Monarch Financial Reports 2013 Financial Results and Declares Cash Dividend

Monarch Financial Reports 2013 Financial Results and Declares Cash Dividend

CHESAPEAKE, Va., Jan. 30, 2014 (GLOBE NEWSWIRE) -- Monarch Financial Holdings,
Inc. (Nasdaq:MNRK), the bank holding company for Monarch Bank, reported annual
and fourth quarter financial results and declared a quarterly cash dividend.
The Board of Directors announced the quarterly common stock cash dividend of
$0.07 per common share, payable on February 28, 2014, to shareholders of
record on February 10, 2014.

Annual 2013 highlights are:

  *Net income of $11,091,007, for a return on equity of 11.97%
  *Diluted earnings per share of $1.08
  *Net Loans held for investment grew $51.6 million, up 7.8%
  *Non-performing assets at 0.26% of total assets
  *Net Interest Margin of 4.13%
  *$1.98 billion in mortgage loans closed, 65% for home purchases

Fourth quarter 2013 highlights are:

  *Quarterly net income of $2,156,566, for a return on equity of 8.88%
  *Diluted earnings per share of $0.20
  *$350 million in mortgage loans closed, 80% for home purchases

"We are proud to announce the best year in our history for total shareholder
return, and the second best year for company financial performance.
Market-driven declines in mortgage production, which was at an all-time high
in 2012, resulted in a much lower mortgage banking contribution in 2013. Our
banking and investment operations produced record results, with loans held for
investment, core deposits, and assets under management all growing, driving
higher revenue and net income for those segments," stated Brad E. Schwartz,
Chief Executive Officer. "Non-performing assets hit a five-year low of 0.26%
of total assets. The market has responded to our standout performance with
price appreciation in our common stock that, when combined with two increases
in our common stock dividends during the year, produced a 52% total
shareholder return for 2013."

For 2013 net income was $11,091,007 compared to $12,824,869 for the same
period in 2012. For 2013 net income available to common shareholders was
$11,091,007 compared to $11,422,337 for the same period in 2012 when preferred
stock dividends were paid. The 2013 return on average equity (ROE) was 11.97%,
and the annualized return on average assets (ROA) was 1.07%.Annual diluted
earnings per share were $1.08 compared to $1.25 per share in 2012.

Net income was $2,156,566 for the fourth quarter of 2013, down from the same
period in 2012 which was the best quarter in the Company's history, driven by
large mortgage refinance activity.The quarterly annualized return on average
equity (ROE) was 8.88%, and the quarterly return on average assets (ROA) was
0.86%.Diluted earnings per share were $0.20.

Total assets at December 31, 2013 were $1.02 billion.In 2013 loans held for
investment grew 7.8% to $712 million while mortgage loans held for sale
declined 76% to $100 million.While total deposit growth was flat compared to
one year ago, the mix of deposits changed and we had solid growth in local
core deposits. Demand deposit and money market accounts grew while time
deposits were reduced.Demand deposits represent 29% of total
deposits.Monarch Bank remains the second largest community bank by deposit
market share in the Greater Hampton Roads Metropolitan Area.Borrowings
declined $198 million or 99% from one year prior.At December 31, 2012 the
Bank utilized non-core deposits and borrowings to fund the historically high
volume of mortgage loans closed and that funding is no longer necessary.

"We are pleased with our 7.8% year over year loan growth, and the fact we grew
while maintaining a strong net interest margin and superior asset quality,"
stated E. Neal Crawford Jr., President of Monarch Bank."Our peninsula
expansion is going well, along with the integration of Monarch Bank Private
Wealth into our client base.We will continue to focus on building lasting
relationships with our clients through exceptional service."

Non-performing assets were 0.26% as of December 31, 2013 compared to 0.30% one
year prior, and non-performing loans to loans held for investment were 0.32%
compared to 0.55% one year prior.Non-performing assets were $2.6 million,
comprised of $472 thousand in loans 90 days or more past due and still
accruing interest, $1.8 million in non-accrual loans and $0.3 million in other
real estate owned.The allowance for loan losses represents 1.27% of total
loans held for investment and 395% of non-performing loans.

