MONARCH FINANCIAL HOLDINGS, INC. 
By CHESAPEAKE, Va., Jan. 26 /PRNewswire-FirstCall/ -- Monarch Financial Holdings , Inc. (Nasdaq: MNRK), the bank holding company for Monarch Bank, reported record annual and fourth quarter profitability, along with continued loan, deposit and asset growth. Annual and fourth quarter 2009 highlights are:
-- Record annual net income of $4,855,672, up 329% from 2008
-- 2009 Earnings per share $0.66, up from $0.21 one year prior
-- Record 4th quarter net income of $1,223,027
-- Addition of $20 million in new capital, repayment of U.S. Treasury TARP
Capital
-- Annual asset growth of $92 million, up 15.4%
-- Closed over $1.1 billion in mortgage loans in 2009
-- Non-performing assets 1.32% to total assets, remain significantly below
peer
Net income for 2009 was $4,855,672 compared to $1,132,883 for the previous year. The annualized return on average equity (ROE) was 7.55%, and the annualized return on average assets (ROA) was 0.75%. Year-to-date 2009 diluted earnings per share were $0.66, compared to $0.21 the previous year. The cost of repaying the U.S. Treasury preferred shares related to warrants issued reduced earnings per common share in the fourth quarter and year-to-date by $0.03 per share. For the fourth quarter of 2009, net income was $1,223,027, a major increase compared to the loss of ($1,534,678) for the same period in 2008. The quarterly annualized return on average equity (ROE) was 7.15 %, and the annualized return on average assets (ROA) was 0.73%. Quarterly diluted earnings per share were $0.13, an improvement over the fourth quarter of 2008 when the basic and diluted loss per share was ($0.28).
"We accomplished so much in a year that challenged all banks. We reached record profitability, fully repaid the U.S. Treasury preferred stock investment, and oversubscribed and raised $20 million in new capital. Monarch Mortgage had a record year for applications and closed mortgage loans, and was a major contributor to our performance. We produced these record results despite historically higher credit costs and approximately one million dollars in additional FDIC deposit insurance expense," stated Brad Schwartz, Chief Executive Officer of Monarch Bank.
Total assets at December 31, 2009 were $689 million, up $92 million or 15.4% from $597 million one year prior. Total loans held for investment increased $33 million to $538 million, up 6.5% from 2008. Mortgage loans held for sale increased $25 million to $79 million, up 45.3% from 2008. Deposits increased $44 million to $540 million, up 8.9% from 2008. Borrowings also grew in 2009, primarily to fund growth in our mortgage pipeline. "Our growth and overall performance further differentiates us from our competitors, and positions us for growth opportunities in 2010 and beyond," stated Neal Crawford, President of Monarch Bank.
The company continues to experience better asset quality performance than its local and national peer group. Non-performing assets represented 1.32% of total assets at year end 2009, down from 1.35% on December 31, 2008. There was one $203,000 loan 90 days or more past due and still accruing, $6.8 million in non-accrual loans, and $2.1 million in other real estate owned. The Company was aggressive in recognizing losses and disposing of non-performing assets throughout the year. The allowance for loan losses represents 1.73% of total loans held for investment, compared to 1.59% one year earlier.
Monarch repaid in full $14.7 million in preferred stock issued under the U.S. Treasury's CPP/TARP program in late December 2009. The company also issued $20 Million in new convertible preferred stock in December 2009. Equity to assets was 9.86% as of December 31, 2009, compared to 10.03% one year prior. Total risk-based capital to risk weighted assets equaled 14.21%, significantly higher than what is required to be meet "Well Capitalized" standards, the highest rating of capital strength by bank regulatory standards.
Net interest income increased 36.8% or $5.9 million in 2009 compared to 2008 due to a combination of improved asset yields, earning asset growth, and declines in funding costs. The net interest margin improved to 3.64% for 2009 compared to 3.11% in 2008, with the net interest margin improving to 3.99% for the fourth quarter of 2009 compared to 2.83% for the same period in 2008.
