922 51,595 51,901 53,505 52,685 Total Liabilities and Share- holders' Equity $ 754,786 $ 763,377 $ 751,621 $ 748,193 $ 729,050 Book Value Per Share $ 8.52 $ 8.23 $ 8.19 $ 8.24 $ 8.08 End of period shares issued and out- standing 6,227,550 6,283,592 6,353,342 6,515,342 6,545,342 Less: Unearned ESOP shares 15,100 17,500 19,900 22,300 26,125 End of Period Shares Used to Calculate Book Value 6,212,450 6,266,092 6,333,442 6,493,042 6,519,217 Years Ended Dec 2006 Dec 2005 -------------------- BALANCE SHEET * Cash and Interest-earning deposits $ 27,743 $ 29,500 Federal Funds Sold 5,803 7,100 Securities 120,250 119,244 Total Loans 559,463 525,466 Loans Held for Sale 2,545 1,308 Commercial & Industrial 93,912 91,277 Real Estate: Commercial & Residential 320,789 317,472 Construction & Vacant Land 97,006 68,066 Home Equity 26,515 27,479 Installment Loans 18,696 19,864 Reserve for Loan Losses 6,144 5,585 Bank Premises and Equipment 15,411 13,039 Federal Home Loan Bank Stock 2,312 2,545 Interest Receivable and Other Assets 23,355 21,751 Total Assets $ 748,193 $ 713,060 Total Deposits $ 589,328 $ 576,181 Noninterest Checking 79,783 85,198 Interest Bearing Checking & NOW 138,418 109,359 Regular Savings 17,884 21,015 Money Market Savings 105,702 93,621 CDs Less than $100,000 122,037 121,592 CDs Greater than $100,000 112,401 134,254 Other Time 13,103 11,142 Total Borrowings 98,079 76,762 Federal Funds Purchased 2,075 -- Securities Sold Under Repurchase Agreement 70,784 40,519 FHLB Advances 19,430 33,781 Loans Sold Under Repurchase Agreement & Other Debt 2,697 2,462 Subordinated Debentures - Trust Preferred 3,093 -- Interest Payable and Other Liabilities 7,281 9,603 Total Liabilities 694,688 662,546 Shareholders Equity 53,505 50,514 Total Liabilities and Shareholders' Equity $ 748,193 $ 713,060 Book Value Per Share $ 8.24 $ 7.64 End of period shares issued and outstanding 6,515,342 6,639,842 Less: Unearned ESOP shares 22,300 31,900 End of Period Shares Used to Calculate Book Value 6,493,042 6,607,942 * period end numbers -------------------------------------------------------------- Monroe Bancorp (MROE) Financial Summary (dollar amounts in thousands except per share data) Quarters Ended ------------------------------------------------- INCOME STATEMENT Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 --------------------------------------------------------------------- Interest Income $12,232 $12,249 $11,852 $11,922 $11,590 Interest Expense 6,528 6,396 6,121 6,165 5,796 Net Interest Income 5,704 5,853 5,731 5,757 5,794 Loan Loss Provision 345 255 285 300 300 Total Noninterest Income 2,651 2,685 2,447 2,375 2,497 Service Charges on Deposit Accounts 917 932 867 867 901 Trust Fees 617 537 485 453 435 Commission Income 210 239 232 187 182 Gain on Sale of Loans 231 262 177 232 332 Realized Gains on Securities 2 41 1 3 60 Unrealized Gains (Losses) on Trading Securities Associated with Directors' Deferred Comp Plan 55 83 33 23 65 Other Operating Income 619 591 652 610 522 Total Noninterest Expense 5,283 5,266 5,093 5,313 5,011 Salaries & Wages 2,178 2,152 2,102 2,054 2,072 Commissions, Options & Incentive Compensation 427 581 452 486 467 Employee Benefits 481 465 435 591 456 Premises & Equipment 799 717 819 806 786 Advertising 149 162 225 105 184 Legal Fees 85 118 155 78 102 Appreciation (Depreciation) in Directors' Deferred Compensation Plan 78 148 64 135 85 Other Operating Expenses 1,086 923 841 1,058 859 Income Before Income Tax 2,727 3,017 2,800 2,519 2,980 Income Tax Expense 729 827 788 700 927 Net Income After Tax & Before Extraordinary Items 1,998 2,190 2,012 1,819 2,053 Extraordinary Items -- -- -- -- -- Net Income $ 1,998 $ 2,190 $ 2,012 $ 1,819 $ 2,053 Basic Earnings Per Share $ 0.321 $ 0.348 $ 0.312 $ 0.280 $ 0.312 