CHESAPEAKE, Va., April 19, 2012 (GLOBE NEWSWIRE) -- Monarch Financial Holdings, Inc. (Nasdaq:MNRK) (Nasdaq:MNRKP), the bank holding company for Monarch Bank, reported their best all-time and first quarter profits in the Company's history. First quarter 2012 highlights are:
- Record 1st quarter net income of $2,516,106, up 83%
- Net income available to common shareholders up 116%
- Basic earnings per share of $0.36, up 125%
- Asset growth of $29 million, up 3.2% for quarter
- Deposit growth of $72 million, up 9.7%
- Non-performing assets remain low at 1.20% of total assets
- $547 million in mortgage loans closed
"The first quarter of 2012 was the most profitable period in Monarch's history, and only the second time we have exceeded $2 million in quarterly net income. The leading driver of this improvement was our mortgage group closing almost $550 million in loans during what is typically a slow period in the mortgage industry. Expanded mortgage production along with strong net interest income at the bank drove these record results," stated Brad E. Schwartz, Chief Executive Officer. "Our asset quality remained strong and considerably better than our regional and national peers. All of this created a noteworthy increase in the return to our shareholders, with our basic earnings per share more than doubling from the same period last year."
Net income was $2,516,106 for the first quarter of 2012, up 83% from the same period in 2011, which was the Company's previous record first quarter with $1,373,257 in net income. The quarterly annualized return on average equity (ROE) was 13.10%, and the quarterly return on average assets (ROA) was 1.10%. Quarterly basic earnings per share were $0.36, compared to $0.16 per share in the same quarter of 2011, a 125% improvement. Diluted earnings per share were $0.30, compared to $0.16 per share in the same quarter of 2011, an 88% improvement.
Total assets at March 31, 2012 increased to $937.8 million driven by increases in mortgage loans held for sale at quarter-end. Portfolio loans held for investment grew $32 million year over year. Deposits increased $142 million year over year, with growth focused on checking and time deposit accounts. We also reduced other borrowings year over year as we have focused on core deposits to fund the majority of our balance sheet while we continue to use short-term non-core funding to support fluctuations in our short-term loans held for sale portfolio. This funding strategy, coupled with our focus on generating commercial demand deposits with our cash management team, continues to drive down our overall funding costs and liability risk.
"We remain open for lending to credit-worthy clients at both Monarch Bank and OBX Bank, and we have remained open for business throughout the recent economic downturn. We booked $35 million in new loans during the first quarter of this year, and are well positioned to compete with both larger banks as well as our community bank competitors, for loans, deposits and cash management services," stated Neal Crawford, President of Monarch Bank. "While we can deliver the breadth and depth of products and services a business may need, our real strength is our bankers and our client-focused approach to doing business."
Non-performing assets were 1.20%, which is significantly below that of our local, state, and national peer group. This was down from 1.26% reported one year ago, and up slightly from year end 2011. Non-performing assets were $11.3 million, comprised of $1.7 million in loans 90 days or more past due and still accruing interest, $7.3 million in non-accrual loans and $2.2 million in other real estate owned. There were only three residential properties held at quarter end in other real estate owned.
The Company was aggressive in recognizing losses and disposing of non-performing assets during the quarter. Provision expense for the first quarter was $1.9 million compared to $1.0 million for the same period in 2011. One commercial loan relationship represented $1.0 million of the loans charged off during the quarter, after a client lost their primary vendor contract and closed down the business. The allowance for loan losses represents 1.74% of total loans held for investment and 115% of non-performing loans.
Average equity to average assets was 8.37% during the first quarter of 2012, down from 9.13% one year prior. Total risk-based capital to risk weighted assets equaled 12.51%, significantly higher than what is required to meet the highest rating of "Well Capitalized" by federal banking regulators. Monarch again was 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 24.4% or $1,865,198 during the first quarter of 2012 compared to the same quarter in 2011. The net interest margin improved to 4.47% compared to 4.23% in 2011, primarily driven by a lower cost of funds. The higher volume of lower rate mortgage loans held for sale, while providing incremental interest income, also contributed to a slight decline in this ratio since the end of 2011.
Mortgage revenue continues to be the number one driver of non-interest revenue. Monarch Mortgage and related mortgage companies closed $547 million in mortgage loans during the quarter, which was a new Company record. Non-interest income grew by $7.7 million over the previous year, while non-interest expenses grew by $6.8 million, reducing our net overhead by $946 thousand over the previous year.
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 Suffolk, Virginia. OBX Bank, a division of Monarch Bank, operates offices in Kitty Hawk and Nags Head, North Carolina. Services are also provided through over fifty ATMs located in the South Hampton Roads area and the Outer Banks of North Carolina, and "Monarch Online" consumer, mobile and business internet banking (monarchbank.com). Monarch Mortgage and our affiliated mortgage companies have over twenty 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), Monarch Home Funding, LLC (secondary mortgage origination), 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", and shares of our convertible preferred stock are publicly traded on the Nasdaq Capital Market under the symbol "MNRKP".