Capital strength continues to grow by all measures.Average equity to average
assets rose to 9.73% at year-end 2013, a 33% increase from 7.29% one year
prior.Total risk-based capital to risk weighted assets at Monarch Bank rose
to 13.95%, meaningfully higher than the required level to meet the highest
rating of "Well Capitalized" by federal banking regulators.Cash dividends of
$0.07 per share were paid in the fourth quarter of 2013, and a total of $0.24
per share was paid during the year, an increase of 26% over 2012.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 2% or
$990,000 during 2013 compared to 2012.A decrease in the average balance of
our mortgage loans held for sale of 38% was partially offset by increases in
the average balance of our loans held for investment portfolio and a reduction
in our funding costs.Our net interest margin for the year 2013 and for the
fourth quarter of 2013 was 4.13%.

Non-interest income decreased $19.9 million or 22% in 2013 over the previous
year, while non-interest expenses declined by $13.3 million, increasing net
overhead expense by $6.6 million compared to the previous year. A decline in
mortgage banking revenues was the driver of the decline in non-interest
income. Investment revenues related to Monarch Bank Private Wealth totaled
$1.1 million for the year compared to $173 thousand the previous year, a
significant increase. The Company was recently recognized by Raymond James
Financial Services as having a top performing investment program, with $185
million in assets under management accumulated since the formation of Monarch
Bank Private Wealth in September of 2012.

Mortgage revenue remains the number one driver of non-interest income.$350
million in mortgage loans were closed during the fourth quarter of 2013 (80%
purchase) compared to $762 million in the fourth quarter of 2012 (39%
purchase).Monarch closed $1.98 billion in mortgage loans during 2013 compared
to $2.7 billion in 2012.The reduction in mortgage revenue was due to lower
margins driven by competition and loan mix, a lower volume of closings, and
reduced balances and related earnings from our loans held for sale
portfolio.Ongoing and aggressive expense reductions are being made in our
mortgage operations to better align our expense structure with current and
forecasted mortgage production levels.

"Our current focus is to continue to grow market share in a declining market
environment.Our long-term focus has always been on purchase mortgage lending,
with 80% of the loans closed in the fourth quarter of 2013 used to purchase
homes," stated William T. Morrison, CEO of Monarch Mortgage. "We continue to
make adjustments to our delivery system and expense structure that should
drive improved profitability to the bottom line in 2014."

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), 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
                                  
                      December     September    June 30,    March 31,   December 31,
                       31,         30,
                      2013         2013         2013         2013         2012
ASSETS:                                                                
Cash and due from      $18,971    $21,016    $19,050    $17,414    $27,364
banks
Interest bearing bank  31,955      24,504      15,195      14,099      14,667
balances
Federal funds sold     53,985      83,454      56,972      21,937      15,744
                                                                      
Investment securities, 48,822      16,973      16,573      16,493      14,634
at fair value
                                                                      
Loans held for sale    99,718      120,435     166,586     242,457     419,075
                                                                      
Loans held for
investment, net of     712,671     697,541     697,376     692,410     661,094
unearned income
Less: allowance for    (9,061)     (11,228)    (11,320)    (10,788)    (10,910)
loan losses
Net loans              703,610     686,313     686,056     681,622     650,184
                                                                      
Bank premises and      28,882      28,454      28,101      27,507      25,448
equipment, net
Restricted equity      3,683       3,666       3,792       3,781       12,363
securities, at cost
Bank owned life        7,409       7,351       7,290       7,231       7,173
insurance
Goodwill               775         775         775         775         775
Intangible assets, net 104         149         194         238         283
Accrued interest
receivable and other   18,786      18,857      20,815      21,421      27,868
assets
                                                                      
