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Monarch Financial Reports Record 2nd Quarter and Declares Cash Dividend

20:00 EDT 22 Jul 2015 | Globe Newswire

CHESAPEAKE, Va., July 23, 2015 (GLOBE NEWSWIRE) -- Monarch Financial Holdings, Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported record second quarter profit and continued strong financial performance. The Board of Directors announced a quarterly common stock cash dividend of $0.09 per common share, payable on August 31, 2015, to shareholders of record on August 7, 2015.

Second quarter 2015 highlights are:

  • 2nd quarter net income of $3,423,829, up 7.5%
  • Return on Equity of 12.28%
  • Net Interest Margin remained strong at 4.28%
  • Diluted earnings per share of $0.32
  • Non-performing assets at 0.23% of total assets
  • $605 million in mortgage loans closed, 76% purchase money

Year to date 2015 highlights are:

  • Net income of $6,885,036, up 20.4%
  • Return on Equity of 12.62%
  • Diluted earnings per share of $0.64

“We are pleased to report a record second quarter, as well as record results for the first six months of the year.  Driving these gains is our mortgage operation, which closed over $1.09 billion in loans during the first half of the year, another first half of the year record.  These higher mortgage loan closings, minimal credit costs, and a strong net interest margin continued to drive our bottom line results,” stated Brad E. Schwartz, Chief Executive Officer.  “From a shareholder perspective our earnings per share are up over 18% for the year, we recently increased our cash dividend payout by 12.5%, and we were ranked as the 18th top performing community bank in the country.  We are extremely pleased with our past performance, our national ranking, and our future opportunities for growing the Monarch franchise.”

Net income was $3,423,829 for the second quarter of 2015, a record second quarter for the company, up 7.5% from the same period one year ago.  The quarterly annualized return on average equity (ROE) was 12.28%, and the quarterly return on average assets (ROA) was 1.22%.  Quarterly diluted earnings per share increased to $0.32, compared to $0.30 for the same quarter in 2014. 

Net income was $6,885,036 for the first six months of 2015, up 20.4% from the previous year.  The annualized return on average equity (ROE) was 12.62%, and the quarterly return on average assets (ROA) was 1.26%.  Diluted earnings per share were $0.64, compared to $0.54 for the same period in 2014. 

Total assets at June 30, 2015 were $1.17 billion, with both loans and deposits showing strong year over year growth.  Year over year total loans held for investment grew $93 million or 13.3% and mortgage loans held for sale grew $37 million or 23.9%.  For the second quarter total loans held for investment grew $6 million or 0.8% and mortgage loans held for sale grew $34 million or 21.3%.  Together these two loan categories continue to drive earning asset growth.  Funding continues to shift to a higher level of demand deposits, with 36% of our total deposit mix now in demand deposits.  Demand deposit balances remain at record high levels.  A shift to funding a portion of our seasonal mortgage pipeline with short-term fixed rate borrowings has allowed us to maintain our deposit pricing discipline to better manage our net interest margin.

“While I am thrilled with our year over year loan performance, the second quarter was a little more challenging as we had very strong loan production that was largely offset by principal payments and payoffs,” stated Neal Crawford, President of Monarch Bank.  “Our cash management and retail deposit teams continue to drive deposit growth, with well over a third of our deposits now in demand deposits.”

Non-performing assets to total assets were 0.23%, 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 since 2008.  Non-performing assets were $2.6 million which were down from the previous quarter and the same period in 2014.  Non-performing assets were comprised of $2.3 million in non-accrual loans, $0 in loans more than 90 days past due, and $375 thousand in other assets.  Net charge-offs for the year were $773 thousand, provision expense was $500 thousand, and the allowance for loan losses represents 1.09% of loans held for investment and 383% of non-performing loans.

The Board of Directors announced a quarterly common stock cash dividend of $0.09 per common share, payable on August 31, 2015, to shareholders of record on August 7, 2015.  Average equity to average assets was 9.92%, and total risk-based capital to risk weighted assets at Monarch Bank equaled 13.52%, 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 17.1% or $1.6 million during the second quarter of 2015 compared to the same quarter in 2014 driven by higher average balances of loans held for investment and mortgage loans held for sale.  The net interest margin was 4.28% for the second quarter, which was up from 4.18% in the same quarter in 2014.  

