Monarch Financial Reports 36% Increase in Profits and Strong Balance Sheet Growth


CHESAPEAKE, Va., April 23, 2015 (GLOBE NEWSWIRE) -- Monarch Financial Holdings, Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported record first quarter net income and overall strong financial performance. First quarter 2015 highlights are:

  • Net income of $3,461,207, up 36%
  • Diluted earnings per share of $0.32, up 33%
  • Return on Average Equity of 12.98%
  • Deposit growth of $117 million, driving balance sheet growth
  • Non-performing assets low at 0.39% of total assets
  • Net Interest Margin remained strong at 4.32%
  • $487 million in mortgage loans closed, up 80%

"We are extremely pleased with our first quarter financial performance, with mortgage banking earnings driving the strong increase over the previous year. Loans held for investment grew in the first quarter at an annualized rate of over 7%, and our asset quality remains in the top quartile of banks. Total deposits exceeded $1 billion for the first time in our history, led by growth in checking, money market, and time deposit accounts," stated Brad E. Schwartz, Chief Executive Officer. "This is the best first quarter in our history and we are bullish on the prospects for the remainder of the year."

Net income was $3,461,207 for the first quarter of 2015 compared to $2,537,265 for the same period in 2014, a 36% increase. The quarterly annualized return on average equity (ROE) was 12.98% compared to 10.46% one year prior, and the annualized quarterly return on average assets (ROA) was 1.31% compared to 1.06% one year prior. Diluted earnings per share for the first quarter were $0.32, up 33% from the previous year's first quarter.

Total assets at March 31, 2015 were $1.18 billion, up 15% from the prior year. During the first quarter of 2015 loans held for investment increased $14.4 million to $787 million, and mortgage loans held for sale grew $12.2 million to $160 million. Total deposits grew 16% to $1.036 billion, with demand deposits growing $51 million or 18% year over year. Demand deposits represent 31% of total deposits, an achievement driven by our dedicated cash management and banking office teams. 

"We continue to hire talented bankers and expand our banking teams to drive client acquisition and overall balance sheet growth. While deposit growth was at a record pace in the first quarter, one major client made a significant deposit at quarter-end that we anticipate will run-off over the next several months.  We remain focused on quality loan and deposit growth, while our cash management and private banking teams continue to focus on growing core deposits," stated E. Neal Crawford Jr., President of Monarch Bank.

Non-performing assets were 0.39% as of March 31, 2015 compared to 0.27% one year prior. Non-performing assets were $4.6 million, comprised of $175 thousand in 90 days or more past due and still accruing interest, $4.3 million in non-accrual loans and $100,000 in one parcel of other real estate owned that is under contract to close in April. The allowance for loan losses represents 1.10% of total loans held for investment and 192% of non-performing loans.

Average equity to average assets was 10.10% and total risk-based capital to risk weighted assets was 13.52%, significantly higher than the required level to meet the highest rating of "Well Capitalized" by federal banking regulators. Cash dividends of $0.08 per share were paid in the first quarter of 2015, and tangible book value per share grew to $10.32. 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, grew 12.5% in the first quarter driven by higher average balances of earning assets and a decline in the cost of funding those assets. Our net interest margin was 4.32%, slightly up from 4.25% one year ago yet slightly down from 4.42% in the previous quarter. While the current rate environment does not appropriately reward banks for a transaction-focused funding strategy, this strategy should deliver net interest margin protection when rates eventually rise. 

Non-interest income increased $9.0 million in the first quarter over the previous year driven primarily by mortgage and title company revenues. Mortgage revenue remains the number one driver of non-interest income. $487 million in mortgage loans were closed during the first quarter of 2015 (52% purchase) compared to $271 million in the first quarter of 2014. The first quarter is typically the weakest quarter for purchase money mortgage closings, and the drop in rates in January drove refinance volume to offset the seasonal purchase money decline. 

