XNAS:MNRK Monarch Financial Holdings Inc Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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MNRK.2012.6.30-10Q

 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________________________________________
FORM 10-Q
_______________________________________________________
ý
QUARTERLY REPORT UNDER SECTION 13 0R 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: June 30, 2012
OR
¨
TRANSITION REPORT UNDER SECTIONS 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-34565
 _______________________________________________________
MONARCH FINANCIAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 _______________________________________________________
 
VIRGINIA
6022
20-4985388
(State of other jurisdiction of
Incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
1435 Crossways Blvd.
Chesapeake, Virginia 23320
(757) 389-5111
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report) 
 _______________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” and “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
ý
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ¨  No  ý
The number of shares of common stock outstanding as of August 6, 2012 was 6,029,475.
 
 
 
 
 




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2


MONARCH FINANCIAL HOLDINGS, INC.
FORM 10-Q
June 30, 2012
INDEX
 
PART I.
 
 
ITEM 1.
 
 
 
 
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2012 and June 30, 2011
 
 
 
 
 
 
 
ITEM 2.
 
ITEM 3.
 
ITEM 4.
PART II.
 
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 3.
 
Item 4.
Mine Safety Disclosures
 
Item 5.
 
Item 6.

3


PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONARCH FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CONDITION
 
Unaudited
 
 
 
June 30, 2012
 
December 31, 2011
ASSETS:
 
 
 
Cash and due from banks
$
20,511,501

 
$
20,090,991

Interest bearing bank balances
46,709

 
10,188,033

Federal funds sold
6,141,545

 
1,466,560

Total cash and cash equivalents
26,699,755

 
31,745,584

Investment securities available-for-sale, at fair value
10,820,261

 
9,186,697

Loans held for sale
282,013,719

 
211,555,094

Loans held for investment, net of unearned income
626,463,677

 
607,612,446

Less: allowance for loan losses
(10,724,000
)
 
(9,930,000
)
Loans, net
615,739,677

 
597,682,446

Property and equipment, net
23,210,161

 
23,093,883

Restricted equity securities
4,884,850

 
6,420,500

Bank owned life insurance
7,069,397

 
6,946,166

Goodwill
775,000

 
775,000

Intangible assets, net
372,025

 
461,311

Other real estate owned
2,013,000

 
3,368,700

Other assets
21,636,152

 
17,551,547

Total assets
$
995,233,997

 
$
908,786,928

LIABILITIES:
 
 
 
Deposits:
 
 
 
Demand deposits—non-interest bearing
$
178,520,160

 
$
133,855,101

Demand deposits—interest bearing
41,219,109

 
40,930,378

Savings deposits
19,632,789

 
17,915,622

Money market deposits
307,392,254

 
269,749,851

Time deposits
306,648,612

 
277,641,145

Total deposits
853,412,924

 
740,092,097

Borrowings:
 
 
 
Short term borrowings
5,000,000

 

Trust preferred subordinated debt
10,000,000

 
10,000,000

Federal Home Loan Bank advances
31,325,448

 
70,927,481

Total borrowings
46,325,448

 
80,927,481

Other liabilities
14,255,539

 
10,920,522

Total liabilities
913,993,911

 
831,940,100

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; 800,000 shares authorized; 793,300 shares issued and outstanding at June 30, 2012 and 800,000 shares issued and outstanding at December 31, 2011
3,966,500

 
4,000,000

Common stock, $5 par value; 20,000,000 shares authorized; issued and outstanding, 6,029,475 shares (includes nonvested shares of 87,550) at June 30, 2012 and 5,999,989 shares (includes nonvested shares of 83,550); at December 31, 2011
29,709,625

 
29,582,195

Additional paid-in capital
22,727,732

 
22,475,738

Retained earnings
24,511,879

 
20,537,960

Accumulated other comprehensive loss
(298,911
)
 
(363,028
)
Total Monarch Financial Holdings, Inc. stockholders’ equity
80,616,825

 
76,232,865

Noncontrolling interests
623,261

 
613,963

Total equity
81,240,086

 
76,846,828

Total liabilities and stockholders’ equity
$
995,233,997

 
$
908,786,928

The accompanying notes are an integral part of the consolidated financial statements.

4


ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
MONARCH FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
 
Three Months Ended June 30, 2012
 
Six months ended June 30, 2012
 
2012
 
2011
 
2012
 
2011
Interest income:
 
 
 
 
 
 
 
Interest and fees on loans
$
10,853,754

 
$
9,600,504

 
$
21,734,790

 
$
19,043,714

Interest on investment securities
51,090

 
49,589

 
97,321

 
90,140

Interest on federal funds sold
8,903

 
12,960

 
15,162

 
40,001

Dividends on equity securities
64,974

 
50,933

 
102,474

 
83,448

Interest on other bank accounts
4,898

 
29

 
8,446

 
1,104

Total interest income
10,983,619

 
9,714,015

 
21,958,193

 
19,258,407

Interest expense:
 
