EXHIBIT 99.1
PRESS RELEASE
Monadnock Bancorp, Inc. 603.924.9654
1 Jaffrey Road www.monadnockbank.com
Peterborough, NH 03458
FOR IMMEDIATE RELEASE
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For Additional Information Contact:
Karl F. Betz, SVP, CFO & Treasurer (603) 924-9654
kbetz@monadnockbank.com
Monadnock Bancorp, Inc. Announces Third Quarter and YTD Results
Peterborough, New Hampshire - October 19, 2007 - Monadnock Bancorp, Inc.
(over-the-counter bulletin board: MNKB), the holding company for Monadnock
Community Bank announced net income for the three and nine months ended
September 30, 2007 of $35,000 and $89,000, respectively, compared with net
income of $36,000 and $66,000 for the three and nine months ended September 30,
2006. Basic and diluted earnings per share were $.03 and $.07 for the three and
nine months ended September 30, 2007, respectively, compared with $.03 and $.05
for the three and nine months ended September 30, 2006, respectively. Earnings
per share on a basic and fully diluted method have been restated by the
exchange ratio computation of 1.3699 as a result of our second step offering
which was completed on June 28, 2006. Book value per share and tangible book
value per share were $7.57 and $7.41, respectively, at September 30, 2007
compared with $7.48 and $7.31, respectively, at December 31, 2006.
The decrease in earnings for the three months ended September 30, 2007 compared
with the same period a year earlier was primarily attributable to the Federal
Home Loan Bank "FHLB" dividend schedule. The FHLB of Boston declared and paid a
half year dividend in the third quarter of 2006 rather than a quarterly
dividend in each of the second and third quarters of 2006. The decrease was
also the result of an increase in noninterest expense of $61,000, an increase
in the provision for loan losses of $14,000, an increase in income tax expense
of $13,000 and a decrease in noninterest income of $5,000, partially offset by
an increase in net interest and dividend income of $91,000.
The increase in earnings for the nine months ended September 30, 2007 compared
with the same period a year earlier was primarily attributable to an increase
in net interest and dividend income of $318,000, an increase in noninterest
income of $14,000, partially offset by an increase in noninterest expense of
$211,000, an increase in the provision for loan losses of $46,000 and an
increase in income tax expense of $51,000.
Net interest and dividend income increased $91,000, or 15.9%, to $663,000 for
the three months ended September 30, 2007 compared to $572,000 for the three
months ended September 30, 2006. This increase reflected a $359,000, or 29.5%,
increase in interest and dividend income, and a $267,000, or 41.2%, increase in
interest expense. The interest rate spread was 2.05% for the three months ended
September 30, 2007 compared to 2.15% for the three months ended September 30,
2006 and 2.04% for the three months ended June 30, 2007. The net interest
margin for the three months ended September 30, 2007 was 2.61% compared to
2.75% for the three months ended September 30, 2006 and 2.64% for the three
months ended June 30, 2007. The impact of the delay in the declaration of the
FHLB dividend noted above in 2006 resulted in an increase in the interest rate
spread and net interest margin of 7 and 8 basis points, respectively, for the
quarter ended September 30, 2006. The decrease in the interest rate spread for
the three months ended September 30, 2007 compared with the same period a year
earlier was also due to a change in the mix of assets to lower yielding
investment securities as a result of our increasing the average balance of
interest earning assets by $18.5 million during this period. In addition, the
change in the mix of liabilities to more interest rate sensitive products such
as time certificates and FHLB advances resulted in net interest margin
compression for the quarter ended September 30, 2007 when compared with the
quarter ended September 30, 2006.
Net interest and dividend income increased $318,000, or 20.2%, to $1.9 million
for the nine months ended September 30, 2007 compared to $1.6 million for the
nine months ended September 30, 2006. This increase reflected a $1.2 million,
or 35.1%, increase in interest and dividend income, and a $837,000, or 48.9%,
increase in interest expense. The interest rate spread was 2.05% for the nine
months ended September 30, 2007 compared to 2.26% for the nine months ended
September 30, 2006. The net interest margin for the nine months ended September
30, 2007 was 2.62% compared to 2.70% for the nine months ended September 30,
2006. The decrease in the interest rate spread for the nine months ended
September 30, 2007 compared with the same period a year earlier was also due to
a change in the mix of assets to lower yielding investment securities as a
result of our increasing the average balance of interest earning assets by
$18.7 million during this period. In addition, the change in the mix of
liabilities to more interest rate sensitive products such as time certificates
and FHLB advances resulted in net interest margin compression for the nine
months ended September 30, 2007 when compared with the nine months ended
September 30, 2006.
Noninterest income decreased $5,000 for the three months ended September 30,
2007 when compared with the three months ended September 30, 2006 as a result
of a decrease in fees collected on the Bank's overdraft privilege program.