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, | March 31, | |
| 2012 | 2011 | 2011 | |
| ASSETS: | |||
| Cash and due from banks | $ 19,976 | $ 20,091 | $ 14,650 |
| Interest bearing bank balances | 17,075 | 1,467 | 1,088 |
| Federal funds sold | 1,644 | 10,188 | 35,398 |
| Investment securities, at fair value | 8,841 | 9,187 | 43,542 |
| Loans held for sale | 243,179 | 211,555 | 95,306 |
| Loans held for investment, net of unearned income | 598,358 | 607,612 | 566,456 |
| Less: allowance for loan losses | (10,400) | (9,930) | (9,503) |
| Net loans | 587,958 | 597,682 | 556,953 |
| Bank premises and equipment, net | 23,086 | 23,094 | 22,561 |
| Restricted equity securities, at cost | 7,242 | 6,421 | 8,859 |
| Bank owned life insurance | 7,007 | 6,946 | 7,403 |
| Goodwill | 775 | 775 | 775 |
| Intangible assets, net | 417 | 461 | 595 |
| Accrued interest receivable and other assets | 20,621 | 20,920 | 14,488 |
| Total assets | $ 937,821 | $ 908,787 | $ 801,618 |
| LIABILITIES: | |||
| Demand deposits--non-interest bearing | $ 149,520 | $ 133,855 | $ 103,434 |
| Demand deposits--interest bearing | 43,282 | 40,930 | 33,369 |
| Money market deposits | 297,285 | 269,750 | 298,134 |
| Savings deposits | 17,262 | 17,916 | 19,772 |
| Time deposits | 304,333 | 277,641 | 215,118 |
| Total deposits | 811,682 | 740,092 | 669,827 |
| FHLB borrowings | 19,767 | 70,927 | 41,450 |
| Federal funds purchased | 4,350 | -- | -- |
| Trust preferred subordinated debt | 10,000 | 10,000 | 10,000 |
| Accrued interest payable and other liabilities | 13,241 | 10,921 | 7,487 |
| Total liabilities | 859,040 | 831,940 | 728,764 |
| STOCKHOLDERS' EQUITY: | |||
|
Preferred stock, $5 par value, 1,185,300 shares authorized; none issued |
-- | -- | -- |
|
Noncumulative perpetual preferred stock, series B, liquidation value of $20.0 million, $5 par value; 800,000 shares authorized, issued and outstanding |
4,000 | 4,000 | 4,000 |
|
Common stock, $5 par, 20,000,000 shares authorized; issued - 5,981,489 shares (includes nonvested shares of 87,550) at March 31, 2012 and 5,999,989 shares (includes nonvested shares of 83,550) at December 31, 2011 and 5,965,339 shares at March 31, 2010 |
29,469 | 29,582 | 29,827 |
| Capital in excess of par value | 22,616 | 22,476 | 22,251 |
| Retained earnings | 22,424 | 20,538 | 16,908 |
| Accumulated other comprehensive loss | (342) | (363) | (286) |
| Total Monarch Financial Holdings, Inc. stockholders' equity | 78,167 | 76,233 | 72,700 |
| Noncontrolling interest | 614 | 614 | 154 |
| Total equity | 78,781 | 76,847 | 72,854 |
| Total liabilities and stockholders' equity | $ 937,821 | $ 908,787 | $ 801,618 |
| Consolidated Statements of Income | ||
| Monarch Financial Holdings, Inc. and Subsidiaries | ||
| Unaudited | ||
| Three Months Ended | ||
| March 31, | ||
| 2012 | 2011 | |
| INTEREST INCOME: | ||
| Interest on federal funds sold | $ 6,259 | $ 27,041 |
| Interest on other bank accounts | 3,548 | 1,075 |
| Dividends on equity securities | 37,500 | 32,515 |
| Interest on investment securities | 46,231 | 40,551 |
| Interest and fees on loans | 10,881,036 | 9,443,210 |
| Total interest income | 10,974,574 | 9,544,392 |
| INTEREST EXPENSE: | ||
| Interest on deposits | 1,281,787 | 1,757,675 |
| Interest on trust preferred subordinated debt | 122,850 | 121,500 |
| Interest on other borrowings | 62,507 | 22,985 |
| Total interest expense | 1,467,144 | 1,902,160 |
| NET INTEREST INCOME | 9,507,430 | 7,642,232 |
| PROVISION FOR LOAN LOSSES | 1,930,679 | 1,001,454 |
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
7,576,751 | 6,640,778 |
| NON-INTEREST INCOME: | ||
| Mortgage banking income | 16,584,211 | 9,004,237 |
| Service charges and fees | 414,051 | 386,320 |
| Other income | 397,746 | 303,949 |
| Total non-interest income | 17,396,008 | 9,694,506 |
| NON-INTEREST EXPENSE: | ||
