Monarch Financial Reports Quarterly Results and Raises Cash Dividend by 16%

Monarch Financial Reports Quarterly Results and Raises Cash Dividend by 16%

CHESAPEAKE, Va., Oct. 17, 2013 (GLOBE NEWSWIRE) -- Monarch Financial Holdings,
Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported third
quarter financial results and increased their quarterly cash dividend. The
Board of Directors announced a 16.7% increase in the quarterly common stock
cash dividend to $0.07 per common share, payable on November 29, 2013, to
shareholders of record on November 12, 2013.

Third quarter 2013 highlights are:

  *Quarterly net income of $2,409,674 for a return on equity of 10.18%
  *Diluted earnings per share of $0.23
  *Net Interest Margin holding steady at 4.11%
  *Non-performing assets at 0.30% of total assets
  *$478 million in mortgage loans closed with 77% purchase

Year to date 2013 highlights are:

  *Net income of $8,934,441, for a return on equity of 13.07%
  *Diluted earnings per share of $0.85
  *$1.6 billion in mortgage loans closed with 60% purchase

"We knew this quarter was going to be a challenge, on a comparative basis,
because of the record mortgage refinance volume we closed in the second half
of 2012. We are proud to show improved profitability this quarter in our
banking and investment operations which was somewhat offset by a decline in
mortgage profitability. Our investment in the formation of Monarch Bank
Private Wealth, the expansion into the Williamsburg and Peninsula mortgage and
banking markets, and our new mortgage venture with Rose and Womble Realty also
impacted our solid yet reduced earnings," stated Brad E. Schwartz, Chief
Executive Officer. "We will continue on our strategic path of growing our
franchise and diversifying our revenue even if it impacts short-term results.
The fact we increased our cash dividend payout by over 16% indicates the
confidence we have in our core earnings and performance."

For the first nine months of 2013 net income was $8,934,441 compared to
$9,056,496 for the same period in 2012. While net income was in line with the
previous year, net income available to common shareholders rose 13% for an
increase of $1,044,679. The nine month annualized return on average equity
(ROE) was 13.07%, and the annualized return on average assets (ROA) was 1.14%.
Year to date diluted earnings per share were $0.85 compared to $0.89 per share
in the same quarter of 2012.

Net income was $2,409,674 for the third quarter of 2013, down 36% from the
same period in 2012, which was the second best quarter in the Company's
history.The quarterly annualized return on average equity (ROE) was 10.18%,
and the quarterly return on average assets (ROA) was 0.94%.Diluted earnings
per share were $0.23, compared to $0.37 per share in the same quarter of
2012.

Total assets at September 30, 2013 were $1.01 billion.Over the past year
loans held for investment grew 11% to $698 million while mortgage loans held
for sale declined 68% to $120 million.Total deposits remained at the same
level as one year ago yet their composition changed.Demand deposits have
grown $47 million or 21% from a year ago, with demand deposits now
representing 31% of total deposits.Money market accounts have grown $51
million or 16% from one year prior, while higher cost certificates of deposit
decreased $101 million or 31%.At the same time borrowings declined $109
million or 99% from one year prior.While the current rate environment does
not appropriately reward banks for a transaction-focused funding strategy,
this strategy should deliver long-term net interest margin protection when
rates eventually rise.

"Building a high quality and profitable loan portfolio remains our primary
focus, and we are proud of our 11% year over year loan growth," stated E. Neal
Crawford Jr., President of Monarch Bank."Our peninsula expansion and the
integration of Monarch Bank Private Wealth into our client base are just
beginning and we continue to attract new banking relationships in all our
markets."

Non-performing assets were 0.30% as of September 30, 2013 compared to 0.48%
one year prior, and non-performing loans to loans held for investment were
0.43% compared to 0.65% one year prior.Non-performing assets were $3.1
million, comprised of $82 thousand 90 days or more past due and still accruing
interest, $2.9 million in non-accrual loans and $0.1 million in other real
estate owned.The Company recorded net loan losses of $92 thousand in the
third quarter, and year to date net loan loss recoveries totaled $318
thousand.The allowance for loan losses represents 1.61% of total loans held
for investment and 379% of non-performing loans.

