Monarch Financial posts record quarterly profit

By Christopher Dinsmore
The Virginian-Pilot
© October 28, 2010

Lifted by surging mortgage lending, Monarch Financial Holdings Inc. reported Wednesday that it earned a record $1.51 million in the quarter ended Sept. 30.

That's up from $1.15 million in the same period last year. Earnings per share rose to 19 cents, from 17 cents.

The Chesapeake-based parent of Monarch Bank has been focusing on mortgage lending and refinancing, then packaging and reselling the loans. It closed $504 million of such loans during the July-to-September period and held nearly $238 million of mortgage loans for sale as of Sept. 30.

Overall, the company's assets grew by more than a third, to $876 million and deposits 25 percent to $675 million, from a year ago.

"The economy remained sluggish and we continued to aggressively charge off poorly performing loans while building our loan loss reserves this quarter, growing our reserves by $1.7 million," said Brad E. Schwartz, Monarch's CEO, in a statement. "Asset quality remains extremely favorable compared to other local and regional banks."

Nonperforming assets rose 23 percent to $10.8 million as of Sept. 30 and make up 1.23 percent of total assets. During the third quarter, Monarch charged off $1.3 million of bad loans, while adding $3 million to loan-loss reserves, which stood at $10.2 million at the end of the quarter.

Monarch's stock fell 16 cents on Wednesday to close at $7.75 a share.

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Contrary statement

Submitted by Mr. Wizard on Wed, 10/27/2010 at 10:11 am.

"Asset quality at the Chesapeake-based parent of Monarch Bank remained strong as it reported non-performing assets of $10.8 million, or 1.23 percent of total assets, on Sept. 30. That’s up from 1.03 percent of assets on June 30."

If NPA went UP, how is that remaining strong? If NPA goes up, that is bad for a bank.

This type of conflation is unacceptable, especially when quantified.

Must be a straight bank press release with no fact checking.

you're right Mr. Wiz

Submitted by Chris.Dinsmore (staffer) on Wed, 10/27/2010 at 11:57 am.

The story has been written through now. The early version was posted off the press release. There is a tension between breaking news quickly and being more thoughtful about it. Yes, NPAs rose, which isn't good, but Schwartz speaks to Monarch's relative asset strength.