CHESAPEAKE, Va., Oct. 23, 2014 (GLOBE NEWSWIRE) -- Monarch Financial Holdings, Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported third quarter and annual financial performance. The Board of Directors also announced a quarterly common stock cash dividend of $0.08 per common share, payable on November 28, 2014, to shareholders of record on November 10, 2014.
Third quarter 2014 highlights are:
- Net income of $2,807,848, up 16.5%
- Diluted earnings per share of $0.26, up 13%
- Quarterly cash dividend of $0.08 per share
- Return on Equity of 10.72%
- Return on Assets of 1.11%
- Non-performing assets at 0.31% of total assets
- $441 million in mortgage loans closed with 84% purchase
Year to date 2014 highlights are:
- Net income of $8,528,687, for a return on equity of 11.27%
- Diluted earnings per share of $0.80
- $1.16 billion in mortgage loans closed with 84% purchase
"We are pleased to report another strong quarter for Monarch. Loan growth with a stable net interest margin, higher mortgage revenue, no credit costs, and focused expense management continue to drive our bottom line results." stated Brad E. Schwartz, Chief Executive Officer. "Our asset quality remains very strong, and we remain well positioned for an increase in interest rates that is anticipated sometime in 2015."
Net income was $2,807,848 for the third quarter of 2014, an increase of 16.5% from the same period one year ago. The quarterly annualized return on average equity (ROE) was 10.72%, and the quarterly annualized return on average assets (ROA) was 1.11%. Quarterly diluted earnings per share increased to $0.26, compared to $0.23 in the previous quarter, a 13% increase. Net income was $8,528,687 for the first nine months of 2014. The annualized return on average equity (ROE) was 11.27%, and the annualized return on average assets (ROA) was 1.15%. Diluted earnings per share were $0.80, compared to $0.85 for the same period in 2013.
Total assets at September 30, 2014 were $1.0 billion. Loans held for investment grew 2.3% year over year, and mortgage loans held for sale grew 15.1%. Loans held for investment also grew $13.5 million or 1.9% from the previous quarter. We hit a milestone with over $300 million in demand deposit accounts, which now comprise 35% of our total deposit portfolio. Our funding mix position should enhance and protect the net interest margin when interest rates rise in the future.
"Even with irrational loan competition we were able to grow our loans in the past quarter and from the same period one year prior. Our cash management and retail deposit teams continue to perform at a high level, with over a third of our deposits now in demand deposits – which also delivered positive growth in fee income" stated Neal Crawford, President of Monarch Bank.
Non-performing assets to total assets were 0.31%, remaining significantly below that of our local, state, and national peer group. Non-performing assets were $3.2 million which was down from the previous quarter. Non-performing assets were comprised of $2.2 million in non-accrual loans, $243 thousand in loans more than 90 days past due, and $767 thousand in two properties in other real estate owned. The larger of the two properties is already under contract to close in November. Net charge-offs for the calendar year were $84 thousand and the allowance for loan losses represents 1.26% of loans held for investment and 370% of non-performing loans.
The Board of Directors announced a quarterly common stock cash dividend of $0.08 per common share, payable on November 28, 2014, to shareholders of record on November 10, 2014. Tangible book value of $9.80 per share has increased 8.5% over the past year, with the stock closing at 128% of book value.
Capital strength continues to grow by every metric. Average equity to average assets improved to 10.40%, up from 9.27% one year prior. Total risk-based capital to risk weighted assets at Monarch Bank equaled 14.18%, significantly higher than the level required to be rated "Well Capitalized" by federal banking regulators. 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 during the third quarter of 2014 was flat when compared to the same quarter in 2013. The net interest margin was 4.18% for the third quarter, which despite market-driven pressure on loan rates was the same as the previous quarter. The third quarter net interest margin of 4.18% was up from 4.12% in the same quarter in 2013.
Non-interest income grew in every category in the third quarter. Mortgage revenue continues to be the number one driver of non-interest income. We closed $441 million in mortgage loans (84% purchase money) during the third quarter of 2014 compared to $478 million (77% purchase) in the third quarter of 2013, a slight decrease. Despite the slightly lower volume closed mortgage revenue grew by $1 million. There were also increases in service charges and fees, title income, investment and insurance revenue, and other income. Investment and insurance revenue increased 62% compared to the same quarter the previous year due to the continued growth of Monarch Bank Private Wealth.