Average equity to average assets rose to 9.27% during the third quarter of
2013, an increase from 7.85% one year prior.Total risk-based capital to risk
weighted assets at Monarch Bank equaled 13.84%, 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, decreased 6% or
$669,000 during the third quarter of 2013 compared to the same quarter in
2012.A decrease in the average balance of our mortgage loans held for sale of
$191 million or 58% was partially offset by increases in the average balance
of our loans held for investment portfolio of $76 million or 12% when
comparing year over year results.Our quarterly net interest margin was 4.11%
which was equal to the previous quarter.

Non-interest income decreased $9.9 million or 37% during the third quarter
over the previous year, while non-interest expenses declined by $7.5 million,
increasing net overhead expense by $2.4 million for the third quarter compared
to the previous year.Investment revenues related to Monarch Bank Private
Wealth totaled $717,427 for the year compared to $66,138 the previous year, a
significant increase.The Company was recently recognized by Raymond James
Financial Services as a top performing investment program, with over $150
million in assets under management accumulated since the formation of Monarch
Bank Private Wealth in the third quarter of 2012.

Mortgage revenue remains the number one driver of non-interest income.$478
million in mortgage loans were closed during the third quarter of 2013 (77%
purchase) compared to $785 million in the third quarter of 2012 (40%
purchase).Monarch closed $1.6 billion in mortgage loans during the first nine
months of 2013.The reduction in mortgage revenue was due to lower margins
driven by competition, a lower volume of closings, and reduced balances and
related earnings from our loans held for sale portfolio.The third quarter of
2012 was the best quarter for mortgage loan closings in our Company's
history.Ongoing expense reductions are being made in our mortgage operations
to better align our expense structure with current mortgage production levels.

"Our long-term focus on purchase mortgage lending will continue to help us
grow market share, with 77% of our mortgages closed in the third quarter being
purchase mortgage loans.We took advantage of the refinance market last year
and remain committed to building relationships with the realtor and builder
community, as well as our past clients to drive 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 eleven banking offices in
Chesapeake, Virginia Beach, Norfolk, Suffolk, and Williamsburg
Virginia.Monarch Bank also has a loan production office in Newport News,
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-five 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), Advance Financial Group (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
                                                                                            
                        September    June 30,     March 31,    December 31, September
                       30,          2013         2013         2012         30,
                        2013                                                2012
ASSETS:                                                                 
Cash and due from      $21,016    $19,050    $17,414    $27,364    $14,633
banks
Interest bearing bank  24,504      15,195      14,099      14,667      12,043
balances
Federal funds sold     83,454      56,972      21,937      15,744      8,191
                                                                       
Investment securities, 16,973      16,573      16,493      14,634      10,328
at fair value
                                                                       
Loans held for sale    120,435     166,586     242,457     419,075     382,095
                                                                       
Loans held for
investment, net of      697,541     697,376     692,410     661,094     627,256
unearned income
Less: allowance for    (11,228)    (11,320)    (10,788)    (10,910)    (10,890)
loan losses
Net loans              686,313     686,056     681,622     650,184     616,366
                                                                       
Bank premises and      28,454      28,101      27,507      25,448      23,449
equipment, net
Restricted equity      3,666       3,792       3,781       12,363      8,346
securities, at cost
Bank owned life        7,351       7,290       7,231       7,173       7,132
insurance
Goodwill               775         775         775         775         775
Intangible assets, net 149         194         238         283         327
Accrued interest
receivable and other    18,857      20,815      21,421      27,868      26,727
assets
                                                                       
Total assets           $1,011,947 $1,021,399 $1,054,975 $1,215,578 $1,110,412
                                                                       
LIABILITIES:                                                            
Demand
deposits---non-interest $222,021   $218,880   $201,346   $190,120   $182,080
bearing
Demand
deposits---interest     48,302      52,101      57,074      65,369      40,865
bearing
Money market deposits  364,488     341,042     332,305     335,899     313,985
Savings deposits       22,665      22,172      23,579      22,127      21,531
Time deposits          228,652     264,491     317,181     288,267     329,246
Total deposits         886,128     898,686     931,485     901,782     887,707
                                                                       