Non-interest income increased 27.7% or $5.1 million from the previous year driven by increased revenues from mortgage loans sold and related title insurance fees.  Investment and insurance revenue increased 19.5% compared to the previous year due to the continued growth of Monarch Bank Private Wealth.  Mortgage revenue continues to be the number one driver of non-interest income.  We closed $605 million in mortgage loans (76% purchase) during the second quarter of 2015 compared to $487 million (53% purchase) in the first quarter of 2015, a significant increase.  We closed $1,092 million in mortgage loans (66% purchase) during the first half of 2015 compared to $718 million (83% purchase) in the first half of 2014.  Total non-interest expense increased 26.7% or $6.1 million during the second quarter due to higher mortgage commissions, salaries and benefits expenses. 

“We had a great quarter for mortgage originations and closings, and our operations are running more effectively than ever.  Our realtor and builder focus, combined with helping many of our existing clients refinance into lower rates earlier in the year, was the key to driving our higher annual loan 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), 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”. 

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
     
  June 30, March 31, December 31, September 30,  June 30,
   2015   2015   2014   2014   2014 
ASSETS:          
  Cash and due from banks $  15,319  $  13,870  $  14,503  $  21,083  $  19,661 
  Interest bearing bank balances    84,225     73,237     49,761     58,207     37,166 
  Federal funds sold    2,377     63,311     1,135     3,938     29,761 
           
  Investment securities, at fair value    17,338     20,283     23,725     25,137     23,773 
           
  Mortgage loans held for sale    193,948     159,899     147,690     138,590     156,584 
           
  Loans held for investment, net of unearned income    792,962     787,003     772,590     713,667     700,159 
  Less: allowance for loan losses    (8,676)    (8,644)    (8,949)    (8,977)    (9,070)
  Net loans    784,286     778,359     763,641     704,690     691,089 
           
  Bank premises and equipment, net    30,117     30,050     30,247     30,368     31,407 
  Restricted equity securities, at cost    4,706     3,243     3,633     3,179     3,169 
  Bank owned life insurance    10,465     9,950     9,687     9,587     7,526 
  Goodwill    775     775     775     775     775 
  Intangible assets, net    -     -     -     -     15 
  Accrued interest receivable and other assets    27,119     25,403     21,940     23,688     22,973 
           
  Total assets $  1,170,675  $  1,178,380  $  1,066,737  $  1,019,242  $  1,023,899 
           
LIABILITIES:          
  Demand deposits--non-interest bearing $  293,442  $  270,446  $  235,301  $  252,286  $  240,348 
  Demand deposits--interest bearing    54,580     58,725     66,682     53,093     51,563 
  Money market deposits    379,716     417,329     369,221     365,041     377,096 
  Savings deposits    19,431     19,519     20,003     25,211     24,539 
  Time deposits    231,854     271,121     228,207     189,142     197,747 
  Total deposits    979,023     1,037,140     919,414     884,773     891,293 
           
  FHLB borrowings    46,025     1,050     11,075     1,100     1,125 
  Trust preferred subordinated debt    10,000     10,000     10,000     10,000     10,000 
  Accrued interest payable and other liabilities    22,167     19,653     18,710     18,145     18,650 
  Total liabilities    1,057,215     1,067,843     959,199     914,018     921,068 
           
STOCKHOLDERS' EQUITY:          
  Common stock    52,182     51,950     51,864     51,735     51,624 
  Capital in excess of par value    8,846     8,555     8,336     7,966     7,675 
  Retained earnings    52,412     49,957     47,354     45,523     43,566 
  Accumulated other comprehensive loss    (65)    (14)    (102)    (135)    (159)
  Total Monarch Financial Holdings, Inc. stockholders' equity    113,375     110,448     107,452     105,089     102,706 
  Noncontrolling interest    85     89     86     135     125 
  Total equity    113,460     110,537     107,538     105,224     102,831 
           
  Total liabilities and stockholders' equity $  1,170,675  $  1,178,380  $  1,066,737  $  1,019,242  $  1,023,899 
           
Common shares outstanding at period end    10,777,965     10,736,947     10,652,475     10,646,873     10,624,668 
Nonvested shares of common stock included in commons shares outstanding     341,450     346,950     279,750     299,910     299,910 
           
Book value per common share at period end (1) $  10.52  $  10.29  $  10.09  $  9.87  $  9.67 
Tangible book value per common share at period end (2) $  10.45  $  10.21  $  10.01  $  9.80  $  9.59 
Closing market price $  12.55  $  12.51  $  13.75  $  12.56  $  11.72 
           
Total risk based capital - Consolidated company  13.62%  13.57%  13.79%  14.16%  14.29%
Total risk based capital - Bank  13.52%  13.38%  13.81%  14.18%  14.31%
           