Non-interest income grew 80% from the same period in 2008, fueled by increased production at Monarch Mortgage and growth in banking fee income. Non-interest income represented 52% of total revenues in 2009, compared to 39% in 2008. Monarch Mortgage closed $1.19 Billion in mortgage loans in 2009, up from $577 million in 2008. Monarch Mortgage is focused on the retail A-paper mortgage market and does not participate in the sub-prime or wholesale mortgage markets. Non-interest expense grew 55%, with the majority of the increase related to the expansion and increased production of Monarch Mortgage and a 333% or close to a one million dollar increase in FDIC insurance expense.
Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with eight banking offices in Chesapeake, Virginia Beach, and Norfolk, 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 and business internet banking (monarchbank.com). Monarch Mortgage and our affiliated mortgage companies have twenty-three offices with locations in Virginia, North Carolina, Maryland, and South Carolina. Our subsidiaries/divisions include Monarch Bank, OBX Bank, Monarch Mortgage (secondary mortgage origination), Coastal Home Mortgage, LLC (secondary mortgage origination), Home Mortgage Solutions, 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".
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
--------
2009 2008
---- ----
ASSETS:
Cash and due from banks $17,130 $8,418
Interest bearing bank balances 2,541 112
Federal funds sold 14,680 66
Investment securities:
Securities available for sale 7,190 5,847
Securities held to maturity - 500
--- ---
Total investment securities 7,190 6,347
----- -----
Mortgage loans held for sale 78,998 54,369
Loans 537,700 504,712
Less: allowance for loan losses (9,300) (8,046)
------ ------
Net loans 528,400 496,666
------- -------
Bank premises and equipment 8,973 8,386
Restricted equity securities 7,020 3,575
Bank owned life insurance 7,050 6,788
Goodwill 775 775
Intangible assets 818 997
Accrued interest receivable and other
assets 15,764 10,699
------ ------
Total assets $689,339 $597,198
======== ========
LIABILITIES:
Demand deposits--non-interest bearing $76,169 $78,894
Demand deposits--interest bearing 19,671 15,363
Money market deposits 157,309 129,287
Savings deposits 22,812 20,444
Time deposits 264,078 252,098
------- -------
Total deposits 540,039 496,086
FHLB borrowings 66,159 27,675
Federal funds purchased - 385
Trust preferred subordinated debt 10,000 10,000
Accrued interest payable and other
liabilities 5,164 3,164
----- -----
Total liabilities 621,362 537,310
------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $5 par value, 1,185,300
shares authorized,
none issued - -
Noncumulative perpetual preferred stock,
series B,
$25 par value,
800,000 issued and outstanding 20,000 -
Cumulative perpetual preferred stock,
series A,
$1,000 par value,
14,700 issued, 0 outstanding at December
31, 2009 - 14,700
14,700 issued and outstanding December
31, 2008
Unearned discount on Series A cumulative
perpetual - (219)
preferred stock
Common stock, $5 par, 20,000,000 shares
authorized, issued
5,865,534 shares outstanding at December
31, 2009 and
5,735,007 shares outstanding at December
31, 2008 29,328 28,675
Capital in excess of par value 6,345 8,066
Retained earnings 12,360 8,528
Accumulated other comprehensive income (163) 27
---- ---
Total Monarch Financial Holdings, Inc.
