CHESAPEAKE, Va., Jan. 30, 2014 (GLOBE NEWSWIRE) -- Monarch Financial Holdings, Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported annual and fourth quarter financial results and declared a quarterly cash dividend. The Board of Directors announced the quarterly common stock cash dividend of $0.07 per common share, payable on February 28, 2014, to shareholders of record on February 10, 2014.
Annual 2013 highlights are:
- Net income of $11,091,007, for a return on equity of 11.97%
- Diluted earnings per share of $1.08
- Net Loans held for investment grew $51.6 million, up 7.8%
- Non-performing assets at 0.26% of total assets
- Net Interest Margin of 4.13%
- $1.98 billion in mortgage loans closed, 65% for home purchases
Fourth quarter 2013 highlights are:
- Quarterly net income of $2,156,566, for a return on equity of 8.88%
- Diluted earnings per share of $0.20
- $350 million in mortgage loans closed, 80% for home purchases
"We are proud to announce the best year in our history for total shareholder return, and the second best year for company financial performance. Market-driven declines in mortgage production, which was at an all-time high in 2012, resulted in a much lower mortgage banking contribution in 2013. Our banking and investment operations produced record results, with loans held for investment, core deposits, and assets under management all growing, driving higher revenue and net income for those segments," stated Brad E. Schwartz, Chief Executive Officer. "Non-performing assets hit a five-year low of 0.26% of total assets. The market has responded to our standout performance with price appreciation in our common stock that, when combined with two increases in our common stock dividends during the year, produced a 52% total shareholder return for 2013."
For 2013 net income was $11,091,007 compared to $12,824,869 for the same period in 2012. For 2013 net income available to common shareholders was $11,091,007 compared to $11,422,337 for the same period in 2012 when preferred stock dividends were paid. The 2013 return on average equity (ROE) was 11.97%, and the annualized return on average assets (ROA) was 1.07%. Annual diluted earnings per share were $1.08 compared to $1.25 per share in 2012.
Net income was $2,156,566 for the fourth quarter of 2013, down from the same period in 2012 which was the best quarter in the Company's history, driven by large mortgage refinance activity. The quarterly annualized return on average equity (ROE) was 8.88%, and the quarterly return on average assets (ROA) was 0.86%. Diluted earnings per share were $0.20.
Total assets at December 31, 2013 were $1.02 billion. In 2013 loans held for investment grew 7.8% to $712 million while mortgage loans held for sale declined 76% to $100 million. While total deposit growth was flat compared to one year ago, the mix of deposits changed and we had solid growth in local core deposits. Demand deposit and money market accounts grew while time deposits were reduced. Demand deposits represent 29% of total deposits. Monarch Bank remains the second largest community bank by deposit market share in the Greater Hampton Roads Metropolitan Area. Borrowings declined $198 million or 99% from one year prior. At December 31, 2012 the Bank utilized non-core deposits and borrowings to fund the historically high volume of mortgage loans closed and that funding is no longer necessary.
"We are pleased with our 7.8% year over year loan growth, and the fact we grew while maintaining a strong net interest margin and superior asset quality," stated E. Neal Crawford Jr., President of Monarch Bank. "Our peninsula expansion is going well, along with the integration of Monarch Bank Private Wealth into our client base. We will continue to focus on building lasting relationships with our clients through exceptional service."
Non-performing assets were 0.26% as of December 31, 2013 compared to 0.30% one year prior, and non-performing loans to loans held for investment were 0.32% compared to 0.55% one year prior. Non-performing assets were $2.6 million, comprised of $472 thousand in loans 90 days or more past due and still accruing interest, $1.8 million in non-accrual loans and $0.3 million in other real estate owned. The allowance for loan losses represents 1.27% of total loans held for investment and 395% of non-performing loans.