(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 Six Months Ended 
  June 30, June 30, 
   2015   2014   2015   2014  
INTEREST INCOME:         
  Interest and fees on loans held for investment $ 10,032,923  $ 9,089,071  $ 19,873,259  $ 18,567,963  
  Interest on mortgage loans held for sale    1,746,435     1,274,498     3,053,472     2,047,230  
  Interest on investment securities    78,784     91,929     167,699     167,978  
  Interest on federal funds sold    7,207     24,179     15,460     64,557  
  Dividends on equity securities    41,713     22,410     80,713     52,410  
  Interest on other bank accounts    116,754     54,905     218,783     90,937  
  Total interest income    12,023,816    10,556,992     23,409,386     20,991,075  
INTEREST EXPENSE:         
  Interest on deposits    738,767     839,303     1,406,827     1,673,716  
  Interest on trust preferred subordinated debt    47,867     123,359     94,282     245,696  
  Interest on other borrowings    23,467     14,224     46,073     28,586  
  Total interest expense    810,101     976,886     1,547,182     1,947,998  
NET INTEREST INCOME    11,213,715     9,580,106     21,862,204     19,043,077  
PROVISION FOR LOAN LOSSES    250,000     -     500,000     -  
          
NET INTEREST INCOME AFTER PROVISION         
  FOR LOAN LOSSES    10,963,715     9,580,106     21,362,204     19,043,077  
          
NON-INTEREST INCOME:         
  Mortgage banking income    22,240,973    17,369,228     43,304,652     29,571,390  
  Service charges and fees    558,790     538,579     1,075,344     1,008,791  
  Title income    241,919     167,454     474,690     272,488  
  Investment and insurance income    400,542     335,887     744,668     781,359  
  Other income    184,040     87,725     293,073     173,496  
  Total non-interest income    23,626,264    18,498,873     45,892,427     31,807,524  
NON-INTEREST EXPENSE:         
  Salaries and employee benefits    10,097,518     8,492,446     19,691,794     16,764,007  
  Commissions and incentives    10,805,166     6,770,022     20,250,304     10,780,986  
  Occupancy and equipment    2,389,884     2,395,088     4,678,392     4,671,791  
  Loan origination expense    1,930,961     2,060,570     4,389,624     3,423,711  
  Marketing expense    902,932     797,908     1,649,159     1,319,749  
  Data processing    599,568     476,806     1,229,318     956,084  
  Telephone    353,163     293,451     678,909     604,588  
  Other expenses    2,074,321     1,720,693     3,763,845     3,232,701  
  Total non-interest expense    29,153,513    23,006,984     56,331,345     41,753,617  
          
INCOME  BEFORE TAXES     5,436,466     5,071,995     10,923,286     9,096,984  
  Income tax provision    (1,961,763)    (1,767,500)    (3,955,103)    (3,238,740) 
NET INCOME    3,474,703     3,304,495     6,968,183     5,858,244  
          
  Less: Net income attributable to noncontrolling interest    (50,874)    (120,921)    (83,147)    (137,405) 
NET INCOME ATTRIBUTABLE TO MONARCH         
  FINANCIAL HOLDINGS, INC $  3,423,829  $ 3,183,574  $  6,885,036  $  5,720,839  
          
NET INCOME  PER COMMON SHARE:          
          
  Basic $  0.32  $  0.30  $  0.64  $  0.54  
  Diluted $  0.32  $  0.30  $  0.64  $  0.54  
          
Weighted average basic shares outstanding    10,760,159    10,620,869     10,744,430     10,596,786  
Weighted average diluted shares outstanding    10,771,660    10,660,217     10,766,776     10,636,968  
          
Return on average assets  1.22%  1.29%  1.26%  1.18% 
Return on average stockholders' equity  12.28%  12.63%  12.62%  11.57% 
          


  
Financial Highlights 
Monarch Financial Holdings, Inc. and Subsidiaries 
 
(Dollars in thousands,For the Quarter Ended 
except per share data)June 30, March 31, December 31, September 30, June 30, 
  2015   2015   2014   2014   2014  
EARNINGS          
Interest income$  12,024  $  11,385  $  11,361  $  10,639  $  10,557  
Interest expense   (810)    (737)    (786)    (928)    (977) 
Net interest income   11,214     10,648     10,575     9,711     9,580  
Provision for loan losses   (250)    (250)    -      -      -   
Noninterest income - mortgage banking income   22,241     21,064     16,211     16,658     17,369  
Noninterest income - other   1,385     1,202     1,162     1,241     1,130  
Noninterest expense   (29,154)    (27,178)    (23,605)    (23,121)    (23,007) 
Pre-tax net income   5,436     5,486     4,343     4,489     5,072  
Minority interest in net income   (51)    (32)    (44)    (46)    (121) 
Income taxes   (1,961)    (1,993)    (1,616)    (1,635)    (1,767) 
Net income$  3,424  $  3,461  $  2,683  $  2,808  $  3,184  
           