 
 
 
 
 
 
Interest on deposits
1,266,904

 
1,575,088

 
2,548,691

 
3,332,763

Interest on trust preferred subordinated debt
123,425

 
124,200

 
246,275

 
245,700

Interest on borrowings
37,607

 
19,108

 
100,114

 
42,093

Total interest expense
1,427,936

 
1,718,396

 
2,895,080

 
3,620,556

Net interest income
9,555,683

 
7,995,619

 
19,063,113

 
15,637,851

Provision for loan losses
1,484,400

 
1,099,696

 
3,415,079

 
2,101,150

Net interest income after provision for loan losses
8,071,283

 
6,895,923

 
15,648,034

 
13,536,701

Non-interest income:
 
 
 
 
 
 
 
Mortgage banking income
20,152,078

 
11,205,023

 
36,736,289

 
20,209,260

Service charges and fees
467,565

 
424,829

 
881,616

 
811,149

Other
304,290

 
293,528

 
702,036

 
597,477

Total non-interest income
20,923,933

 
11,923,380

 
38,319,941

 
21,617,886

Non-interest expenses:
 
 
 
 
 
 
 
Personnel Expense
17,446,585

 
10,797,293

 
32,809,304

 
20,047,797

Loan expense
2,184,323

 
1,557,105

 
3,799,454

 
2,869,586

Occupancy and equipment expenses
1,715,098

 
1,385,880

 
3,314,179

 
2,772,913

Marketing expense
593,526

 
430,272

 
1,003,817

 
704,028

Data processing expense
363,342

 
278,015

 
709,332

 
583,848

Foreclosed property expense (income)
230,902

 
(37,591
)
 
133,469

 
5,351

Other expenses
1,972,003

 
1,650,902

 
3,618,034

 
3,204,108

Total non-interest expenses
24,505,779

 
16,061,876

 
45,387,589

 
30,187,631

Income before income taxes
4,489,437

 
2,757,427

 
8,580,386

 
4,966,956

Income tax provision
(1,556,294
)
 
(981,457
)
 
(2,977,835
)
 
(1,680,931
)
Net income
2,933,143

 
1,775,970

 
5,602,551

 
3,286,025

Less: Net income attributable to noncontrolling interests
(156,156
)
 
(114,879
)
 
(309,458
)
 
(251,677
)
Net income attributable to Monarch Financial Holdings, Inc.
$
2,776,987

 
$
1,661,091

 
$
5,293,093

 
$
3,034,348

Preferred stock dividend
(390,000
)
 
(390,000
)
 
(780,000
)
 
(780,000
)
Net income available to common stockholders
$
2,386,987

 
$
1,271,091

 
$
4,513,093

 
$
2,254,348

Basic net income per share
$
0.40

 
$
0.21

 
$
0.75

 
$
0.38

Diluted net income per share
$
0.33

 
$
0.19

 
$
0.62

 
$
0.35


The accompanying notes are an integral part of the consolidated financial statements.

5


ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
MONARCH FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2012
 
2011
 
2012
 
2011
Net Income
 
$
2,933,143

 
$
1,775,970

 
$
5,602,551

 
$
3,286,025

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
Change in unrealized loss on interest rate swap, net of income taxes
 
27,914

 
95,251

 
46,561

 
(28,740
)
Change in unrealized gains on securities available for sale, net of income taxes
 
14,820

 
30,426

 
17,556

 
10,547

Other comprehensive income
 
42,734

 
125,677

 
64,117

 
(18,193
)
Total comprehensive income
 
2,975,877

 
1,901,647

 
$
5,666,668

 
$
3,267,832

Less: Comprehensive income attributable to noncontrolling interests
 
(156,156
)
 
(114,879
)
 
(309,458
)
 
(251,677
)
Comprehensive income attributable to Monarch Financial Holdings, Inc.
 
$
2,819,721

 
$
1,786,768

 
$
5,357,210

 
$
3,016,155

 
 
 
 
 
 
 
 
 
Unrealized gain (loss) on interest rate swap
 
$
42,294

 
$
144,260

 
$
70,546

 
$
(43,545
)
Income tax (expense) benefit
 
(14,380
)
 
(49,009
)
 
(23,985
)
 
14,805

Net unrealized loss on interest rate swap
 
$
27,914

 
$
95,251

 
$
46,561

 
$
(28,740
)
 
 
 
 
 
 
 
 
 
Unrealized holding gains on securities available for sale
 
$
22,454

 
$
46,100

 
$
26,600

 
$
15,981

Income tax (expense) benefit
 
(7,634
)
 
(15,674
)
 
(9,044
)
 
(5,434
)
Net unrealized gains on securities available for sale
 
$
14,820

 
$
30,426

 
$
17,556

 
$
10,547


The accompanying notes are an integral part of the consolidated financial statements.

6


ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
 MONARCH FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
(unaudited)
 
Common Stock
 
Additional
Paid-In
Capital
 
Preferred
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)

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