Monarch Financial Reports Record Profitability and Declares Cash Dividend

CHESAPEAKE, Va., Jan. 27, 2016 (GLOBE NEWSWIRE) -- Monarch Financial Holdings, Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported record annual and increased fourth quarter profits, as well as strong loan and deposit growth. 

The Board of Directors announced a quarterly common stock cash dividend of $0.09 per common share, payable on February 26, 2016, to shareholders of record on February 12, 2016.  This quarterly payment represents a 24% increase over the dividend paid in first quarter of 2015 due to an increased payment amount and the effect of the December 2015 11-for-10 stock split.  The amount and declaration of future cash dividends is subject to Board of Director's approval in addition to regulatory restrictions.  All earnings per share and share totals have been restated to reflect the recent 11-for-10 stock split.

Annual 2015 highlights are:

• Record net income of $13,214,821, up 17.9%
• Diluted earnings per share of $1.11, up 15.6%
• Return on equity of 11.71%
• Net loans held for investment growth of $57 million, up 7.4%
• Net deposit growth of $80 million, up 8.7%
• $2.09 billion in mortgage loans closed, up 30.2%

Fourth quarter 2015 highlights are:

• Net income of $3,202,041, up 19.3%
• Diluted earnings per share of $0.27, up 17.4%
• Return on equity of 10.89%
• Net interest margin increased to 4.34%
• Loans held for investment grew $38 million
• Non-performing assets at 0.19% of total assets
• $469 million in mortgage loans closed, 76% purchase money

“We are pleased to report the best year of profitability in our 17 year history, a new record.  Our banking, mortgage and private wealth businesses continue to perform well with growth across all segments.  A strong net interest margin, robust mortgage production, loan and demand deposit growth, zero credit costs, and a focus on expense management continue to drive our above peer bottom line results.” stated Brad E. Schwartz, Chief Executive Officer.  “From a shareholder perspective earnings per share were up 16% for the year, cash dividends paid grew by 13% year over year, and our net income available to common shareholders reached record levels.  The announcement of our merger with TowneBank, expected to be completed by the end of the second quarter of 2016, drove a total shareholder return of 41% for the year.  We are excited about the integration of the two very strong banking franchises, with Monarch directors and employees expected to play a key role in the combined company.”

Record net income was $13,214,821 for 2015 compared to $11,211,850 in 2014, an increase of $2,002,971, or 17.9% over the previous year.  The annualized return on average equity (ROE) was 11.71%, and the return on average assets (ROA) was 1.20%.  Diluted earnings per share were $1.11, up 15.6% when compared to $0.96 for 2014. 

Net income was $3,202,041 for the fourth quarter of 2015, up 19.3% from the same period one year ago.  The quarterly annualized return on average equity (ROE) was 10.89%, and the quarterly return on average assets (ROA) was 1.16%.  Quarterly diluted earnings per share increased to $0.27 compared to $0.23 for the same quarter in 2014. 

Total assets at December 31, 2015 were $1.16 billion, with both loans and deposits showing strong year over year growth.  Year over year total loans held for investment grew $57 million or 7.4% and mortgage loans held for sale grew $22 million or 14.7%.  Deposits grew $79.7 million or 8.7% for the year, driven by growth in demand deposit accounts and time deposits.  Demand deposit accounts grew $47 million or 15.6% for the year, with 35% of our total deposit mix in demand deposits. 

“Loan growth increased dramatically late in the year driven by new loan volume as well as existing loan funding.  Even with the recent merger announcement our bankers continue to attract quality banking relationships that value our client-focused style of doing business.” stated Neal Crawford, President of Monarch Bank.  

Non-performing assets to total assets were 0.19% compared to 0.28% one year prior, which continues to remain significantly below that of our local, state, and national peer group.  This is the lowest level of non-performing assets reported at year end since 2007.  Non-performing assets were $2.2 million compared to $3.0 million at year end 2014.  Non-performing assets were comprised of $2.0 million in non-accrual loans, $248 thousand in loans more than 90 days past due, and no other real estate or repossessed assets.  Net charge-offs for the year were a negligible $65 thousand, with a large recovery of $724 thousand in the fourth quarter driving a reversal of $500 thousand in provision expense charged earlier in the year.  The allowance for loan losses represents 1.07% of loans held for investment and 397% of non-performing loans.

The Board of Directors announced a quarterly common stock cash dividend of $0.09 per common share, payable on February 26, 2016, to shareholders of record on February 12, 2016.  Due to the 11-for-10 stock split effected as a 10% stock dividend effective on December 4, 2015, the dividend represents a 10% increase in cash dividends over the previous quarterly dividend and a 24% increase over the dividend paid in the first quarter of 2015.  Total dividend payments on a per share basis increased 13% in 2015 when compared to 2014.  We have increased our cash dividend payout every year since we began paying cash dividends in 2010. 

Average equity to average assets was 10.6%, and total risk-based capital to risk weighted assets at Monarch Bank equaled 13.60%, 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, our number one driver of profitability, increased for the full year by 12.5% driven by increased earning assets and management of our funding costs.   Net interest income increased 6.5% or $684 thousand during the fourth quarter of 2015.  An improved mix of earning assets in the fourth quarter along with higher loan fee recognition drove the improved fourth quarter performance.  The net interest margin was 4.34% for the fourth quarter compared to 4.19% in the third quarter of 2015 and 4.42% in the fourth quarter of 2014. 

Non-interest income in the fourth quarter increased 6.4% or $1.1 million from the previous year driven by increased revenues from mortgage loans sold, title insurance fees, investment and insurance revenue, service charges, and commercial mortgage placement fees.  Mortgage revenue continues to be the number one driver of non-interest income.  We closed $469 million in mortgage loans (76% purchase) during the fourth quarter of 2015 compared to $446 million (69% purchase) in the same quarter one year prior.  We closed $2.09 billion in mortgage loans (72% purchase) during 2015 compared to $1.60 billion (80% purchase) in 2014, an increase of 30%.  Total non-interest expense increased 6.6% or $1.6 million during the fourth quarter due to higher mortgage commissions, salaries and benefits expenses.  During the fourth quarter of 2015 we expensed $457,000 of merger related legal and investment banking expenses.

“The year 2015 was the second best year in our history for total closings, and a record year for mortgage purchase loan closings.  We closed $2.1 billion representing 7,996 loans.  We also had a good fourth quarter for mortgage originations and closings despite the new disclosure regulations that have slowed many of our competitors.” 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), Fitzgerald Financial, LLC (secondary mortgage origination), Advance 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”.  On December 17, 2015 we announced the acquisition of Monarch Financial Holdings, Inc. and Monarch Bank by TowneBank of Portsmouth, Virginia. 

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.