Capital strength continues to grow by all measures. Average equity to average assets rose to 9.73% at year-end 2013, a 33% increase from 7.29% one year prior. Total risk-based capital to risk weighted assets at Monarch Bank rose to 13.95%, meaningfully higher than the required level to meet the highest rating of "Well Capitalized" by federal banking regulators. Cash dividends of $0.07 per share were paid in the fourth quarter of 2013, and a total of $0.24 per share was paid during the year, an increase of 26% over 2012. Monarch was again awarded the highest 5-Star "Superior" rating by Bauer Financial, an independent third-party bank rating agency that rates banks on safety and soundness.
Net interest income, our number one driver of profitability, decreased 2% or $990,000 during 2013 compared to 2012. A decrease in the average balance of our mortgage loans held for sale of 38% was partially offset by increases in the average balance of our loans held for investment portfolio and a reduction in our funding costs. Our net interest margin for the year 2013 and for the fourth quarter of 2013 was 4.13%.
Non-interest income decreased $19.9 million or 22% in 2013 over the previous year, while non-interest expenses declined by $13.3 million, increasing net overhead expense by $6.6 million compared to the previous year. A decline in mortgage banking revenues was the driver of the decline in non-interest income. Investment revenues related to Monarch Bank Private Wealth totaled $1.1 million for the year compared to $173 thousand the previous year, a significant increase. The Company was recently recognized by Raymond James Financial Services as having a top performing investment program, with $185 million in assets under management accumulated since the formation of Monarch Bank Private Wealth in September of 2012.
Mortgage revenue remains the number one driver of non-interest income. $350 million in mortgage loans were closed during the fourth quarter of 2013 (80% purchase) compared to $762 million in the fourth quarter of 2012 (39% purchase). Monarch closed $1.98 billion in mortgage loans during 2013 compared to $2.7 billion in 2012. The reduction in mortgage revenue was due to lower margins driven by competition and loan mix, a lower volume of closings, and reduced balances and related earnings from our loans held for sale portfolio. Ongoing and aggressive expense reductions are being made in our mortgage operations to better align our expense structure with current and forecasted mortgage production levels.
"Our current focus is to continue to grow market share in a declining market environment. Our long-term focus has always been on purchase mortgage lending, with 80% of the loans closed in the fourth quarter of 2013 used to purchase homes," stated William T. Morrison, CEO of Monarch Mortgage. "We continue to make adjustments to our delivery system and expense structure that should drive improved profitability to the bottom line in 2014."
Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with eleven banking offices in Chesapeake, Virginia Beach, Norfolk, Suffolk, and Williamsburg Virginia. Monarch Bank also has a loan production office in Newport News, Virginia. OBX Bank, a division of Monarch Bank, operates offices in Kitty Hawk and Nags Head, North Carolina. Monarch Mortgage and our affiliated mortgage companies have over thirty-five 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), Advance Financial Group (secondary mortgage origination), Monarch Bank Private Wealth (investment, trust, planning and private banking), 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 31, | September 30, | June 30, | March 31, | December 31, | |
| 2013 | 2013 | 2013 | 2013 | 2012 | |
| ASSETS: | |||||
| Cash and due from banks | $ 18,971 | $ 21,016 | $ 19,050 | $ 17,414 | $ 27,364 |
| Interest bearing bank balances | 31,955 | 24,504 | 15,195 | 14,099 | 14,667 |
| Federal funds sold | 53,985 | 83,454 | 56,972 | 21,937 | 15,744 |
| Investment securities, at fair value | 48,822 | 16,973 | 16,573 | 16,493 | 14,634 |
| Loans held for sale | 99,718 | 120,435 | 166,586 | 242,457 | 419,075 |
| Loans held for investment, net of unearned income | 712,671 | 697,541 | 697,376 | 692,410 | 661,094 |
| Less: allowance for loan losses | (9,061) | (11,228) | (11,320) | (10,788) | (10,910) |
| Net loans | 703,610 | 686,313 | 686,056 | 681,622 | 650,184 |
| Bank premises and equipment, net | 28,882 | 28,454 | 28,101 | 27,507 | 25,448 |
| Restricted equity securities, at cost | 3,683 | 3,666 | 3,792 | 3,781 | 12,363 |
| Bank owned life insurance | 7,409 | 7,351 | 7,290 | 7,231 | 7,173 |
| Goodwill | 775 | 775 | 775 | 775 | 775 |
| Intangible assets, net | 104 | 149 | 194 | 238 | 283 |
| Accrued interest receivable and other assets | 18,786 | 18,857 | 20,815 | 21,421 | 27,868 |
| Total assets | $ 1,016,700 | $ 1,011,947 | $ 1,021,399 | $ 1,054,975 | $ 1,215,578 |
| LIABILITIES: | |||||
| Demand deposits--non-interest bearing | $ 206,891 | $ 222,021 | $ 218,880 | $ 201,346 | $ 190,120 |
| Demand deposits--interest bearing | 55,528 | 48,302 | 52,101 | 57,074 | 65,369 |
| Money market deposits | 374,462 | 364,488 | 341,042 | 332,305 | 335,899 |
| Savings deposits | 22,137 | 22,665 | 22,172 | 23,579 | 22,127 |
| Time deposits | 234,100 | 228,652 | 264,491 | 317,181 | 288,267 |
| Total deposits | 893,118 | 886,128 | 898,686 | 931,485 | 901,782 |
| FHLB borrowings | 1,175 | 1,200 | 1,225 | 1,250 | 194,299 |
| Short Term borrowings | -- | -- | -- | 5,000 | 5,000 |
| Federal funds purchased | -- | -- | -- | -- | -- |
| Trust preferred subordinated debt | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 |
| Accrued interest payable and other liabilities | 14,661 | 17,855 | 16,733 | 14,894 | 15,550 |
| Total liabilities | 918,954 | 915,183 | 926,644 | 962,629 | 1,126,631 |
| STOCKHOLDERS' EQUITY: | |||||
| Preferred Stock | -- | -- | -- | -- | 2,406 |
| Common stock | 51,432 | 51,230 | 50,873 | 50,821 | 41,632 |
| Capital in excess of par value | 7,069 | 6,755 | 6,521 | 6,300 | 12,718 |
| Retained earnings | 39,437 | 38,014 | 36,233 | 33,790 | 30,786 |
| Accumulated other comprehensive loss | (419) | (406) | (480) | (174) | (200) |
| Total Monarch Financial Holdings, Inc. stockholders' equity | 97,519 | 95,593 | 93,147 | 90,737 | 87,342 |
| Noncontrolling interest | 227 | 1,171 | 1,608 | 1,609 | 1,605 |