PER COMMON SHARE          
Earnings per share - basic$  0.32  $  0.32  $  0.25  $  0.26  $  0.30  
Earnings per share - diluted   0.32     0.32     0.25     0.26     0.30  
Common stock - per share dividends   0.09     0.08     0.08     0.08     0.08  
Average Basic Shares Outstanding 10,760,159   10,728,206   10,648,184   10,635,275   10,620,869  
Average Diluted Shares Outstanding 10,771,660   10,761,396   10,689,219   10,670,507   10,660,217  
 
YIELDS 
Loans held for investment 5.21 % 5.21 % 5.34 % 5.16 % 5.22 %
Mortgage loans held for sale, net at fair value 3.88   3.90   4.16   4.14   4.37  
Other earning assets 1.38   1.31   1.33   1.16   1.04  
Total earning assets 4.59   4.62   4.75   4.58   4.61  
Interest bearing checking 0.13   0.13   0.14   0.15   0.17  
Money market and regular savings 0.36   0.30   0.31   0.36   0.39  
Time deposits 0.61   0.61   0.81   0.88   0.88  
Borrowings 1.04   1.33   1.71   4.92   4.95  
Total interest-bearing liabilities 0.44   0.43   0.48   0.57   0.60  
Interest rate spread 4.15   4.19   4.27   4.01   4.01  
Net interest margin 4.28   4.32   4.42   4.18   4.18  
 
FINANCIAL RATIOS          
Return on average assets   1.22 %   1.31 %   1.04 %   1.11 %   1.29 %
Return on average stockholders' equity   12.28     12.98     10.03     10.72     12.63  
Non-interest revenue/Total revenue   66.3     66.2     60.5     62.7     63.7  
Efficiency - Consolidated   83.7     82.6     84.5     83.7     81.8  
Efficiency - Bank only   64.6     66.2     61.2     61.7     63.9  
Average equity to average assets   9.92     10.10     10.39     10.40     10.18  
           
ALLOWANCE FOR LOAN LOSSES          
Beginning balance$  8,644  $  8,949  $  8,977  $  9,070  $  9,213  
Provision for loan losses   250     250     -      -      -   
Charge-offs   (287)    (598)    (174)    (181)    (184) 
Recoveries   69     43     146     88     41  
Net charge-offs   (218)    (555)    (28)    (93)    (143) 
Ending balance$  8,676  $  8,644  $  8,949  $  8,977  $  9,070  
 
COMPOSITION OF RISK ASSETS          
Nonperforming loans: 
90 days past due$  -  $  175  $  175  $  243  $  499  
Nonaccrual loans 2,266   4,325   2,705   2,180   3,028  
OREO and reposessed property 375   100   144   767   144  
Nonperforming assets$  2,641  $  4,600  $  3,024  $  3,190  $  3,671  
           
           
ASSET QUALITY RATIOS          
Nonperforming assets to total assets 0.23 % 0.39 % 0.28 % 0.31 % 0.36 %
Nonperforming loans to total loans 0.29   0.57   0.37   0.34   0.50  
Allowance for loan losses to total loans held for investment 1.09   1.10   1.16   1.26   1.30  
Allowance for loan losses to nonperforming loans 382.88   192.09   310.73   370.49   257.16  
Annualized net charge-offs to average loans held for investment 0.11   0.29   0.02   0.05   0.08  
           
AVERAGE BALANCES (Amounts in thousands)          
Total mortgage loans held for sale$  180,485  $  136,084  $  131,471  $  138,382  $  116,851  
Total loans held for investment   778,757     771,587     725,093     701,137     698,851  
Interest-earning assets   1,062,119     1,009,389     958,904     930,420     927,552  
Assets   1,126,749     1,070,581     1,021,591     999,358     993,003  
Total deposits   969,144     925,984     883,478     867,980     867,217  
Other borrowings   27,437     21,049     14,575     11,124     11,150  
Stockholders' equity   111,824     108,174     106,088     103,908     101,092  
           
MORTGAGE PRODUCTION (Amounts in thousands) 
Dollar volume of mortgage loans closed$  605,401  $  487,423  $  445,846  $  440,784  $  446,863  
Percentage of refinance based on dollar volume 23.9 %   47.0 %   30.9 %   16.0 %   15.0 %

 

 

Contact: Brad E. Schwartz – (757) 389-5111, www.monarchbank.com

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