"We are extremely proud of our mortgage origination, support staff and leadership teams that have met the challenges of new regulations and a more traditional seasonal market. With slightly less volume in the third quarter we were able to grow revenue through stronger secondary pricing and efficiencies. Our past formula for success in a more traditional and seasonal market should continue to lead our continued market share growth." stated William T. Morrison, CEO of Monarch Mortgage.
Total non-interest expenses increased 3.6% during the third quarter due to increased commissions and incentives, occupancy and equipment expenses, and data processing expenses, which were partially offset by reduced loan expenses. Salaries and employee benefits remained stable with no growth, despite increases in health care expenses which were offset by lower salaries expense. Net overhead, the difference between non-interest income and non-interest expense, improved by $418 thousand or 7.4% in the third quarter compared to a year prior. During the third quarter we closed one banking office.
Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with ten banking offices in Chesapeake, Virginia Beach, Norfolk, 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 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), 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 | |||||
September 30, | June 30, | March 31, | December 31, | September 30, | |
2014 | 2014 | 2014 | 2013 | 2013 | |
ASSETS: | |||||
Cash and due from banks | $ 21,083 | $ 19,661 | $ 18,510 | $ 18,971 | $ 21,016 |
Interest bearing bank balances | 58,207 | 37,166 | 37,033 | 31,955 | 24,504 |
Federal funds sold | 3,938 | 29,761 | 84,232 | 53,985 | 83,454 |
Investment securities, at fair value | 25,137 | 23,773 | 23,197 | 48,822 | 16,973 |
Mortgage loans held for sale | 138,590 | 156,584 | 92,839 | 99,718 | 120,435 |
Loans held for investment, net of unearned income | 713,667 | 700,159 | 715,088 | 712,671 | 697,541 |
Less: allowance for loan losses | (8,977) | (9,070) | (9,213) | (9,061) | (11,228) |
Net loans | 704,690 | 691,089 | 705,875 | 703,610 | 686,313 |
Bank premises and equipment, net | 30,368 | 31,407 | 29,902 | 28,882 | 28,454 |
Restricted equity securities, at cost | 3,179 | 3,169 | 3,156 | 3,683 | 3,666 |
Bank owned life insurance | 9,587 | 7,526 | 7,467 | 7,409 | 7,351 |
Goodwill | 775 | 775 | 775 | 775 | 775 |
Intangible assets, net | -- | 15 | 60 | 104 | 149 |
Accrued interest receivable and other assets | 23,688 | 22,973 | 19,673 | 18,786 | 18,857 |
Total assets | $ 1,019,242 | $ 1,023,899 | $ 1,022,719 | $ 1,016,700 | $ 1,011,947 |
LIABILITIES: | |||||
Demand deposits--non-interest bearing | $ 252,286 | $ 240,348 | $ 221,357 | $ 206,891 | $ 222,079 |
Demand deposits--interest bearing | 53,093 | 51,563 | 55,949 | 55,528 | 48,244 |
Money market deposits | 365,041 | 377,096 | 367,590 | 374,462 | 364,488 |
Savings deposits | 25,211 | 24,539 | 24,327 | 22,137 | 22,665 |
Time deposits | 189,142 | 197,747 | 224,947 | 234,100 | 228,652 |
Total deposits | 884,773 | 891,293 | 894,170 | 893,118 | 886,128 |
FHLB borrowings | 1,100 | 1,125 | 1,150 | 1,175 | 1,200 |
Short Term borrowings | -- | -- | -- | -- | -- |