Diluted Earnings Per Share $ 0.319 $ 0.346 $ 0.311 $ 0.279 $ 0.311 Years Ended -------------------- INCOME STATEMENT Dec 2006 Dec 2005 --------------------------------------------------------------------- Interest Income $ 44,643 $ 34,879 Interest Expense 21,978 14,055 Net Interest Income 22,665 20,824 Loan Loss Provision 1,200 1,140 Total Noninterest Income 9,492 9,258 Service Charges on Deposit Accounts 3,614 3,538 Trust Fees 1,701 1,545 Commission Income 785 900 Gain on Sale of Loans 1,045 1,235 Realized Gains on Securities 115 95 Unrealized Gains (Losses) on Trading Securities Associated with Directors' Deferred Comp Plan 74 74 Other Operating Income 2,158 1,871 Total Noninterest Expense 20,098 18,054 Salaries & Wages 8,077 7,329 Commissions, Options & Incentive Compensation 1,862 1,883 Employee Benefits 2,055 1,566 Premises & Equipment 3,151 2,654 Advertising 712 653 Legal Fees 307 526 Appreciation (Depreciation) in Directors' Deferred Compensation Plan 301 187 Other Operating Expenses 3,633 3,256 Income Before Income Tax 10,859 10,888 Income Tax Expense 3,273 3,665 Net Income After Tax & Before Extraordinary Items 7,586 7,223 Extraordinary Items -- -- Net Income $ 7,586 $ 7,223 Basic Earnings Per Share $ 1.154 $ 1.094 Diluted Earnings Per Share $ 1.150 $ 1.091 Monroe Bancorp (MROE) Financial Summary (dollar amounts in thousands except per share data) --------------------------------------------------- Quarters Ended --------------------------------------------------- ASSET QUALITY Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 --------------------------------------------------------------------- Net Charge-Offs (Recoveries) $ 686 $ (17) $ 213 $ 250 $ 22 OREO Expenses 46 3 8 5 5 --------------------------------------------------------------------- Total Credit Charges $ 732 $ (14) $ 221 $ 255 $ 27 Nonperforming Loans $ 4,821 $ 2,701 $ 2,308 $ 1,712 $ 2,068 OREO 141 212 141 141 -- --------------------------------------------------------------------- Nonperforming Assets 4,962 2,913 2,449 1,853 2,068 90 Day Past Due Loans net of Nonperforming Loans 197 484 550 644 727 --------------------------------------------------------------------- Nonperforming Assets + 90 day PD/Assets $ 5,159 $ 3,397 $ 2,999 $ 2,497 $ 2,795 --------------------------------------------------------------------- RATIO ANALYSIS - CREDIT QUALITY* --------------------------------------------------------------------- NCO/Loans 0.49% -0.01% 0.15% 0.18% 0.02% Credit Charges/Loans & OREO 0.52% -0.01% 0.16% 0.18% 0.02% Nonperforming Loans/ Loans 0.85% 0.48% 0.41% 0.31% 0.37% Nonperforming Assets/ Loans & OREO 0.88% 0.52% 0.44% 0.33% 0.37% Nonperforming Assets/ Assets 0.66% 0.38% 0.33% 0.25% 0.28% Nonperforming Assets + 90 day PD/Assets 0.68% 0.44% 0.40% 0.33% 0.38% Reserve/ Nonperforming Loans 127.50% 240.17% 269.32% 358.88% 294.73% Reserve/Total Loans 1.09% 1.15% 1.10% 1.10% 1.10% Equity & Reserves/ Nonperforming Assets 1190.43% 1993.89% 2373.09% 3219.05% 2842.36% OREO/Nonperforming Assets 2.84% 7.28% 5.76% 7.61% 0.00% --------------------------------------------------------------------- RATIO ANALYSIS - CAPITAL ADEQUACY * --------------------------------------------------------------------- Equity/Assets 7.01% 6.76% 6.91% 7.15% 7.23% Equity/Loans 9.37% 9.15% 9.22% 9.56% 9.48% --------------------------------------------------------------------- RATIO ANALYSIS - PROFITABILITY --------------------------------------------------------------------- Return on Average Assets 1.05% 1.17% 1.10% 0.97% 1.11% Return on Average Equity 15.27% 16.93% 15.33% 13.63% 15.62% Net Interest Margin (tax-equivalent) (1) 3.31% 3.44% 3.45% 3.39% 3.43% --------------------------------------------------------------------- -------------------- Years Ended --------------------------------------------------------------------- ASSET QUALITY Dec 2006 Dec 2005 --------------------------------------------------------------------- Net Charge-Offs (Recoveries) $ 641 $ 749 OREO Expenses 24 89 --------------------------------------------------------------------- Total Credit Charges $ 665 $ 838 Nonperforming Loans $ 1,712 $ 1,933 OREO 141 -- --------------------------------------------------------------------- Nonperforming Assets 1,853 1,933 90 Day Past Due Loans net of Nonperforming Loans 644 99 --------------------------------------------------------------------- Nonperforming Assets + 90 day PD/Assets $ 2,497 $ 2,032 --------------------------------------------------------------------- RATIO ANALYSIS - CREDIT QUALITY * --------------------------------------------------------------------- NCO/Loans 0.11% 0.14% Credit Charges/Loans & OREO 0.12% 0.16% Nonperforming Loans/Loans 0.31% 0.37% Nonperforming Assets/Loans & OREO 0.33% 0.37% Nonperforming Assets/Assets 0.25% 0.27% Nonperforming Assets + 90 day PD/Assets 0.33% 0.28% Reserve/Nonperforming Loans 358.88% 288.93% Reserve/Total Loans 1.10% 1.06% Equity & Reserves/Nonperforming Assets 3219.05% 2902.17% OREO/Nonperforming Assets 7.61% 0.00% --------------------------------------------------------------------- RATIO ANALYSIS - CAPITAL ADEQUACY * --------------------------------------------------------------------- Equity/Assets 7.15% 7.08% Equity/Loans 9.56% 9.61% --------------------------------------------------------------------- RATIO ANALYSIS - PROFITABILITY --------------------------------------------------------------------- Return on Average Assets 1.04% 1.09% Return on Average Equity 14.59% 14.93% Net Interest Margin (tax-equivalent) (1) 3.42% 3.41% --------------------------------------------------------------------- * Based on period end numbers (1) Interest income on tax-exempt securities has been adjusted to a tax-equivalent basis using a marginal income tax rate of 34%. Reclassification of amounts from prior periods were made to conform to the September 2007 presentation. Monroe Bancorp (MROE) Reconciliation of GAAP Net Interest Margin to Non-GAAP Net Interest Margin on a Tax-Equivalent Basis (dollar amounts in thousands except per share data) -------------------------------------------------- Quarters Ended -------------------------------------------------- Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 --------------------------------------------------------------------- Net interest income $ 5,704 $ 5,853 $ 5,731 $ 5,757 $ 5,794 Tax equivalent adjustment 176 179 161 176 162 --------------------------------------------------------------------- Net interest income - tax equivalent $ 5,880 $ 6,032 $ 5,892 $ 5,933 $ 5,956 Average earning assets $703,681 $702,664 $693,384 $694,081 $689,125 Net interest margin 3.22% 3.34% 3.35% 3.29% 3.34% Net interest margin - tax equivalent 3.31% 3.44% 3.45% 3.39% 3.43% --------------------------------------------------------------------- --------------------- Years Ended --------------------------------------------------------------------- Dec 2006 Dec 2005 --------------------------------------------------------------------- Net interest income $ 22,665 $ 20,824 Tax equivalent adjustment 632 277 --------------------------------------------------------------------- Net interest income - tax equivalent $ 23,297 $ 21,101 Average earning assets $681,999 $618,092 Net interest margin 3.32% 3.37% Net interest margin - tax equivalent 3.42% 3.41% --------------------------------------------------------------------- -------------------------------------------------- Year-to-Date -------------------------------------------------- Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 ---------------------------------------------------------------------- Net interest income $ 17,288 $ 11,584 $ 5,731 $ 22,665 $ 16,908 Tax equivalent adjustment 515 340 161 632 456 --------------------------------------------------------------------- Net interest income - tax equivalent $ 17,803 $ 11,924 $ 5,892 $ 23,297 $ 17,364 Average earning assets $699,948 $698,050 $693,384 $681,999 $677,928 Net interest margin 3.30% 3.35% 3.35% 3.32% 3.33% Net interest margin - tax equivalent 3.40% 3.44% 3.45% 3.42% 3.42% --------------------------------------------------------------------- Monroe Bancorp (MROE) Financial Impact on Net Income of Deferred Compensation Plan (dollar amounts in thousands except per share data) ------------------------------------------------- Quarters Ended ------------------------------------------------- Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 --------------------------------------------------------------------- Interest and Dividend Income $ 25 $ 27 $ 27 $ 42 $ 23 Realized and Unrealized Gains (Losses) 57 124 33 25 65 Other Income -- 1 7 71 -- Total Income From Plan: 82 152 67 138 88 Change in Deferred Compensation Liability 78 148 64 135 85 Trustee Fees 4 4 3 3 3 Total Expense of Plan: 82 152 67 138 88 Net Impact of Plan: $ -- $ -- $ -- $ -- $ -- --------------------------------------------------------------------- ------------------ Years Ended ------------------ Dec 2006 Dec 2005 --------------------------------------------------------------------- Interest and Dividend Income $ 107 $ 82 Realized and Unrealized Gains (Losses) 129 87 Other Income 78 31 Total Income From Plan: 314 200 Change in Deferred Compensation Liability 301 187 Trustee Fees 13 13 Total Expense of Plan: 314 200 Net Impact of Plan: $ -- $ -- --------------------------------------------------------------------- Reconciliation of GAAP Noninterest Income & Expense to Noninterest Income & Expense Without the Financial Impact of the Deferred Compensation Plan (dollar amounts in thousands except per share data) ------------------------------------------------- Quarters Ended ------------------------------------------------- Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 ------------------------------------------------- Total Noninterest Income $ 2,651 $ 2,685 $ 2,447 $ 2,375 $ 2,497 Income of Deferred Comp Plan Incl. in Noninterest Income 57 125 40 96 65 Adjusted Noninterest Income: 2,594 2,560 2,407 2,279 2,432 Total Noninterest Expense 5,283 5,266 5,093 5,313 5,011 Expense of Deferred Compensation Plan 82 152 67 138 88 Adjusted Noninterest Expense: 5,201 5,114 5,026 5,175 4,923 --------------------------------------------------------------------- Years Ended -------------------- Dec 2006 Dec 2005 -------------------- Total Noninterest Income $ 9,492 $ 9,258 Income of Deferred Comp Plan Incl. in Noninterest Income 207 118 Adjusted Noninterest Income: 9,285 9,140 Total Noninterest Expense 20,098 18,054 Expense of Deferred Compensation Plan 314 200 Adjusted Noninterest Expense: 19,784 17,854 --------------------------------------------------------------------- ------------------------------------------------- Year-to-Date ------------------------------------------------- Sept 2007 Jun 2007 Mar 2007 Dec 2006 Sept 2006 ------------------------------------------------- Total Noninterest Income $ 7,783 $ 5,132 $ 2,447 $ 9,492 $ 7,117 Income of Deferred Comp Plan Incl. in Noninterest Income 222 165 40 207 111 Adjusted Noninterest Income: 7,561 4,967 2,407 9,285 7,006 Total Noninterest Expense 15,642 10,359 5,093 20,098 14,785 Expense of Deferred Compensation Plan 301 219 67 314 176 Adjusted Noninterest Expense: 15,341 10,140 5,026 19,784 14,609 ---------------------------------------------------------------------