FHLB borrowings        1,200       1,225       1,250       194,299     105,027
Short Term borrowings  --          --          5,000       5,000       5,000
Federal funds          --          --          --          --          --
purchased
Trust preferred        10,000      10,000      10,000      10,000      10,000
subordinated debt
Accrued interest
payable and other       17,855      16,733      14,894      15,550      17,151
liabilities
Total liabilities      915,183     926,644     962,629     1,126,631   1,024,885
                                                                       
STOCKHOLDERS' EQUITY:                                                   
Preferred Stock        --          --          --          2,406       3,945
Common stock           51,230      50,873      50,821      41,632      35,732
Capital in excess of   6,755       6,521       6,300       12,718      16,867
par value
Retained earnings      38,014      36,233      33,790      30,786      27,586
Accumulated other      (406)       (480)       (174)       (200)       (218)
comprehensive loss
Total Monarch
Financial Holdings,     95,593      93,147      90,737      87,342      83,912
Inc. stockholders'
equity
Noncontrolling         1,171       1,608       1,609       1,605       1,615
interest
Total equity           96,764      94,755      92,346      88,947      85,527
                                                                       
Total liabilities and  $1,011,947 $1,021,399 $1,054,975 $1,215,578 $1,110,412
stockholders' equity
                                                                       
Preferred shares
outstanding at period   --         --         --         481,123     788,900
end
Common shares
outstanding at period   10,480,023  10,408,544  10,398,073  8,557,939   7,251,491
end (1)
Nonvested shares of
common stock included   233,960     233,960     233,960     231,460     126,072
in commons shares
outstanding (1)
                                                                       
Book value per common
share at period end (1) $9.12      $8.95      $8.73      $8.80      $8.85
(2)
Tangible book value per
common share at period  $9.03      $8.86      $8.63      $8.68      $8.70
end (1) (3)
Closing market price    $11.72     $10.83     $10.61     $8.22      $8.13
(1)
                                                                       
Total risk based
capital - Consolidated  13.70%       13.42%       13.06%       12.05%       12.49%
company
Total risk based        13.84%       13.66%       13.78%       12.73%       13.23%
capital - Bank
                                                                       
(1) All share information has been adjusted to reflect the 6 for 5 stock split granted
December 7, 2012 and cash in lieu of fractional shares.
(2) Book value per common share is defined as stockholders' equity divided by
as-converted common shares outstanding.
(3) Tangible book value per common share is defined as stockholders' equity less             
goodwill and other intangibles divided by as-converted commons shares outstanding.
                                                                       

Consolidated Statements of Income                                         
Monarch Financial Holdings, Inc. and Subsidiaries                         
Unaudited                                                                 
                                                                         
                  Three Months Ended        Nine Months Ended
                   September 30,            September 30,
                  2013         2012         2013         2012
INTEREST INCOME:                                       
Interest on       $43,210    $3,973     $73,680    $19,135
federal funds sold
Interest on other 11,307      4,713       29,401      13,159
bank accounts
Dividends on      66,500      38,500      210,160     140,974
equity securities
Interest on
investment         55,314      52,670      170,185     149,991
securities
Interest and fees 10,665,512  11,719,849  33,187,774  33,454,639
on loans
Total interest    10,841,843  11,819,705  33,671,200  33,777,898
income
INTEREST EXPENSE:                                      
Interest on       979,858     1,207,004   3,030,233   3,755,695
deposits
Interest on trust
preferred          125,818     123,422     369,060     369,697
subordinated debt
Interest on other 15,355      99,723      343,343     199,837
borrowings
Total interest    1,121,031   1,430,149   3,742,636   4,325,229
expense
NET INTEREST       9,720,812   10,389,556  29,928,564  29,452,669
INCOME
PROVISION FOR LOAN --          898,598     --          4,313,677
LOSSES
                                                      
NET INTEREST
INCOME AFTER                                           
PROVISION
FOR LOAN LOSSES   9,720,812   9,490,958   29,928,564  25,138,992
                                                      
