Monarch Community Bancorp Inc. (MCBF) filed Quarterly Report for the period ended 2009-09-30.
Monarch Community Bank is a service-oriented organization dedicated to protecting their members' savings and providing affordable, competitive loan opportunities to Branch and Hillsdale counties...and all the communities they serve. Monarch Community Bancorp Inc. has a market cap of $6.16 million; its shares were traded at around $3.01 with and P/S ratio of 0.3.
Highlight of Business Operations:
Total deposits increased $23.5 million, or 12.3%, from $192.2 million at December 31, 2008 to $215.7million at September 30, 2009. The increase is attributed to an increase of $10.1 million in local certificates of deposit, an increase of $5.9 million in demand and Now accounts, an increase in money market accounts of $15.1 million and an increase of $400,000 in savings accounts. Brokered deposits decreased $8 million as management continues to try to reduce its reliance on wholesale funding. The increase in local certificates of deposits and money market accounts is largely due to management’s efforts to remain competitive with interest rates in these categories of deposits. The increase in money market accounts has provided funding so it has not been necessary for management to borrow additional FHLB advances or increase brokered deposits. Brokered deposits have been managed to provide additional liquidity or reduce excess liquidity depending on current conditions. Management expects future deposit growth to come from increased sales and marketing efforts to attract lower cost savings and checking accounts as well as product enhancement.
The provision for loan losses was $1.3 million in the third quarter of 2009, compared to $731,000 in the third quarter of 2008 and $5.4 million for the nine month period ended September 30, 2009, compared to $1.5 million in the same period of 2008. Net charge-offs for the quarter ended September 30, 2009 totaled $814,000, compared to $442,000 for the quarter ended September 30 , 2008 and $2.1 million for the nine months ended September 30, 2009, compared to $1.0 million for the same period a year ago. The significant increase in the provision was primarily driven by the continued deteriorating economic conditions in Michigan and weaknesses in the local real estate markets which resulted in downgrades to the credit ratings of certain loans in the portfolio and a significant increase in the balances of nonperforming loans.
Net gain on sale loans increased $269,000 for the quarter ended September 30, 2009 from $101,000 to $370,000 compared to the same period a year ago. The increase is largely due to the falling rate environment which has generated a significant amount of one to four family residential mortgage refinancing. Management expects this trend to decline through the latter half of 2009. Fees and service charges decreased $19,000 for the quarter ended September 30, 2009 from $598,000 to $579,000 compared to the same period a year ago. This decrease was a result of a decrease in overdraft fees of $17,000 offset by an increase of $2,000 in all other fees and charges. Future increases in this source of income are dependent on the Bank increasing the number of checking account customers. Management does not expect significant increases in Bounce Protection income from its existing customer base.
Non-interest income for the nine months ended September 30, 2009 increased $1.1 million or 38.5%, from $2.8 million to $3.9 million for the same period in 2008. Net gain on sale loans increased $1.3 million for the nine months ended September 30, 2009 from $563,000 to $1.8 million compared to the same period a year ago. Fees and Service charges decreased $98,000 for the nine months ended September 30, 2009 from $1.7 million to $1.6 million compared to the same period a year ago. As mentioned previously the decrease in fees and service charges is primarily due to the decrease in overdraft fees of $91,000. Other income decreased $74,000 from $204,000 to $127,000.
Noninterest expense increased $227,000, or 10.1%, for the three months ended September 30, 2009 compared to the same period ending a year ago. Salaries and employee benefits increased $127,000 from $1.1 million to $1.2 million due normal increases in salaries and wages. Amortization of mortgage servicing rights increased $19,000 as a result of a continued increase in mortgage loan payoffs due to refinancing associated with the decrease of interest rates in the fourth quarter of 2008. Other general and administrative expenses increased $49,000, from $330,000 to $379,000; reflecting the increase in the quarterly FDIC assessment. Foreclosed property expense increased $60,000, from $84,000 to $144,000 due to increases in maintenance costs, loan collection costs, and losses and impairment charges associated with the disposition of other real estate. Professional services increased $44,000 from $108,000 to $152,000 primarily due to increases in legal fees associated with non-performing loans. Other operating expenses increased $20,000. Data processing decreased $92,000 from $185,000 to $93,000 due to a one time credit recognized with the renegotiation of our contract with the third party data processor Jack Henry and Associates.
Noninterest expense increased $672,000, or 9.7%, for the nine months ended September 30, 2009 compared to the same period ending a year ago. Salaries and employee benefits increased $138,000 from $3.3 million to $3.5 million due normal increases in salaries and wages. Other general and administrative expenses increased $288,000, from $1 million to $1.3 million; this is primarily due to the increase in FDIC insurance reflecting the increase of $136,000 one-time special assessment on all insured financial institutions equal to approximately 5 basis points of total assets, less tier one equity and the quarterly increases implemented earlier in the year.. Amortization of mortgage servicing rights increased $125,000, from $321,000 to $446,000, also for reasons mentioned previously. Professional services increased $103,000, from $301,000 to $404,000 primarily due to increases in legal fees associated with non-performing loans and legal fees associated with the issuance of preferred stock and common stock warrants as part of the Capital Purchase Program transaction. Other operating expenses increased $92,000. The increase in other operating expenses was due to increases in loan collection costs, and losses and impairment charges associated with the disposition of other real estate and additional costs associated with the reissuance of ATM/debit cards associated with a compromised card processing vendor. Data processing decreased $74,000 due to the reasons mentioned previously.
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