"The first quarter of 2105 was the best quarter for closings over the past year, with both refinance and purchase volume higher. We anticipate, based on our current pipeline of expected loan closings, the beginning to a strong spring home selling season where our purchase closings should drive the majority of our volume," stated William T. Morrison, CEO of Monarch Mortgage.

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 loan production offices in Newport News and Richmond, 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
           
  March 31, December 31, September 30, June 30, March 31,
  2015 2014 2014 2014 2014
ASSETS:          
Cash and due from banks  $ 13,870  $ 14,503  $ 21,083  $ 19,661  $ 18,510
Interest bearing bank balances  73,237  49,761  58,207  37,166  37,033
Federal funds sold  63,311  1,135  3,938  29,761  84,232
           
Investment securities, at fair value  20,283  23,725  25,137  23,773  23,197
           
Mortgage loans held for sale  159,899  147,690  138,590  156,584  92,839
           
Loans held for investment, net of unearned income  787,003  772,590  713,667  700,159  715,088
Less: allowance for loan losses  (8,644)  (8,949)  (8,977)  (9,070)  (9,213)
Net loans  778,359  763,641  704,690  691,089  705,875
           
Bank premises and equipment, net  30,050  30,247  30,368  31,407  29,902
Restricted equity securities, at cost  3,243  3,633  3,179  3,169  3,156
Bank owned life insurance  9,950  9,687  9,587  7,526  7,467
Goodwill  775  775  775  775  775
Intangible assets, net  --  --  --  15  60
Accrued interest receivable and other assets  25,403  21,940  23,688  22,973  19,673
           
Total assets  $ 1,178,380  $ 1,066,737  $ 1,019,242  $ 1,023,899  $ 1,022,719
           
LIABILITIES:          
Demand deposits---non-interest bearing  $ 269,451  $ 235,301  $ 252,286  $ 240,348  $ 221,357
Demand deposits---interest bearing  58,725  66,682  53,093  51,563  55,949
Money market deposits  417,329  369,221  365,041  377,096  367,590
Savings deposits  19,519  20,003  25,211  24,539  24,327
Time deposits  271,121  228,207  189,142  197,747  224,947
Total deposits  1,036,145  919,414  884,773  891,293  894,170
           
FHLB borrowings  1,050  11,075  1,100  1,125  1,150
Trust preferred subordinated debt  10,000  10,000  10,000  10,000  10,000
Accrued interest payable and other liabilities  19,653  18,710  18,145  18,650  17,422
Total liabilities  1,066,848  959,199  914,018  921,068  922,742
           
STOCKHOLDERS' EQUITY:          
Common stock  51,950  51,864  51,735  51,624  51,584
Capital in excess of par value  9,550  8,336  7,966  7,675  7,357
Retained earnings  49,957  47,354  45,523  43,566  41,232
Accumulated other comprehensive loss  (14)  (102)  (135)  (159)  (314)
Total Monarch Financial Holdings, Inc. stockholders' equity  111,443  107,452  105,089  102,706  99,859
Noncontrolling interest  89  86  135  125  118
Total equity  111,532  107,538  105,224  102,831  99,977
           
Total liabilities and stockholders' equity  $ 1,178,380  $ 1,066,737  $ 1,019,242  $ 1,023,899  $ 1,022,719
           
Common shares outstanding at period end  10,736,947  10,652,475  10,646,873  10,624,668  10,619,444
           
Nonvested shares of common stock included in commons shares outstanding  346,950  279,750  299,910  299,910  302,710
           
Book value per common share at period end (1)  $ 10.39  $ 10.10  $ 9.87  $ 9.67  $ 9.40
Tangible book value per common share at period end (2)  $ 10.32  $ 10.02  $ 9.80  $ 9.59  $ 9.33
Closing market price  $ 12.51  $ 13.75  $ 12.56  $ 11.72  $ 12.26
           
Total risk based capital - Consolidated company 13.52% 13.79% 14.16% 14.29% 14.27%
Total risk based capital - Bank 13.32% 13.81% 14.18% 14.31% 14.30%
           