Total assets           $1,016,700 $1,011,947 $1,021,399 $1,054,975 $1,215,578
                                                                      
LIABILITIES:                                                           
Demand
deposits--non-interest $206,891   $222,021   $218,880   $201,346   $190,120
bearing
Demand
deposits--interest     55,528      48,302      52,101      57,074      65,369
bearing
Money market deposits  374,462     364,488     341,042     332,305     335,899
Savings deposits       22,137      22,665      22,172      23,579      22,127
Time deposits          234,100     228,652     264,491     317,181     288,267
Total deposits         893,118     886,128     898,686     931,485     901,782
                                                                      
FHLB borrowings        1,175       1,200       1,225       1,250       194,299
Short Term borrowings  --          --          --          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      14,661      17,855      16,733      14,894      15,550
liabilities
Total liabilities      918,954     915,183     926,644     962,629     1,126,631
                                                                      
STOCKHOLDERS' EQUITY:                                                  
Preferred Stock        --          --          --          --          2,406
Common stock           51,432      51,230      50,873      50,821      41,632
Capital in excess of   7,069       6,755       6,521       6,300       12,718
par value
Retained earnings      39,437      38,014      36,233      33,790      30,786
Accumulated other      (419)       (406)       (480)       (174)       (200)
comprehensive loss
Total Monarch
Financial Holdings,    97,519      95,593      93,147      90,737      87,342
Inc. stockholders'
equity
Noncontrolling         227         1,171       1,608       1,609       1,605
interest
Total equity           97,746      96,764      94,755      92,346      88,947
                                                                      
Total liabilities and  $1,016,700 $1,011,947 $1,021,399 $1,054,975 $1,215,578
stockholders' equity
                                                                      
Preferred shares
outstanding at period  --         --         --         --         481,123
end
Common shares
outstanding at period  10,502,323  10,480,023  10,408,544  10,398,073  8,557,939
end (1)
                                                                      
Nonvested shares of
common stock included  215,960     233,960     233,960     233,960     231,460
in commons shares
outstanding (1)
                                                                      
Book value per common
share at period end    $9.29      $9.12      $8.95      $8.73      $8.80
(1) (2)
Tangible book value
per common share at    $9.20      $9.03      $8.86      $8.63      $8.68
period end (1) (3)
Closing market price   $12.31     $11.72     $10.83     $10.61     $8.22
(1)
                                                                      
Total risk based
capital - Consolidated 13.91%       13.70%       13.42%       13.21%       12.05%
company
Total risk based       13.95%       13.84%       13.66%       13.94%       12.73%
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 sharesoutstanding.
                                                                      

Consolidated Statements of Income
Monarch Financial Holdings, Inc. and Subsidiaries
Unaudited
                     Three Months Ended          Year Ended
                     December 31,                December 31,
                     2013          2012          2013          2012
INTEREST INCOME:                                             
Interest on federal   $42,283     $4,208      $115,963    $23,343
funds sold
Interest on other     28,626       8,279        58,027       21,438
bank accounts
Dividends on equity   67,540       50,422       277,700      191,396
securities
Interest on           60,311       50,294       230,496      200,285
investment securities
Interest and fees on  10,478,477   12,577,364   43,666,251   46,032,003
loans
Total interest income 10,677,237   12,690,567   44,348,437   46,468,465
INTEREST EXPENSE:                                            
Interest on deposits  905,970      1,206,595    3,936,203    4,962,290
Interest on trust
preferred             122,850      125,214      491,910      494,911
subordinated debt
Interest on other     15,002       259,195      358,345      459,032
borrowings
Total interest        1,043,822    1,591,004    4,786,458    5,916,233
expense
NET INTEREST INCOME   9,633,415    11,099,563   39,561,979   40,552,232
PROVISION FOR LOAN    --           517,456      --           4,831,133
LOSSES
                                                            
