MONARCH FINANCIAL EXCEEDS $1 BILLION …… AND REPORTS RECORD
Chesapeake, VA - Monarch Financial Holdings, Inc. (Nasdaq:
MNRK, MNRKP), the bank holding company for Monarch Bank,
reported their best all-time and third quarter profits in the
Company's history. Third quarter 2012 highlights are:
- Record 3rd quarter net income of $3,763,403, up 76%
- Net income available to common shareholders was up 93%
- Basic earnings per share of $0.56, up 93%
- Total assets reach $1.1 billion
- Non-performing assets drop to 0.48% of total assets
- $788 million in mortgage loans closed
"The third quarter of 2012 was a fantastic period for Monarch
in so many ways and represents our 15th quarter
of record performance. Strong and profitable mortgage loan
closings, improved credit costs, and strong net interest
income drove our bottom line results." stated Brad E.
Schwartz, Chief Executive Officer. "Our asset quality
continues to improve with non-performing assets dropping
below one-half of one percent, the lowest level of
non-performing assets in four years. Monarch's conservative
approach to risk, combined with our aggressive focus on smart
and profitable growth, continues to drive our performance.
Our recently announced expansion into the
Williamsburg/Peninsula markets, the launch of Monarch Bank
Private Wealth, and our affiliation with Raymond James
Financial are all designed to further drive our franchise
value and non-interest income growth".
Net income was $3,763,403 for the third quarter of 2012, up
76% from the same period in 2011, which was the Company's
previous record third quarter with $2,137,230 in net income.
The quarterly annualized return on average equity (ROE) was
18.24%, and the quarterly return on average assets (ROA) was
1.43%. Quarterly basic earnings per share were $0.56,
compared to $0.29 per share in the same quarter of 2011, a
93% improvement. Diluted earnings per share were $0.44,
compared to $0.25 per
share in the same quarter of 2011, a 76% improvement.
For the first nine months of 2012 net income was a record
$9,056,496 compared to $5,171,578 for the same period in
2011, a 75% increase. We have exceeded our 2011 annual net
income by almost
$2 million. The nine month annualized return on average
equity (ROE) was 15.23%, and the annualized return on average
assets (ROA) was 1.25%. Year to date basic earnings per share
were $1.31 compared to $0.67 for the same period in 2011.
Diluted earnings per share were $1.06 compared to $0.60 per
share in the same quarter of 2011, a 77% improvement.
Total assets at September 30, 2012 increased to $1.11 billion
driven primarily by growth in our mortgage loans held for
sale portfolio. Loans held for investment grew $31 million
year over year, while mortgage loans held for sale grew by
$224 million. Deposits increased $170 million year over year,
with strong growth in demand deposits. Short term time
deposits and borrowings have been used to support the growth
in our short-term loans held for sale portfolio which has
increased due to the high level of mortgage purchase and
refinance activity. This funding strategy, coupled with our
focus on generating commercial demand deposits through our
cash management team, continues to drive down overall funding
costs and protect our net interest margin.
"We are pleased to report net loan growth given the extremely
competitive lending environment and our higher credit
standards. Core deposits continue to grow, with checking and
account growth leading the way. Checking accounts now
represent over 30% of our core deposits." stated Neal
Crawford, President of Monarch Bank. "We are also proud of
recently being recognized as the second largest community
bank in the entire Hampton Roads MSA by deposits."
Non-performing assets were 0.48%, which remains significantly
below that of our local, state, and national peer group. This
was down from 0.85% in the second quarter of 2012, 0.85% at
2011, and 0.99% one year ago. Non-performing assets were $5.4
million, comprised of $4.1 million in non-accrual loans and
$1.3 million in other real estate owned. There were only two
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 third quarter was $899
thousand compared to $1.7 million for the same period in
2011. The allowance for loan losses represents
1.74% of total loans held for investment and 265% of
Average equity to average assets was 8.18% during 2012, down
from 9.25% one year prior. Total risk-based capital to risk
weighted assets at Monarch Bank equaled 13.28%, significantly
higher than the required level to meet the highest rating of
"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 22% or $1.9 million during the third quarter of
2012 compared to the same quarter in 2011. Our net interest
margin was 4.30% compared to 4.51% in 2011, and was 4.38%
year to date compared to 4.44% during the same period of
2011. The higher volume of lower rate mortgage loans held for
sale, while providing interest income growth, contributed to
the decline in this ratio during each period in 2012.
Non-interest income grew by $10.4 million during the third
quarter over the previous year, while non-interest expenses
grew by $10.0 million, reducing net overhead expense by $319
thousand for the third quarter compared to the previous year.
Two-thirds of the increases in non-interest expense are
variable commissions and incentives primarily related to
increased mortgage production. Mortgage revenue continues to
be the number one driver of non-interest income. $788 million
in mortgage loans were closed during the quarter, which was a
new Company record. Home purchase mortgage loans represented
40% of total closed loans for the quarter.
"Not only did we surpass 2011's record $1.6 billion in volume
of mortgage loan closings, but we are on track to hit the $2
billion mark in closings in October. As of September 30, 2012
we have closed
7,309 loans for a total volume of $1.94 billion" stated
William T. Morrison, CEO of Monarch Mortgage. "The recent
activities by the Federal Reserve Bank to reduce long-term
rates drove our refinance volume higher in the third quarter.
We are proud to have closed 45% of our year to date volume
for new and existing home purchases"
Monarch Financial Holdings, Inc. is the one-bank holding
company for Monarch Bank. Monarch Bank is a community bank
with eleven banking offices in Chesapeake, Virginia Beach,
Norfolk, Suffolk, and Williamsburg 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. 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), Regional
Home Mortgage, LLC (secondary mortgage
origination), Monarch Home Funding, 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",
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.
Contact: Brad E. Schwartz - (757) 389-5111,
Date: October 18, 2012