(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
  March 31,
  2015 2014
INTEREST INCOME:    
Interest on federal funds sold  $ 8,253  $ 40,378
Interest on other bank accounts  102,029  36,032
Dividends on equity securities  39,000  30,000
Interest on investment securities  88,915  76,049
Interest on mortgage loans held for sale  1,307,037  772,732
Interest and fees on loans held for investment  9,840,336  9,478,892
Total interest income  11,385,570  10,434,083
INTEREST EXPENSE:    
Interest on deposits  668,060  834,413
Interest on trust preferred subordinated debt  46,415  122,337
Interest on other borrowings  22,606  14,362
Total interest expense  737,081  971,112
NET INTEREST INCOME  10,648,489  9,462,971
PROVISION FOR LOAN LOSSES  250,000  --
     
NET INTEREST INCOME AFTER PROVISION    
FOR LOAN LOSSES  10,398,489  9,462,971
     
NON-INTEREST INCOME:    
Mortgage banking income  21,063,679  12,202,162
Service charges and fees  516,554  470,212
Title income  232,771  105,034
Investment and insurance income  344,126  445,472
Other income  109,033  85,771
Total non-interest income  22,266,163  13,308,651
NON-INTEREST EXPENSE:    
Salaries and employee benefits  9,594,276  8,271,561
Commissions and incentives  9,445,138  4,010,964
Occupancy and equipment  2,288,508  2,276,703
Loan expense  2,458,663  1,363,141
Marketing expense  746,227  521,841
Data processing  629,750  479,278
Telephone  325,746  311,137
Other expenses  1,689,524  1,512,008
Total non-interest expense  27,177,832  18,746,633
     
INCOME BEFORE TAXES  5,486,820  4,024,989
Income tax provision  (1,993,340)  (1,471,240)
NET INCOME  3,493,480  2,553,749
     
Less: Net income attributable to noncontrolling interest  (32,273)  (16,484)
NET INCOME ATTRIBUTABLE TO MONARCH    
FINANCIAL HOLDINGS, INC  $3,461,207  $2,537,265
     
NET INCOME PER COMMON SHARE:    
     
Basic  $ 0.32  $ 0.24
Diluted  $ 0.32  $ 0.24
     
Weighted average basic shares outstanding  10,728,206  10,572,435
Weighted average diluted shares outstanding  10,761,396  10,613,452
     
Return on average assets 1.31% 1.06%
Return on average stockholders' equity 12.98% 10.46%
 
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
 
(Dollars in thousands, For the Quarter Ended
 except per share data) March 31,  December 31,  September 30,  June 30, March 31, 
  2015 2014 2014 2014 2014
EARNINGS          
Interest income  $ 11,385  $ 11,361  $ 10,639  $ 10,557  $ 10,434
Interest expense  (737)  (786)  (928)  (977)  (971)
Net interest income  10,648  10,575  9,711  9,580  9,463
Provision for loan losses  (250)  --   --   --   -- 
Noninterest income - mortgage banking income  21,064  16,211  16,658  17,369  12,202
Noninterest income - other  1,202  1,162  1,241  1,130  1,106
Noninterest expense  (27,178)  (23,605)  (23,121)  (23,007)  (18,747)
Pre-tax net income  5,486  4,343  4,489  5,072  4,024
Minority interest in net income   (32)  (44)  (46)  (121)  (16)
Income taxes   (1,993)  (1,616)  (1,635)  (1,767)  (1,471)
Net income   $ 3,461  $ 2,683  $ 2,808  $ 3,184  $ 2,537
           
PER COMMON SHARE           
Earnings per share - basic  $ 0.32  $ 0.25  $ 0.26  $ 0.30  $ 0.24
Earnings per share - diluted  0.32  0.25  0.26  0.30  0.24
Common stock - per share dividends  0.08  0.08  0.08  0.08  0.07
Average Basic Shares Outstanding 10,728,206 10,648,184 10,635,275 10,620,869 10,572,435
Average Diluted Shares Outstanding 10,761,396 10,689,219 10,670,507 10,660,217 10,613,452
           