Trust preferred subordinated debt | 10,000 | 10,000 | 10,000 | 10,000 | 10,000 |
Accrued interest payable and other liabilities | 18,145 | 18,650 | 17,422 | 14,661 | 17,855 |
Total liabilities | 914,018 | 921,068 | 922,742 | 918,954 | 915,183 |
STOCKHOLDERS' EQUITY: | |||||
Common stock | 51,735 | 51,624 | 51,584 | 51,432 | 51,230 |
Capital in excess of par value | 7,966 | 7,675 | 7,357 | 7,069 | 6,755 |
Retained earnings | 45,523 | 43,566 | 41,232 | 39,437 | 38,014 |
Accumulated other comprehensive loss | (135) | (159) | (314) | (419) | (406) |
Total Monarch Financial Holdings, Inc. stockholders' equity | 105,089 | 102,706 | 99,859 | 97,519 | 95,593 |
Noncontrolling interest | 135 | 125 | 118 | 227 | 1,171 |
Total equity | 105,224 | 102,831 | 99,977 | 97,746 | 96,764 |
Total liabilities and stockholders' equity | $ 1,019,242 | $ 1,023,899 | $ 1,022,719 | $ 1,016,700 | $ 1,011,947 |
Common shares outstanding at period end | 10,646,873 | 10,624,668 | 10,619,444 | 10,502,323 | 10,480,023 |
Nonvested shares of common stock included in commons shares outstanding | 299,910 | 299,910 | 302,710 | 215,960 | 233,960 |
Book value per common share at period end (1) | $ 9.87 | $ 9.67 | $ 9.40 | $ 9.29 | $ 9.12 |
Tangible book value per common share at period end (2) | $ 9.80 | $ 9.59 | $ 9.33 | $ 9.20 | $ 9.03 |
Closing market price | $ 12.56 | $ 11.72 | $ 12.26 | $ 12.31 | $ 11.72 |
Total risk based capital - Consolidated company | 14.16% | 14.29% | 14.27% | 13.91% | 13.68% |
Total risk based capital - Bank | 14.18% | 14.31% | 14.30% | 13.95% | 13.83% |
(1) Book value per common share is defined as stockholders' equity divided by common shares outstanding. | |||||
(2) Tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by commons shares outstanding | |||||
Consolidated Statements of Income | ||||
Monarch Financial Holdings, Inc. and Subsidiaries | ||||
Unaudited | ||||
Three Months Ended | Nine Months Ended | |||
September 30, | September 30, | |||
2014 | 2013 | 2014 | 2013 | |
INTEREST INCOME: | ||||
Interest on federal funds sold | $ 15,313 | $ 43,210 | $ 79,870 | $ 73,680 |
Interest on other bank accounts | 61,609 | 11,307 | 152,546 | 29,401 |
Dividends on equity securities | 21,000 | 66,500 | 73,410 | 210,160 |
Interest on investment securities | 90,669 | 55,314 | 258,647 | 170,185 |
Interest on mortgage loans held for sale | 1,442,668 | 1,423,852 | 3,489,898 | 5,931,116 |
Interest and fees on loans held for investment | 9,007,543 | 9,241,660 | 27,575,506 | 27,256,658 |
Total interest income | 10,638,802 | 10,841,843 | 31,629,877 | 33,671,200 |
INTEREST EXPENSE: | ||||
Interest on deposits | 789,712 | 979,858 | 2,463,428 | 3,030,233 |
Interest on trust preferred subordinated debt | 124,200 | 125,818 | 369,896 | 369,060 |
Interest on other borrowings | 13,765 | 15,355 | 42,351 | 343,343 |
Total interest expense | 927,677 | 1,121,031 | 2,875,675 | 3,742,636 |
NET INTEREST INCOME | 9,711,125 | 9,720,812 | 28,754,202 | 29,928,564 |
PROVISION FOR LOAN LOSSES | -- | -- | -- | -- |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 9,711,125 | 9,720,812 | 28,754,202 | 29,928,564 |
NON-INTEREST INCOME: | ||||