Noninterest income increased $14,000, or 6.8%, to $219,000 for the nine months
ended September 30, 2007 from $205,000 for the nine months ended September 30,
2006. The increase was primarily attributable to net gains on sales of
available-for-sale securities of $16,000 for the nine months ended September
30, 2007 compared with no gain on sales for the same period in 2006.
Noninterest expense increased $61,000, or 10.4% to $649,000 for the three
months ended September 30, 2007 compared with $588,000 for the three months
ended September 30, 2006. Salaries and employee benefits expense increased
$35,000 from $314,000, or 53.4%, of total noninterest expense for the three
months ended September 30, 2006 to $349,000, or 53.8%, of total noninterest
expense for the three months ended September 30, 2007. This increase in
salaries and employee benefits expense resulted from an increase in staffing
for the commercial lending area, normal salary increases, increases related to
stock benefit plans as well as a decrease in the deferrals of loan origination
costs. Other increases in noninterest expense related primarily to a $14,000
increase in marketing expenses and a $7,000 increase in professional fees.
Noninterest expense increased $211,000, or 12.5% to $1.9 million for the nine
months ended September 30, 2007 compared with $1.7 million for the nine months
ended September 30, 2006. Salaries and employee benefits expense increased
$141,000 from $859,000, or 51.0%, of total noninterest expense for the nine
months ended September 30, 2006 to $1.0 million, or 52.8%, of total noninterest
expense for the nine months ended September 30, 2007. This increase in salaries
and employee benefits expense resulted from an increase in staffing for the
commercial lending area, normal salary increases, increases related to stock
benefit plans and a decrease in the deferrals of loan origination costs. Other
increases in noninterest expense primarily related to a $28,000 increase in
professional fees, $18,000 increase in marketing expenses and a $29,000
increase in other expenses related to enhanced internet security and certain
one time non-recurring expenses.
Total assets increased $9.1 million, or 9.5%, to $105.3 million at September
30, 2007 compared with $96.2 million at December 31, 2006. Our net loan
portfolio grew by $6.7 million, or 12.5%, to $60.4 million at September 30,
2007 from $53.7 million at December 31, 2006. Loan growth during the first nine
months of 2007 was primarily concentrated in commercial real estate lending and
one- to four-family residential lending which grew $3.2 million and $3.1
million, respectively. Total deposits increased $5.8 million, or 9.4%, to $67.2
million at September 30, 2007 from $61.4 million at December 31, 2006. The
largest increase was in time deposits, NOW accounts and demand deposit accounts
which increased $4.3 million, $929,000 and $849,000, respectively. The increase
in time deposits was the direct result of our marketing initiatives in this
area as well as paying competitive rates on this product. The increase in NOW
and demand deposit accounts was primarily due to several large deposit accounts
at September 30, 2007.
Total nonperforming assets increased $328,000 to $388,000 or 0.37% of total
assets at September 30, 2007 compared with $60,000 or 0.06% of total assets at
December 31, 2006. The nonperforming assets carry a guarantee by the United
States Small Business Administration covering $164,000 and $51,000 of the
balance outstanding, respectively, at September 30, 2007 and December 31, 2006.
The increase in nonperforming assets for the nine months ended September 30,
2007 was primarily due to two commercial loan relationships.
As of September 30, 2007, the Company had repurchased 50,000 shares of common
stock for $332,800, or a weighted average per share price of $6.66.
President and Chief Executive Officer William M. Pierce, Jr. said, "We are
pleased with the results of the repurchase program and to report solid growth
in our loan and deposit portfolios for 2007. We will continue to focus on the
strategic objectives of maintaining a community focus in the areas we serve,
providing a high quality of service to our customers and diligently working to
improve our franchise and shareholder value." For additional information visit
www.monadnockbank.com.
FORWARD-LOOKING STATEMENTS:
Statements contained in this news release that are not historical facts may
constitute "forward-looking statements" (within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended), which involve significant
risks and uncertainties. The Company intends such forward-looking statements to
be covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act Of 1995, and is
including this statement for purposes of invoking these safe harbor provisions.
The Company's ability to predict results or the actual effect of future plans
or strategies is inherently uncertain. Factors which could have a material
adverse effect on our operations include, but are not limited to, changes in
interest rates, general economic conditions, economic conditions in the state
of New Hampshire and Massachusetts, legislative and regulatory changes,
monetary and fiscal policies of the U.S. Government, including policies of the
U.S. Treasury and the Federal Reserve Board, fiscal policies of the New
Hampshire and Massachusetts State Government, the quality or composition of our
loan or investment portfolios, demand for loan products, competition for and
the availability of loans that we purchase for our portfolio, deposit flows,
competition, demand for financial services in our market areas and accounting
principles and guidelines, acquisitions and the integration of acquired
businesses, asset-liability management, the financial and securities markets
and the availability of and costs associated with sources of liquidity. These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.