Monarch Financial Reports 3rd Quarter Financial Performance and Declares Both Cash and Stock Dividends

CHESAPEAKE, Va., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Monarch Financial Holdings, Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported strong third quarter profit and continued financial performance.  The Board of Directors announced a quarterly common stock cash dividend of $0.09 per common share, payable on November 30, 2015, to shareholders of record on November 12, 2015.  Total cash dividends declared in 2015 increased 13% from the previous year. 

The Board also declared an 11-for-10 stock split effected as a stock dividend. This was the company’s seventh stock split or stock dividend in its history, with the last split in December of 2012.  This 11-for-10 stock split equals one additional share for every ten shares owned, and is payable December 4, 2015 to shareholders of record on November 12, 2015.  The stock split should enhance shareholder total cash dividends payments, if declared in the future.  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 this upcoming stock split.

Third quarter 2015 highlights are:

• 3rd quarter net income of $3,127,744, up 11.4%
  
• Diluted earnings per share of $0.26, up 8.3%
  
• Return on Equity of 10.82%
  
• Net Interest Margin remains strong at 4.19%
  
• Non-performing assets at 0.19% of total assets
  
• $528 million in mortgage loans closed, 83% purchase money

Year to date 2015 highlights are:

• Record net income of $10,012,780, up 17.4%
  
• Diluted earnings per share of $0.84, up 15%
  
• Return on Equity of 12.00%
  
• $1.62 billion in mortgage loans closed, up 40%

“We are pleased to report a record year for net income, as well as both a cash and stock dividend for our shareholders.  Our banking, mortgage and private wealth segments continue to perform well.  Mortgage closings of $1.62 billion already exceed total mortgage loans closed for all of 2014.  A solid net interest margin, strong mortgage production, minimal 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 our earnings per share are up 15% for the year, cash dividends declared have grown by 13%, and our net income available to common shareholders is at record levels.  We believe this common stock dividend will enhance the overall value of our company, as well as enhance the dividend payout for our shareholders in the future should additional cash dividends be declared.  The year 2015 is shaping up to be another great year for the Butterfly Bank.” 

Net income was $3,127,744 for the third quarter of 2015, up 11.4% from the same period one year ago.  The quarterly annualized return on average equity (ROE) was 10.82%, and the quarterly return on average assets (ROA) was 1.11%.  Restated for the stock split, quarterly diluted earnings per share increased to $0.26 compared to $0.24 for the same quarter in 2014. 

Net income was $10,012,780 for the first nine months of 2015, up 17.4% from the previous year.  The annualized return on average equity (ROE) was 12.00%, and the quarterly return on average assets (ROA) was 1.21%.  Restated for the stock split, diluted earnings per share were $0.84, up 15% when compared to $0.73 for the same period in 2014. 

Total assets at September 30, 2015 were $1.12 billion, with both loans and deposits showing strong year over year growth.  Year over year total loans held for investment grew $77 million or 10.8% and mortgage loans held for sale grew $15 million or 10.6%.  For the third quarter total loans held for investment were flat due to the competitive and sometimes irrational lending environment.  During the third quarter we funded $69 million in new loans and renewed $103 million in existing loans.  Funding continues the shift to a higher level of demand deposits, with 35% of our total deposit mix now in demand deposits. 

“While I am thrilled with our year over year loan performance, the market remains highly competitive and we are unwilling to accept the credit, future profitability, or term risk in the current market.   Our pipeline remains strong and we will maintain our discipline and continue to look for quality banking relationships that value our client-focused style of doing business.” stated Neal Crawford, President of Monarch Bank.  “Many bankers seem to have very short memories when it comes to lending.”

Non-performing assets to total assets were 0.19%, 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 $2.1 million which were down from the previous quarter and the same period in 2014.  Non-performing assets were comprised of $1.8 million in non-accrual loans, $0 in loans more than 90 days past due, and $275 thousand in other repossessed assets.  Net charge-offs for the year were $717 thousand, provision expense was $500 thousand, and the allowance for loan losses represents 1.10% of loans held for investment and 474% of non-performing loans.

The Board of Directors announced two capital actions at their October board meeting.  A quarterly common stock cash dividend of $0.09 per common share, payable on November 30, 2015, to shareholders of record on November 12, 2015.  They also announced an 11-for-10 stock split for shareholders of record on November 12, 2015 to be paid on December 4, 2015. 

Average equity to average assets was 10.22%, and total risk-based capital to risk weighted assets at Monarch Bank equaled 14.02%, 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 14.6% or $1.4 million during the third 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.  Net interest income increased for the full year by 14.7%.  The net interest margin was 4.19% for the third quarter, one basis point higher than the margin from the same quarter in 2014.  The net interest margin declined in the third quarter on a linked-quarter basis due to competitive pricing on new and renewed loans, yet remains well above our peer average.

Non-interest income in the third quarter increased 15.9% or $2.8 million from the previous year driven by increased revenues from mortgage loans sold, title insurance fees, investment and insurance revenue and service charges.  Mortgage revenue continues to be the number one driver of non-interest income.  We closed $528 million in mortgage loans (83% purchase) during the third quarter of 2015 compared to $441 million (84% purchase) in the same quarter one year prior.  We closed $1.62 billion in mortgage loans (71% purchase) during the first nine months of 2015 compared to $1.16 billion (84% purchase) in the same period of 2014.  Total non-interest expense increased 16.2% or $3.8 million during the third quarter due to higher mortgage commissions, salaries and benefits expenses. 

“We had a strong third quarter for mortgage originations and closings.  Excluding the volatility in our forward rate commitments, which are non-cash accounting entries we are required to book, our profits on a per loan basis increased, our yields remain strong, and the operation is well positioned for a potential rise in long-term interest rates.” stated William T. Morrison, CEO of Monarch Mortgage.

Also during the third quarter Monarch Bank, through its affiliated 503(c) Monarch Children’s Charities, held their annual fundraising golf tournament and raised over $260,000 from the local community to support local charitable causes.  These funds will support over thirty local charities in their mission to improve the lives of children. 

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.