NON-INTEREST                                           
INCOME:
Mortgage banking  15,657,242  25,651,606  52,395,566  62,387,895
income
Service charges   510,739     458,572     1,439,553   1,340,188
and fees
Title income      177,705     294,369     664,479     577,249
Investment and    264,967     34,826      717,427     66,138
insurance income
Other income      64,420      121,756     313,337     509,600
Total
non-interest       16,675,073  26,561,129  55,530,362  64,881,070
income
NON-INTEREST                                           
EXPENSE:
Salaries and      8,632,847   7,944,646   25,340,677  21,669,084
employee benefits
Commissions and   6,326,920   14,501,486  23,096,216  33,586,352
incentives
Occupancy and     2,232,315   1,827,114   6,229,278   5,141,293
equipment
Loan expense      1,904,786   2,226,109   6,365,518   6,025,563
Marketing expense 807,938     632,996     2,065,542   1,636,813
Data processing   400,125     360,284     1,236,854   1,069,616
Other expenses    2,010,030   2,317,353   6,014,381   6,068,856
Total
non-interest       22,314,961  29,809,988  70,348,466  75,197,577
expense
                                                      
INCOMEBEFORE      4,080,924   6,242,099   15,110,460  14,822,485
TAXES
Income tax        (1,415,697) (2,111,207) (5,207,023) (5,089,042)
provision
NET INCOME         2,665,227   4,130,892   9,903,437   9,733,443
                                                      
Less: Net income
attributable to    (255,553)   (367,489)   (968,996)   (676,947)
noncontrolling
interest
NET INCOME
ATTRIBUTABLE TO                                        
MONARCH
FINANCIAL         $2,409,674 $3,763,403 $8,934,441 $9,056,496
HOLDINGS, INC
                                                      
Preferred stock
dividend and                                           
accretion of
preferred
stock discount    --         (386,734)   --         (1,166,734)
NET INCOME
AVAILABLE TO                                           
COMMON
STOCKHOLDERS      $2,409,674 $3,376,669 $8,934,441 $7,889,762
                                                      
NET INCOMEPER                                         
COMMON SHARE:
                                                      
Basic             $0.23      $0.47      $0.89      $1.09
Diluted           $0.23      $0.37      $0.85      $0.89
                                                      
Weighted average
basic shares       10,464,992  7,251,870   10,060,179  7,144,496
outstanding
Weighted average
diluted shares     10,519,472  10,255,285  10,479,841  10,388,676
outstanding
                                                      
Return on average  0.94%        1.43%        1.14%        1.25%
assets
Return on average
stockholders'      10.18%       18.24%       13.07%       15.23%
equity
                                                      
(1) All share information has been adjusted to reflect the 6 for 5
stock split granted December 7, 2012 and cash in lieu of fractional
shares.


Financial Highlights
Monarch Financial Holdings, Inc. and Subsidiaries
                                                                           
(Dollars in
thousands,       For the Quarter Ended                                     
except per
share data)
                September  June 30,   March 31,  December   September
                 30,        2013       2013       31,        30,
                 2013                             2012       2012
EARNINGS                                                 
Interest income  $10,842  $10,976  $11,854  $12,690  $11,820
Interest expense (1,121)   (1,184)   (1,438)   (1,591)   (1,430)
Net interest     9,721     9,792     10,416    11,099    10,390
income
Provision for    --       --       --       (517)     (899)
loan losses
Noninterest
income -         15,510    20,572    16,166    23,826    25,652
mortgage banking
income
Noninterest      1,018     1,102     1,015     1,054     909
income - other
Noninterest      (22,315)  (26,173)  (21,861)  (29,058)  (29,810)
expense
Pre-tax net      3,934     5,293     5,736     6,404     6,242
income
Minority
interest in net  (108)     (428)     (285)     (298)     (368)
income
Income taxes    (1,416)   (1,798)   (1,993)   (2,338)   (2,111)
Net income      $2,410   $3,067   $3,458   $3,768   $3,763
                                                        