NET INTEREST INCOME
AFTER PROVISION FOR   9,633,415    10,582,107   39,561,979   35,721,099
LOAN LOSSES
                                                            
NON-INTEREST INCOME:                                         
Mortgage banking      13,276,836   23,950,026   65,672,402   86,337,921
income
Service charges and   502,373      489,830      1,941,926    1,830,018
fees
Title income          124,774      237,238      789,253      814,487
Investment and        336,002      106,529      1,053,429    172,667
insurance income
Other income          111,924      96,113       425,261      605,713
Total non-interest    14,351,909   24,879,736   69,882,271   89,760,806
income
NON-INTEREST EXPENSE:                                        
Salaries and employee 8,772,157    8,199,075    34,112,834   29,868,159
benefits
Commissions and       5,248,131    12,986,177   28,344,347   46,572,529
incentives
Occupancy and         2,220,634    1,948,464    8,449,912    7,089,757
equipment
Loan expense          1,526,317    2,461,957    7,891,835    8,487,520
Marketing expense     807,717      775,861      2,873,259    2,412,674
Data processing       459,681      455,785      1,696,535    1,525,401
Other expenses        1,527,715    2,230,718    7,542,096    8,299,574
Total non-interest    20,562,352   29,058,037   90,910,818   104,255,614
expense
                                                            
INCOMEBEFORE TAXES   3,422,972    6,403,806    18,533,432   21,226,291
Income tax provision  (1,179,017)  (2,337,743)  (6,386,040)  (7,426,785)
NET INCOME            2,243,955    4,066,063    12,147,392   13,799,506
                                                            
Less: Net income
attributable to       (87,389)     (297,690)    (1,056,385)  (974,637)
noncontrolling
interest
NET INCOME
ATTRIBUTABLE TO       $2,156,566   $3,768,373   $11,091,007  $ 12,824,869
MONARCH FINANCIAL
HOLDINGS, INC
                                                            
Preferred stock
dividend and
accretion of          --          (237,943)    --          (1,402,532)
preferred stock
discount
NET INCOME AVAILABLE
TO COMMON             $2,156,566   $3,530,430   $11,091,007  $ 11,422,337
STOCKHOLDERS
                                                            
NET INCOMEPER COMMON                                        
SHARE:
                                                            
Basic                 $0.21       $0.44       $1.09       $1.54
Diluted               $0.20       $0.37       $1.08       $1.25
                                                            
Weighted average
basic shares          10,486,056   7,980,259    10,167,156   7,400,443
outstanding
Weighted average
diluted shares        10,535,313   10,315,360   10,299,471   10,255,992
outstanding
                                                            
Return on average     0.86%         1.28%         1.07%         1.26%
assets
Return on average     8.88%         17.51%        11.97%        15.84%
stockholders' 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) December   September  June 30,   March 31,  December
                        31,        30,                              31,
                       2013       2013       2013       2013       2012
EARNINGS                                                        
Interest income         $10,677  $10,842  $10,976  $11,854  $12,690
Interest expense        (1,044)   (1,121)   (1,184)   (1,438)   (1,591)
Net interest income     9,633     9,721     9,792     10,416   11,099
Provision for loan      --       --       --       --       (517)
losses
Noninterest income -    13,277    15,510    20,572    16,166    23,826
mortgage banking income
Noninterest income -    1,075     1,018     1,102    1,015     1,054
other
Noninterest expense     (20,562)  (22,315)  (26,173)  (21,861)  (29,058)
Pre-tax net income      3,423    3,934     5,293     5,736     6,404
Minority interest in    (87)      (108)     (428)     (285)    (298)
net income
Income taxes            (1,179)   (1,416)   (1,798)   (1,993)   (2,338)
Net income              $2,157   $2,410   $3,067   $3,458   $3,768
                                                               