stockholders' equity 67,870 59,777
Noncontrolling interest 107 111
--- ---
Total equity 67,977 59,888
------ ------
Total liabilities and stockholders' equity $689,339 $597,198
======== ========
Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
Three Months Ended Year Ended
December 31 December 31
----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
INTEREST INCOME:
Interest on federal funds
sold $8,707 $6,374 $18,694 $23,818
Interest on other bank
accounts 264 493 2,166 65,533
Dividends on restricted
securities 20,753 27,480 101,306 189,686
Interest and dividends
on investment
securities 53,351 115,898 234,890 483,547
Interest and
fees on loans 8,388,129 7,282,011 32,160,603 30,104,748
--------- --------- ---------- ----------
Total interest
income 8,471,204 7,432,256 32,517,659 30,867,332
--------- --------- ---------- ----------
INTEREST EXPENSE:
Interest on
deposits 1,838,039 3,201,624 8,987,757 12,673,382
Interest on trust
preferred
subordinated debt 122,850 135,537 328,066 520,326
Interest on
other borrowings 240,337 249,824 1,105,335 1,522,275
------- ------- --------- ---------
Total interest
expense 2,201,226 3,586,985 10,421,158 14,715,983
--------- --------- ---------- ----------
NET INTEREST INCOME 6,269,978 3,845,271 22,096,501 16,151,349
PROVISION FOR
LOAN LOSSES 1,098,811 3,769,463 5,183,747 5,014,076
--------- --------- --------- ---------
NET INTEREST INCOME
AFTER PROVISION
FOR LOAN LOSSES 5,171,167 75,808 16,912,754 11,137,273
--------- ------ ---------- ----------
NON-INTEREST INCOME:
Service charges on
deposit accounts 448,882 348,712 1,501,690 1,370,229
Mortgage banking
income 8,574,896 4,475,397 32,476,932 16,471,341
Investment and
insurance
commissions 71,989 286,513 749,422 1,277,608
Security
gains, net - (67,229) - (56,428)
Other income 12,198 109,814 906,213 741,435
------ ------- ------- -------
Total non-interest
income 9,107,965 5,153,207 35,634,257 19,804,185
--------- --------- ---------- ----------
NON-INTEREST EXPENSE:
Salaries and
employee benefits 8,477,889 4,785,974 30,832,738 19,008,912
Occupancy and
equipment 1,077,931 857,084 3,871,050 3,401,452
Loan expense 1,258,240 611,340 3,798,963 1,922,651
Data processing 181,100 179,817 781,681 669,135
FDIC insurance 204,318 86,809 1,290,073 298,019
Other expenses 1,201,534 1,042,876 4,459,839 3,722,676
--------- --------- --------- ---------
Total non-interest
expense 12,401,012 7,563,900 45,034,344 29,022,845
---------- --------- ---------- ----------
INCOME BEFORE TAXES 1,878,120 (2,334,885) 7,512,667 1,918,613
Income tax
provision 619,200 (823,000) 2,452,970 504,500
------- -------- --------- -------
NET INCOME 1,258,920 (1,511,885) 5,059,697 1,414,113
Less: Net income
attributable to
noncontrolling
interest (35,893) (22,793) (204,025) (281,230)
------- ------- -------- --------
NET INCOME ATTRIBUTABLE
TO MONARCH FINANCIAL
HOLDINGS, INC $1,223,027 $(1,534,678) $4,855,672 $1,132,883
---------- ----------- ---------- ----------
Preferred stock
dividend and
accretion of
preferred
stock discount 476,156 - 1,062,963 -
------- --- --------- ---
NET INCOME
AVAILABLE TO
COMMON
STOCKHOLDERS $746,871 $(1,534,678) $3,792,709 $1,132,883
======== =========== ========== ==========
NET INCOME PER COMMON
SHARE:
Basic $0.13 $(0.28) $0.67 $0.21
Diluted $0.13 $(0.28) $0.66 $0.21
Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
(Dollars in thousands,
except per share data) Three Months Ended December 31
2009 2008 Change
---- ---- ------
EARNINGS
14.0
Interest income $8,471 $7,432 %
Interest expense 2,201 3,587 (38.6)
Net interest income 6,270 3,845 63.1
Provision for loan losses 1,099 3,769 (70.8)
Noninterest income 9,108 5,153 76.8
Noninterest expense 12,401 7,563 64.0
Pre-tax net income (loss) 1,878 (2,334) 180.5
Minority interest in net
income 36 23 56.5
Income taxes (benefit) 619 (823) 175.2
Net income 1,223 (1,534) 179.7
PER COMMON SHARE
146.4
Earnings per share - basic $0.13 $(0.28) %