Mortgage banking income | 16,657,849 | 15,657,242 | 46,229,239 | 52,395,566 |
Service charges and fees | 559,497 | 510,739 | 1,568,288 | 1,439,553 |
Title income | 180,402 | 177,705 | 452,890 | 664,479 |
Investment and insurance income | 428,265 | 264,967 | 1,209,624 | 717,427 |
Other income | 72,921 | 64,420 | 246,417 | 313,337 |
Total non-interest income | 17,898,934 | 16,675,073 | 49,706,458 | 55,530,362 |
NON-INTEREST EXPENSE: | ||||
Salaries and employee benefits | 8,571,995 | 8,632,847 | 25,336,002 | 25,340,677 |
Commissions and incentives | 7,047,140 | 6,326,920 | 17,828,126 | 23,096,216 |
Occupancy and equipment | 2,464,666 | 2,232,315 | 7,136,457 | 6,229,278 |
Loan expense | 1,552,162 | 1,904,786 | 4,975,873 | 6,365,518 |
Marketing expense | 801,403 | 807,938 | 2,121,152 | 2,065,542 |
Data processing | 601,644 | 400,125 | 1,557,728 | 1,236,854 |
Telephone | 325,405 | 306,848 | 929,993 | 869,910 |
Other expenses | 1,756,476 | 1,703,182 | 4,989,177 | 5,144,471 |
Total non-interest expense | 23,120,891 | 22,314,961 | 64,874,508 | 70,348,466 |
INCOME BEFORE TAXES | 4,489,168 | 4,080,924 | 13,586,152 | 15,110,460 |
Income tax provision | (1,635,440) | (1,415,697) | (4,874,180) | (5,207,023) |
NET INCOME | 2,853,728 | 2,665,227 | 8,711,972 | 9,903,437 |
Less: Net income attributable to noncontrolling interest | (45,880) | (255,553) | (183,285) | (968,996) |
NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC | $2,807,848 | $2,409,674 | $8,528,687 | $ 8,934,441 |
NET INCOME PER COMMON SHARE: | ||||
Basic | $ 0.26 | $ 0.23 | $ 0.80 | $ 0.89 |
Diluted | $ 0.26 | $ 0.23 | $ 0.80 | $ 0.85 |
Weighted average basic shares outstanding | 10,635,275 | 10,464,992 | 10,609,757 | 10,060,179 |
Weighted average diluted shares outstanding | 10,670,507 | 10,519,472 | 10,648,289 | 10,482,651 |
Return on average assets | 1.11% | 0.94% | 1.15% | 1.14% |
Return on average stockholders' equity | 10.72% | 10.18% | 11.27% | 13.07% |
Financial Highlights | |||||
Monarch Financial Holdings, Inc. and Subsidiaries | |||||
(Dollars in thousands, | For the Quarter Ended | ||||
except per share data) | September 30, | June 30, | March 31, | December 31, | September 30, |
2014 | 2014 | 2014 | 2013 | 2013 | |
EARNINGS | |||||
Interest income | $ 10,639 | $ 10,557 | $ 10,434 | $ 10,677 | $ 10,842 |
Interest expense | (928) | (977) | (971) | (1,044) | (1,121) |
Net interest income | 9,711 | 9,580 | 9,463 | 9,633 | 9,721 |
Provision for loan losses | -- | -- | -- | -- | -- |
Noninterest income - mortgage banking income | 16,658 | 17,369 | 12,202 | 13,277 | 15,657 |
Noninterest income - other | 1,241 | 1,130 | 1,106 | 1,075 | 1,018 |
Noninterest expense | (23,121) | (23,007) | (18,747) | (20,562) | (22,315) |
Pre-tax net income | 4,489 | 5,072 | 4,024 | 3,423 | 4,081 |
Minority interest in net income | (46) | (121) | (16) | (87) | (255) |
Income taxes | (1,635) | (1,767) | (1,471) | (1,179) | (1,416) |
Net income | $ 2,808 | $ 3,184 | $ 2,537 | $ 2,157 | $ 2,410 |
PER COMMON SHARE | |||||
Earnings per share - basic | $ 0.26 | $ 0.30 | $ 0.24 | $ 0.21 | $ 0.23 |
Earnings per share - diluted | 0.26 | 0.30 | 0.24 | 0.20 | 0.23 |
Common stock - per share dividends | 0.08 | 0.08 | 0.07 | 0.07 | 0.06 |