PER COMMON SHARE                                                
Earnings per share -    $0.21    $0.23    $0.29    $0.37   $0.44
basic
Earnings per share -    0.20      0.23      0.29      0.33      0.37
diluted
Common stock - per      0.07     0.06      0.06      0.05      0.05
share dividends
Average Basic Shares    10,486,056 10,464,992 10,401,992 9,300,760  7,980,259
Outstanding
Average Diluted Shares  10,535,313 10,519,472 10,483,420 10,451,897 10,315,360
Outstanding
                                                               
ALLOWANCE FOR LOAN                                              
LOSSES
Beginning balance       $11,228  $11,320  $10,788 $10,910  $10,890
Provision for loan      --       --       --       --       517
losses
Charge-offs             (2,252)   (137)     (279)     (554)     (622)
Recoveries              85        45        811       432      125
Net charge-offs         (2,167)   (92)      532       (122)     (497)
Ending balance          $9,061   $11,228 $11,320  $10,788  $10,910
                                                               
COMPOSITION OF RISK                                             
ASSETS
Nonperforming loans:                                            
90 days past due        $472     $ 82     $--      $351     $153
Nonaccrual loans        1,824      2,883      2,933      3,149      3,483
OREO                    302        95         95         95         0
Nonperforming assets    2,598     3,060     3,028     3,595     3,636
                                                               
                                                               
ASSET QUALITY RATIOS                                            
Nonperforming assets to 0.26%      0.30%      0.30%      0.34%      0.30%
total assets
Nonperforming loans to  0.32       0.43       0.42       0.51       0.55
total loans
Allowance for loan
losses to total loans   1.27       1.61       1.62       1.56       1.65
held for investment
Allowance for loan
losses to nonperforming 394.64     378.68     385.95     308.23     300.06
loans
Annualized net
charge-offs to average  1.25       0.05       -0.31      0.07       0.31
loans held for
investment
                                                               
FINANCIAL RATIOS                                                
Return on average       0.86%     0.94%     1.19%     1.27%     1.28%
assets
Return on average       8.88     10.18     13.42     15.86     17.51
stockholders' equity
Net interest margin     4.13      4.11      4.11      4.12      4.02
(FTE)
Non-interest            57.3      60.4      66.4      59.2      66.3
revenue/Total revenue
Efficiency -            85.5     84.8      83.0      79.1      80.4
Consolidated
Efficiency - Bank only  60.4      59.1      58.2      53.1      54.5
Average equity to       9.73      9.27      8.88      8.00      7.29
average assets
                                                               
PERIOD END BALANCES                                             
(Amounts in thousands)
Total loans held for    $99,718  $120,435 $166,586 $242,457 $419,075
sale
Total loans held for    712,671   697,541   697,376   692,410   661,094
investment
Interest-earning assets 952,981   950,760   960,481   994,946   1,141,180
Assets                  1,016,700 1,011,947 1,021,399 1,054,975 1,215,578
Total deposits          893,118   886,128   898,686   931,485   901,782
Other borrowings        11,175    11,200    11,225    16,250    209,299
Stockholders' equity    97,519    95,593    93,147    90,737   87,342
                                                               
AVERAGE BALANCES                                                
(Amounts in thousands)
Total loans held for    $104,104 $136,660 $200,733 $316,189 $423,354
sale
Total loans held for    695,074   692,731   680,037   665,542   637,774
investment
Interest-earning assets 935,059   946,575   964,872  1,033,838 1,103,667
Assets                  990,734   1,013,932 1,032,345 1,105,933 1,173,820
Total deposits          869,113   882,553   908,229  865,146   945,297
Other borrowings        11,199    11,257    11,250    123,291   114,140
Stockholders' equity    96,415    93,958    91,638    88,430    85,584
                                                               
MORTGAGE PRODUCTION                                             
(Amounts in thousands)
Dollar volume of        $349,695 $478,304 $607,189 $542,235 $762,131
mortgage loans closed
Percentage of refinance 20.3%     22.6%     39.2%     56.8%     61.4%
based on dollar volume

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

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