PER COMMON SHARE                                         
Earnings per     $0.23    $0.29    $0.37    $0.44    $0.47
share - basic
Earnings per     0.23      0.29      0.33      0.37      0.37
share - diluted
Common stock -
per share        0.06      0.06      0.05      0.05      0.05
dividends
Average Basic
Shares           10,464,992 10,401,992 9,300,760  7,980,259  7,251,870
Outstanding
Average Diluted
Shares           10,519,472 10,483,420 10,451,897 10,315,360 10,255,285
Outstanding
                                                        
ALLOWANCE FOR LOAN LOSSES                                 
Beginning        $11,320  $10,788  $10,910  $10,890  $10,724
balance
Provision for    --       --       --       517       899
loan losses
Charge-offs     (137)     (279)     (554)     (622)     (823)
Recoveries      45        811       432       125       90
Net charge-offs  (92)      532       (122)     (497)     (733)
Ending balance   $11,228  $11,320  $10,788  $10,910  $10,890
                                                        
COMPOSITION OF RISK ASSETS                                
Nonperforming loans:                                      
90 days past    $82      $--      $351     $153     $--
due
Nonaccrual &
Restructured     2,883      2,933      3,149      3,483      4,105
debt
OREO             95         95         95         0          1,250
Nonperforming    3,060     3,028     3,595     3,636     5,355
assets
                                                        
ASSET QUALITY RATIOS                                      
Nonperforming
assets to total  0.30%      0.30%      0.34%      0.30%      0.48%
assets
Nonperforming
loans to total   0.43       0.42       0.51       0.55       0.65
loans
Allowance for
loan losses to   1.61       1.62       1.56       1.65       1.74
total loans held
for investment
Allowance for
loan losses to   378.68     385.95     308.23     300.06     265.29
nonperforming
loans
Annualized net
charge-offs to
average loans    0.05       -0.31      0.07       0.31       0.48
held for
investment
                                                        
FINANCIAL RATIOS                                         
Return on        0.94%      1.19%      1.27%      1.28%      1.43%
average assets
Return on
average          10.18     13.42     15.86     17.51     18.24
stockholders'
equity
Net interest     4.11      4.11      4.12      4.02      4.27
margin (FTE)
Non-interest
revenue/Total    60.4      66.4      59.2      66.3      69.2
revenue
Efficiency -     84.8      83.0      79.1      80.4      80.6
Consolidated
Efficiency -     59.1      58.2      53.1      54.5      52.6
Bank only
Average equity
to average       9.27      8.88      8.00      7.29      7.85
assets
                                                        
PERIOD END BALANCES (Amounts in                            
thousands)
Total loans held $120,435 $166,586 $242,457 $419,075 $382,095
for sale
Total loans held 697,541   697,376   692,410   661,094   627,256
for investment
Interest-earning 950,760   960,481   994,946   1,141,180 1,051,145
assets
Assets           1,011,947 1,021,399 1,054,975 1,215,578 1,110,412
Total deposits   886,128   898,686   931,485   901,782   887,707
Other borrowings 11,200    11,225    16,250    209,299   120,027
Stockholders'    95,593    93,147    90,737    87,342    83,912
equity
                                                        
AVERAGE BALANCES (Amounts in                               
thousands)
Total loans held $136,660 $200,733 $316,189 $423,354 $327,378
for sale
Total loans held 692,731   680,037   665,542   637,774   616,728
for investment
Interest-earning 946,575   964,872   1,033,838 1,103,667 978,135
assets
Assets           1,013,932 1,032,345 1,105,933 1,173,820 1,044,966
Total deposits   882,553   908,229   865,146   945,297   890,772
Other borrowings 11,257    11,250    123,291   114,140   46,320
Stockholders'    93,958    91,638    88,430    85,584    82,070
equity
                                                        
MORTGAGE PRODUCTION (Amounts in                            
thousands)
Dollar volume of
mortgage loans   $478,304 $607,189 $542,235 $762,131 $784,963
closed
Percentage of
refinance based  22.6%    39.2%      56.8%      61.4%      59.8%
on dollar volume

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

Monarch Financial Holdings, Inc. logo
 
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