| Total equity | 97,746 | 96,764 | 94,755 | 92,346 | 88,947 |
| Total liabilities and stockholders' equity | $ 1,016,700 | $ 1,011,947 | $ 1,021,399 | $ 1,054,975 | $ 1,215,578 |
| Preferred shares outstanding at period end | -- | -- | -- | -- | 481,123 |
| Common shares outstanding at period end (1) | 10,502,323 | 10,480,023 | 10,408,544 | 10,398,073 | 8,557,939 |
| Nonvested shares of common stock included in commons shares outstanding (1) | 215,960 | 233,960 | 233,960 | 233,960 | 231,460 |
| Book value per common share at period end (1) (2) | $ 9.29 | $ 9.12 | $ 8.95 | $ 8.73 | $ 8.80 |
| Tangible book value per common share at period end (1) (3) | $ 9.20 | $ 9.03 | $ 8.86 | $ 8.63 | $ 8.68 |
| Closing market price (1) | $ 12.31 | $ 11.72 | $ 10.83 | $ 10.61 | $ 8.22 |
| Total risk based capital - Consolidated company | 13.91% | 13.70% | 13.42% | 13.21% | 12.05% |
| Total risk based capital - Bank | 13.95% | 13.84% | 13.66% | 13.94% | 12.73% |
| (1) All share information has been adjusted to reflect the 6 for 5 stock split granted December 7, 2012 and cash in lieu of fractional shares. | |||||
| (2) Book value per common share is defined as stockholders' equity divided by as-converted common shares outstanding. | |||||
| (3) Tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by as-converted commons shares outstanding. | |||||
| Consolidated Statements of Income | ||||
| Monarch Financial Holdings, Inc. and Subsidiaries | ||||
| Unaudited | ||||
| Three Months Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2013 | 2012 | 2013 | 2012 | |
| INTEREST INCOME: | ||||
| Interest on federal funds sold | $ 42,283 | $ 4,208 | $ 115,963 | $ 23,343 |
| Interest on other bank accounts | 28,626 | 8,279 | 58,027 | 21,438 |
| Dividends on equity securities | 67,540 | 50,422 | 277,700 | 191,396 |
| Interest on investment securities | 60,311 | 50,294 | 230,496 | 200,285 |
| Interest and fees on loans | 10,478,477 | 12,577,364 | 43,666,251 | 46,032,003 |
| Total interest income | 10,677,237 | 12,690,567 | 44,348,437 | 46,468,465 |
| INTEREST EXPENSE: | ||||
| Interest on deposits | 905,970 | 1,206,595 | 3,936,203 | 4,962,290 |
| Interest on trust preferred subordinated debt | 122,850 | 125,214 | 491,910 | 494,911 |
| Interest on other borrowings | 15,002 | 259,195 | 358,345 | 459,032 |
| Total interest expense | 1,043,822 | 1,591,004 | 4,786,458 | 5,916,233 |
| NET INTEREST INCOME | 9,633,415 | 11,099,563 | 39,561,979 | 40,552,232 |
| PROVISION FOR LOAN LOSSES | -- | 517,456 | -- | 4,831,133 |
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 9,633,415 | 10,582,107 | 39,561,979 | 35,721,099 |
| NON-INTEREST INCOME: | ||||
| Mortgage banking income | 13,276,836 | 23,950,026 | 65,672,402 | 86,337,921 |
| Service charges and fees | 502,373 | 489,830 | 1,941,926 | 1,830,018 |
| Title income | 124,774 | 237,238 | 789,253 | 814,487 |
| Investment and insurance income | 336,002 | 106,529 | 1,053,429 | 172,667 |
| Other income | 111,924 | 96,113 | 425,261 | 605,713 |
| Total non-interest income | 14,351,909 | 24,879,736 | 69,882,271 | 89,760,806 |
| NON-INTEREST EXPENSE: | ||||
| Salaries and employee benefits | 8,772,157 | 8,199,075 | 34,112,834 | 29,868,159 |