Average Basic Shares Outstanding | 10,635,275 | 10,620,869 | 10,600,766 | 10,486,056 | 10,464,992 |
Average Diluted Shares Outstanding | 10,670,507 | 10,660,217 | 10,641,782 | 10,535,313 | 10,519,472 |
ALLOWANCE FOR LOAN LOSSES | |||||
Beginning balance | $ 9,070 | $ 9,213 | $ 9,061 | $ 11,228 | $ 11,320 |
Provision for loan losses | -- | -- | -- | -- | -- |
Charge-offs | (181) | (184) | (12) | (2,252) | (137) |
Recoveries | 88 | 41 | 164 | 85 | 45 |
Net charge-offs | (93) | (143) | 152 | (2,167) | (92) |
Ending balance | $ 8,977 | $ 9,070 | $ 9,213 | $ 9,061 | $ 11,228 |
COMPOSITION OF RISK ASSETS | |||||
Nonperforming loans: | |||||
90 days past due | $ 243 | $ 499 | $ 759 | $ 472 | $ 82 |
Nonaccrual loans | 2,180 | 3,028 | 1,718 | 1,740 | 2,814 |
OREO | 767 | 144 | 302 | 302 | 95 |
Nonperforming assets | 3,190 | 3,671 | 2,779 | 2,514 | 2,991 |
ASSET QUALITY RATIOS | |||||
Nonperforming assets to total assets | 0.31% | 0.36% | 0.27% | 0.25% | 0.30% |
Nonperforming loans to total loans | 0.34 | 0.50 | 0.35 | 0.31 | 0.42 |
Allowance for loan losses to total loans held for investment | 1.26 | 1.30 | 1.29 | 1.27 | 1.61 |
Allowance for loan losses to nonperforming loans | 370.49 | 257.16 | 371.94 | 409.63 | 387.71 |
Annualized net charge-offs to average loans held for investment | 0.05 | 0.08 | -0.09 | 1.25 | 0.05 |
FINANCIAL RATIOS | |||||
Return on average assets | 1.11% | 1.29% | 1.06% | 0.86% | 0.94% |
Return on average stockholders' equity | 10.72 | 12.63 | 10.46 | 8.88 | 10.18 |
Net interest margin (FTE) | 4.18 | 4.18 | 4.25 | 4.13 | 4.12 |
Non-interest revenue/Total revenue | 62.7 | 63.7 | 56.1 | 57.3 | 60.6 |
Efficiency - Consolidated | 83.7 | 81.8 | 82.1 | 85.5 | 84.8 |
Efficiency - Bank only | 61.7 | 63.9 | 59.9 | 60.4 | 59.1 |
Average equity to average assets | 10.40 | 10.18 | 10.13 | 9.73 | 9.27 |
PERIOD END BALANCES (Amounts in thousands) | |||||
Total mortgage loans held for sale | $ 138,590 | $ 156,584 | $ 92,839 | $ 99,718 | $ 120,435 |
Total loans held for investment | 713,667 | 700,159 | 715,088 | 712,671 | 697,541 |
Interest-earning assets | 945,697 | 949,872 | 956,160 | 952,981 | 950,760 |
Assets | 1,019,242 | 1,023,899 | 1,022,719 | 1,016,700 | 1,011,947 |
Total deposits | 884,773 | 891,293 | 894,170 | 893,118 | 886,128 |
Other borrowings | 11,100 | 11,125 | 11,150 | 11,175 | 11,200 |
Stockholders' equity | 105,089 | 102,706 | 99,859 | 97,519 | 95,593 |
AVERAGE BALANCES (Amounts in thousands) | |||||
Total mortgage loans held for sale | $ 138,382 | $ 116,851 | $ 70,856 | $ 104,104 | $ 136,660 |
Total loans held for investment | 701,137 | 698,851 | 704,917 | 695,074 | 692,731 |
Interest-earning assets | 930,420 | 927,552 | 910,929 | 935,059 | 946,575 |
Assets | 999,358 | 993,003 | 970,815 | 990,734 | 1,013,932 |
Total deposits | 867,980 | 867,217 | 848,969 | 869,113 | 882,553 |
Other borrowings | 11,124 | 11,150 | 11,174 | 11,199 | 11,257 |
Stockholders' equity | 103,908 | 101,092 | 98,374 | 96,415 | 93,958 |
MORTGAGE PRODUCTION (Amounts in thousands) | |||||
Dollar volume of mortgage loans closed | $ 440,784 | $ 446,863 | $ 271,233 | $ 349,695 | $ 478,304 |
Percentage of refinance based on dollar volume | 16.0% | 15.0% | 19.1% | 20.3% | 22.6% |