| Salaries and employee benefits | 6,630,518 | 5,357,145 |
| Commissions and incentives | 8,732,201 | 3,893,359 |
| Occupancy and equipment | 1,599,081 | 1,387,033 |
| Loan expense | 1,615,131 | 1,355,423 |
| Marketing expense | 410,291 | 273,756 |
| Data processing | 345,990 | 305,833 |
| Other expenses | 1,548,598 | 1,553,206 |
| Total non-interest expense | 20,881,810 | 14,125,755 |
| INCOME BEFORE TAXES | 4,090,949 | 2,209,529 |
| Income tax provision | (1,421,541) | (699,474) |
| NET INCOME | 2,669,408 | 1,510,055 |
| Less: Net income attributable to noncontrolling interest | (153,302) | (136,798) |
|
NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC. |
$2,516,106 | $ 1,373,257 |
|
Preferred stock dividend and accretion of preferred stock discount |
(390,000) | (390,000) |
|
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS |
$2,126,106 | $ 983,257 |
| NET INCOME PER COMMON SHARE: | ||
| Basic | $ 0.36 | $ 0.16 |
| Diluted | $ 0.30 | $ 0.16 |
| Financial Highlights | ||
| Monarch Financial Holdings, Inc. and Subsidiaries | ||
|
(Dollars in thousands, except per share data) |
Three Months Ended March 31, | |
| 2012 | 2011 | |
| EARNINGS | ||
| Interest income | $ 10,975 | $ 9,544 |
| Interest expense | 1,467 | 1,902 |
| Net interest income | 9,508 | 7,642 |
| Provision for loan losses | 1,931 | 1,001 |
| Noninterest income | 17,396 | 9,694 |
| Noninterest expense | 20,882 | 14,126 |
| Pre-tax net income | 4,091 | 2,209 |
| Minority interest in net income | 153 | 137 |
| Income taxes | 1,422 | 699 |
| Net income | 2,516 | 1,373 |
| PER COMMON SHARE | ||
| Earnings per share - basic | $ 0.36 | $ 0.16 |
| Earnings per share - diluted | 0.30 | 0.16 |
| Common stock - per share dividends | 0.04 | -- |
| Book value | 9.83 | 8.86 |
| Tangible book value | 9.62 | 8.63 |
| Closing market price (adjusted) | 8.74 | 8.39 |
| Average Basic Shares Outstanding | 5,981,489 | 5,754,299 |
| Average Diluted Shares Outstanding | 8,503,151 | 8,359,255 |
| FINANCIAL RATIOS | ||
| Return on average assets | 1.10 % | 0.71 % |
| Return on average stockholders' equity | 13.10 | 7.74 |
| Net interest margin (FTE) | 4.47 | 4.27 |
| Non-interest revenue/Total revenue | 61.3 | 50.4 |
| Efficiency - Consolidated | 77.4 | 81.2 |
| Efficiency - Bank only | 51.4 | 57.4 |
| Average equity to average assets | 8.37 | 9.13 |
| Total risk based capital - Consolidated | 12.51 | 13.56 |
| Total risk based capital - Bank only | 12.58 | 12.97 |
| PERIOD END BALANCES | ||
| Total loans held for sale | $ 243,179 | $ 95,306 |
| Total loans held for investment | 598,358 | 566,456 |
| Interest-earning assets | 875,986 | 758,052 |
| Assets | 937,821 | 801,618 |
| Total deposits | 811,682 | 669,827 |
| Other borrowings | 34,117 | 51,450 |
| Stockholders' equity | 78,781 | 72,854 |
| AVERAGE BALANCES | ||
| Total loans held for sale | $ 234,185 | $ 107,148 |
| Total loans held for investment | 601,282 | 562,212 |
| Interest-earning assets | 863,782 | 743,155 |
| Assets | 923,331 | 787,752 |
| Total deposits | 793,679 | 688,967 |
| Other borrowings | 34,454 | 13,773 |
| Stockholders' equity | 77,251 | 71,929 |
| ALLOWANCE FOR LOAN LOSSES | ||
| Beginning balance | $ 9,930 | $ 9,038 |
| Provision for loan losses | 1,931 | 1,001 |
| Charge-offs | 1,494 | 597 |
| Recoveries | 33 | 61 |
| Ending balance | 10,400 | 9,503 |
| Net charge-off loans to average loans | 0.24 | 0.10 |
| ASSET QUALITY RATIOS | ||
| Nonperforming assets to total assets | 1.20 % | 1.26 % |
| Allowance for loan losses to total loans held for investment | 1.74 | 1.68 |
| Allowance for loan losses to nonperforming loans | 114.70 | 119.97 |
| COMPOSITION OF RISK ASSETS | ||
| Nonperforming loans: | ||
| 90 days past due | $ 1,736 | $ 430 |
| Nonaccrual & Restructured debt | 7,331 | 7,491 |
| OREO | 2,232 | 2,176 |
| Nonperforming assets | 11,299 | 10,097 |