| Commissions and incentives | 5,248,131 | 12,986,177 | 28,344,347 | 46,572,529 |
| Occupancy and equipment | 2,220,634 | 1,948,464 | 8,449,912 | 7,089,757 |
| Loan expense | 1,526,317 | 2,461,957 | 7,891,835 | 8,487,520 |
| Marketing expense | 807,717 | 775,861 | 2,873,259 | 2,412,674 |
| Data processing | 459,681 | 455,785 | 1,696,535 | 1,525,401 |
| Other expenses | 1,527,715 | 2,230,718 | 7,542,096 | 8,299,574 |
| Total non-interest expense | 20,562,352 | 29,058,037 | 90,910,818 | 104,255,614 |
| INCOME BEFORE TAXES | 3,422,972 | 6,403,806 | 18,533,432 | 21,226,291 |
| Income tax provision | (1,179,017) | (2,337,743) | (6,386,040) | (7,426,785) |
| NET INCOME | 2,243,955 | 4,066,063 | 12,147,392 | 13,799,506 |
| Less: Net income attributable to noncontrolling interest | (87,389) | (297,690) | (1,056,385) | (974,637) |
| NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC | $2,156,566 | $3,768,373 | $11,091,007 | $ 12,824,869 |
| Preferred stock dividend and accretion of preferred stock discount | -- | (237,943) | -- | (1,402,532) |
| NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $2,156,566 | $3,530,430 | $11,091,007 | $ 11,422,337 |
| NET INCOME PER COMMON SHARE: | ||||
| Basic | $ 0.21 | $ 0.44 | $ 1.09 | $ 1.54 |
| Diluted | $ 0.20 | $ 0.37 | $ 1.08 | $ 1.25 |
| Weighted average basic shares outstanding | 10,486,056 | 7,980,259 | 10,167,156 | 7,400,443 |
| Weighted average diluted shares outstanding | 10,535,313 | 10,315,360 | 10,299,471 | 10,255,992 |
| Return on average assets | 0.86% | 1.28% | 1.07% | 1.26% |
| Return on average stockholders' equity | 8.88% | 17.51% | 11.97% | 15.84% |
| (1) All share information has been adjusted to reflect the 6 for 5 stock split granted December 7, 2012 and cash in lieu of fractional shares. | ||||
| Financial Highlights | |||||
| Monarch Financial Holdings, Inc. and Subsidiaries | |||||
| (Dollars in thousands, | For the Quarter Ended | ||||
| except per share data) | December 31, | September 30, | June 30, | March 31, | December 31, |
| 2013 | 2013 | 2013 | 2013 | 2012 | |
| EARNINGS | |||||
| Interest income | $ 10,677 | $ 10,842 | $ 10,976 | $ 11,854 | $ 12,690 |
| Interest expense | (1,044) | (1,121) | (1,184) | (1,438) | (1,591) |
| Net interest income | 9,633 | 9,721 | 9,792 | 10,416 | 11,099 |
| Provision for loan losses | -- | -- | -- | -- | (517) |
| Noninterest income - mortgage banking income | 13,277 | 15,510 | 20,572 | 16,166 | 23,826 |
| Noninterest income - other | 1,075 | 1,018 | 1,102 | 1,015 | 1,054 |
| Noninterest expense | (20,562) | (22,315) | (26,173) | (21,861) | (29,058) |
| Pre-tax net income | 3,423 | 3,934 | 5,293 | 5,736 | 6,404 |
| Minority interest in net income | (87) | (108) | (428) | (285) | (298) |
| Income taxes | (1,179) | (1,416) | (1,798) | (1,993) | (2,338) |
| Net income | $ 2,157 | $ 2,410 | $ 3,067 | $ 3,458 | $ 3,768 |
| PER COMMON SHARE | |||||
| Earnings per share - basic | $ 0.21 | $ 0.23 | $ 0.29 | $ 0.37 | $ 0.44 |
| Earnings per share - diluted | 0.20 | 0.23 | 0.29 | 0.33 | 0.37 |
| Common stock - per share dividends | 0.07 | 0.06 | 0.06 | 0.05 | 0.05 |
| Average Basic Shares Outstanding | 10,486,056 | 10,464,992 | 10,401,992 | 9,300,760 | 7,980,259 |