YIELDS          
Loans held for investment 5.21% 5.34% 5.16% 5.22% 5.50%
Mortgage loans held for sale, net at fair value 3.90 4.16 4.14 4.37 4.42
Other earning assets 1.31 1.33 1.16 1.04 0.79
Total earning assets 4.62 4.75 4.58 4.61 4.69
Interest bearing checking 0.13 0.14 0.15 0.17 0.16
Money market and regular savings 0.30 0.31 0.36 0.39 0.38
Time deposits 0.61 0.81 0.88 0.88 0.90
Borrowings 1.33 1.71 4.92 4.95 4.96
Total interest-bearing liabilities 0.43 0.48 0.57 0.60 0.60
Interest rate spread 4.19 4.27 4.01 4.01 4.09
Net interest margin 4.32 4.42 4.18 4.18 4.25
           
FINANCIAL RATIOS          
Return on average assets  1.31%   1.04%   1.11%   1.29%   1.06% 
Return on average stockholders' equity  12.98  10.03  10.72  12.63  10.46
Non-interest revenue/Total revenue  66.2  60.5  62.7  63.7  56.1
Efficiency - Consolidated  82.6  84.5  83.7  81.8  82.1
Efficiency - Bank only  66.2  61.2  61.7  63.9  59.9
Average equity to average assets  10.10  10.39  10.40  10.18  10.13
           
ALLOWANCE FOR LOAN LOSSES          
Beginning balance  $ 8,949  $ 8,977  $ 9,070  $ 9,213  $ 9,061
Provision for loan losses  250  --   --   --   -- 
Charge-offs  (598)  (174)  (181)  (184)  (12)
Recoveries  43  146  88  41  164
Net charge-offs  (555)  (28)  (93)  (143)  152
Ending balance  $ 8,644  $ 8,949  $ 8,977  $ 9,070  $ 9,213
           
COMPOSITION OF RISK ASSETS          
Nonperforming loans:          
90 days past due  $ 175  $ 175  $ 243  $ 499  $ 759
Nonaccrual loans 4,325 2,705 2,180 3,028 1,718
OREO 100 144 767 144 302
Nonperforming assets  $ 4,600  $ 3,024  $ 3,190  $ 3,671  $ 2,779
           
ASSET QUALITY RATIOS          
Nonperforming assets to total assets 0.39% 0.28% 0.31% 0.36% 0.27%
Nonperforming loans to total loans 0.57 0.37 0.34 0.50 0.35
Allowance for loan losses to total loans held for investment 1.10 1.16 1.26 1.30 1.29
Allowance for loan losses to nonperforming loans 192.09 310.73 370.49 257.16 371.94
Annualized net charge-offs to average loans held for investment 0.29 0.02 0.05 0.08 -0.09
           
AVERAGE BALANCES (Amounts in thousands)          
Total mortgage loans held for sale  $ 136,084  $ 131,471  $ 138,382  $ 116,851  $ 70,856
Total loans held for investment  771,587  725,093  701,137  698,851  704,917
Interest-earning assets  1,009,389  958,904  930,420  927,552  910,929
Assets  1,070,581  1,021,591  999,358  993,003  970,815
Total deposits  925,984  883,478  867,980  867,217  848,969
Other borrowings  21,049  14,575  11,124  11,150  11,174
Stockholders' equity  108,174  106,088  103,908  101,092  98,374
           
MORTGAGE PRODUCTION (Amounts in thousands)          
Dollar volume of mortgage loans closed  $ 487,423  $ 445,846  $ 440,784  $ 446,863  $ 271,233
Percentage of refinance based on dollar volume  47.0%   30.9%   16.0%   15.0%   19.1% 

            

Contact Data