Earnings per share -diluted 0.13 (0.28) 146.4
Book value
Tangible book value
Closing market price
(adjusted)
FINANCIAL RATIOS
820.0
Return on average assets 0.72 % (0.10) % %
Return on average
stockholders' equity 7.08 (12.53) 156.5
Net interest margin (FTE) 3.99 2.83 41.0
Non-interest revenue/Total
revenue 51.8 40.9 26.7
Efficiency - Consolidated 80.3 83.6 (3.9)
Efficiency - Bank only 64.8 75.5 (14.2)
Average equity to average
assets 10.20 8.33 22.4
Total risk based capital -
Consolidated
Total risk based capital -
Bank only
PERIOD END BALANCES
Total loans held for sale
Total loans held for
investment
Interest-earning assets
Assets
Total deposits
Other borrowings
Stockholders' equity
AVERAGE BALANCES
Total loans held for
investment $525,587 $502,294 4.6 %
Interest-earning assets 633,854 552,934 14.6
Assets 672,620 584,480 15.1
Total deposits 532,644 492,195 8.2
Other borrowings 48,186 29,093 65.6
Stockholders' equity 68,575 48,713 40.8
ALLOWANCE FOR LOAN LOSSES
91.3
Beginning balance $9,550 $4,991 %
Provision for loan losses 1,099 3,769 (70.8)
Charge-offs 1,359 738 84.1
Recoveries 10 24 (58.3)
Ending balance 9,300 8,046 15.6
Net charge-off loans to
average loans 0.26 0.14 80.6
ASSET QUALITY RATIOS
Nonperforming assets to total
assets
Allowance for loan losses to
total loans
Allowance for loan losses to
nonperforming loans
COMPOSITION OF RISK ASSETS
Nonperforming loans:
90 days past due
Nonaccrual
OREO
Nonperforming assets
(Dollars in thousands,
except per share data) Year Ended December 31,
2009 2008 Change
---- ---- ------
EARNINGS
Interest income $32,518 $30,867 5.3 %
Interest expense 10,421 14,716 (29.2)
Net interest income 22,097 16,151 36.8
Provision for loan losses 5,184 5,014 3.4
Noninterest income 35,634 19,804 79.9
Noninterest expense 45,034 29,022 55.2
Pre-tax net income (loss) 7,513 1,919 291.5
Minority interest in net
income 204 281 (27.4)
Income taxes (benefit) 2,453 505 385.7
Net income 4,856 1,133 328.6
PER COMMON SHARE
219.0
Earnings per share - basic $0.67 $0.21 %
Earnings per share -diluted 0.66 0.21 214.3
Book value 8.18 7.92 3.3
Tangible book value 7.91 7.61 3.9
Closing market price
(adjusted) 6.10 6.75 (9.6)
FINANCIAL RATIOS
275.0
Return on average assets 0.75 % 0.20 % %
Return on average
stockholders' equity 7.55 2.66 183.8
Net interest margin (FTE) 3.64 3.11 17.0
Non-interest revenue/Total
revenue 52.3 39.1 33.8
Efficiency - Consolidated 77.7 80.2 (3.1)
Efficiency - Bank only 58.2 71.7 (18.8)
Average equity to average
assets 9.90 7.67 29.1
Total risk based capital -
Consolidated 14.21 14.79 (3.9)
Total risk based capital -
Bank only 10.82 11.87 (8.8)
PERIOD END BALANCES
45.3
Total loans held for sale $78,998 $54,369 %
Total loans held for
investment 537,700 504,712 6.5
Interest-earning assets 647,829 568,463 14.0
Assets 689,339 597,198 15.4
Total deposits 540,039 496,086 8.9
Other borrowings 77,159 38,060 102.7
Stockholders' equity 67,977 59,888 13.5
AVERAGE BALANCES
Total loans held for
investment $515,903 $477,016 8.2 %
Interest-earning assets 618,431 530,420 16.6
Assets 649,356 555,212 17.0
Total deposits 513,386 455,670 12.7
Other borrowings 54,214 43,556 24.5
Stockholders' equity 64,300 42,573 51.0
ALLOWANCE FOR LOAN LOSSES
102.4
Beginning balance $8,046 $3,976 %
Provision for loan losses 5,184 5,014 3.4
Charge-offs 4,022 1,033 289.4
Recoveries 92 89 3.4
Ending balance 9,300 8,046 15.6
Net charge-off loans to
average loans 0.76 0.20 284.9
ASSET QUALITY RATIOS
Nonperforming assets to total
assets 1.32 % 1.35 % (3.0) bp
Allowance for loan losses to
total loans 1.73 1.59 13.5 bp
23.7
Allowance for loan losses to 132.59 107.19 %
nonperforming loans
COMPOSITION OF RISK ASSETS
Nonperforming loans:
100.0
90 days past due $203 $- %
Nonaccrual 6,811 7,506 (9.3)
OREO 2,116 533 297.0
----- ---
13.6
Nonperforming assets 9,130 8,039 %
===== =====
bp - Change is measured as difference in basis points.
SOURCE Monarch Financial Holdings, Inc.