| Average Diluted Shares Outstanding | 10,535,313 | 10,519,472 | 10,483,420 | 10,451,897 | 10,315,360 |
| ALLOWANCE FOR LOAN LOSSES | |||||
| Beginning balance | $ 11,228 | $ 11,320 | $ 10,788 | $ 10,910 | $ 10,890 |
| Provision for loan losses | -- | -- | -- | -- | 517 |
| Charge-offs | (2,252) | (137) | (279) | (554) | (622) |
| Recoveries | 85 | 45 | 811 | 432 | 125 |
| Net charge-offs | (2,167) | (92) | 532 | (122) | (497) |
| Ending balance | $ 9,061 | $ 11,228 | $ 11,320 | $ 10,788 | $ 10,910 |
| COMPOSITION OF RISK ASSETS | |||||
| Nonperforming loans: | |||||
| 90 days past due | $ 472 | $ 82 | $ -- | $ 351 | $ 153 |
| Nonaccrual loans | 1,824 | 2,883 | 2,933 | 3,149 | 3,483 |
| OREO | 302 | 95 | 95 | 95 | 0 |
| Nonperforming assets | 2,598 | 3,060 | 3,028 | 3,595 | 3,636 |
| ASSET QUALITY RATIOS | |||||
| Nonperforming assets to total assets | 0.26% | 0.30% | 0.30% | 0.34% | 0.30% |
| Nonperforming loans to total loans | 0.32 | 0.43 | 0.42 | 0.51 | 0.55 |
| Allowance for loan losses to total loans held for investment | 1.27 | 1.61 | 1.62 | 1.56 | 1.65 |
| Allowance for loan losses to nonperforming loans | 394.64 | 378.68 | 385.95 | 308.23 | 300.06 |
| Annualized net charge-offs to average loans held for investment | 1.25 | 0.05 | -0.31 | 0.07 | 0.31 |
| FINANCIAL RATIOS | |||||
| Return on average assets | 0.86% | 0.94% | 1.19% | 1.27% | 1.28% |
| Return on average stockholders' equity | 8.88 | 10.18 | 13.42 | 15.86 | 17.51 |
| Net interest margin (FTE) | 4.13 | 4.11 | 4.11 | 4.12 | 4.02 |
| Non-interest revenue/Total revenue | 57.3 | 60.4 | 66.4 | 59.2 | 66.3 |
| Efficiency - Consolidated | 85.5 | 84.8 | 83.0 | 79.1 | 80.4 |
| Efficiency - Bank only | 60.4 | 59.1 | 58.2 | 53.1 | 54.5 |
| Average equity to average assets | 9.73 | 9.27 | 8.88 | 8.00 | 7.29 |
| PERIOD END BALANCES (Amounts in thousands) | |||||
| Total loans held for sale | $ 99,718 | $ 120,435 | $ 166,586 | $ 242,457 | $ 419,075 |
| Total loans held for investment | 712,671 | 697,541 | 697,376 | 692,410 | 661,094 |
| Interest-earning assets | 952,981 | 950,760 | 960,481 | 994,946 | 1,141,180 |
| Assets | 1,016,700 | 1,011,947 | 1,021,399 | 1,054,975 | 1,215,578 |
| Total deposits | 893,118 | 886,128 | 898,686 | 931,485 | 901,782 |
| Other borrowings | 11,175 | 11,200 | 11,225 | 16,250 | 209,299 |
| Stockholders' equity | 97,519 | 95,593 | 93,147 | 90,737 | 87,342 |
| AVERAGE BALANCES (Amounts in thousands) | |||||
| Total loans held for sale | $ 104,104 | $ 136,660 | $ 200,733 | $ 316,189 | $ 423,354 |
| Total loans held for investment | 695,074 | 692,731 | 680,037 | 665,542 | 637,774 |
| Interest-earning assets | 935,059 | 946,575 | 964,872 | 1,033,838 | 1,103,667 |
| Assets | 990,734 | 1,013,932 | 1,032,345 | 1,105,933 | 1,173,820 |
| Total deposits | 869,113 | 882,553 | 908,229 | 865,146 | 945,297 |
| Other borrowings | 11,199 | 11,257 | 11,250 | 123,291 | 114,140 |
| Stockholders' equity | 96,415 | 93,958 | 91,638 | 88,430 | 85,584 |
| MORTGAGE PRODUCTION (Amounts in thousands) | |||||
| Dollar volume of mortgage loans closed | $ 349,695 | $ 478,304 | $ 607,189 | $ 542,235 | $ 762,131 |
| Percentage of refinance based on dollar volume | 20.3% | 22.6% | 39.2% | 56.8% | 61.4% |