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Global Cash Access Reports 2014 Fourth Quarter Revenue of $152.1 Million and Adjusted EBITDA of $24.0 Million

LAS VEGAS, March 10, 2015 (GLOBE NEWSWIRE) — Global Cash Access Holdings, Inc. (GCA) (“GCA” or the “Company”) today reported financial results for the fourth quarter and full year ended December 31, 2014. On December 19, 2014, GCA completed the acquisition of Multimedia Games Holding Company, Inc. (“Multimedia Games”), creating a diversified organization dedicated to providing integrated payments solutions, video and mechanical reel gaming content and technology solutions, as well as compliance and efficiency software. Unless otherwise noted, all results for the 2014 fourth quarter and full year referenced below include 13 days of operations from Multimedia Games.

Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
(in millions, except for per share amounts)

Revenue $152.1 $140.5

Operating income (1) $0.4 $11.2

Net (Loss) Income (1) ($5.7) $5.7

Net (Loss) Income per Diluted Share (1) ($0.09) $0.08

Diluted Shares Outstanding 66.4 67.4

Adjusted EBITDA (2) $24.0 $17.1

Cash Earnings (3) $15.6 $13.0

Cash Earnings Per Share (“Cash EPS”) (4) $0.23 $0.19

(1) Operating income, Net Loss and Net Loss per Diluted Share for the three months ended December 31, 2014 includes $10.0 million of acquisition costs and purchase accounting adjustments and a $3.1 million asset impairment charge. (2) Adjusted EBITDA is defined as operating income plus depreciation and amortization, non-cash compensation, asset impairment charge, accretion of contract rights, acquisition costs and purchase accounting adjustments. (3) Cash Earnings is defined as net income plus non-cash compensation, deferred income tax, amortization, asset impairment charge, accretion of contract rights, acquisition costs, purchase accounting adjustments and write-off of deferred loan fees. (4) Cash Earnings Per Share (“Cash EPS”) is defined as Cash Earnings divided by the weighted average number of diluted shares of common stock outstanding.

Ram V. Chary, President and Chief Executive Officer of GCA, commented, “The completion of the acquisition of Multimedia Games in December has resulted in the combination of differentiated, industry-leading solutions offered by both GCA and Multimedia Games, which enables us to present a unique new value proposition to casino operators. We intend to leverage our slot gaming entertainment, payments and compliance solutions to bring enhanced offerings to market that provide excellent returns on our customers’ capital investments in gaming technology. In the short time since acquiring Multimedia Games, we have made measurable progress on integrating our two organizations and are tracking to our objectives.”

Fourth Quarter 2014 Results Overview (includes 13 days of operations of Multimedia Games)

Revenues increased $11.6 million, or 8% compared to the same period last year, to $152.1 million in the fourth quarter of 2014. Fourth quarter 2014 revenue includes $7.4 million from Multimedia Games and a $4.2 million, or 3%, increase in legacy GCA revenue. Operating income, inclusive of a $9.7 million impact for acquisition costs, $0.3 million for purchase accounting adjustments, and an asset impairment charge of $3.1 million, was $0.4 million in the 2014 fourth quarter compared to operating income of $11.2 million for the 2013 fourth quarter. Adjusted EBITDA increased $6.9 million, or 40%, to $24.0 million for the fourth quarter of 2014, compared to Adjusted EBITDA of $17.1 million in the same period last year. The increase in Adjusted EBITDA includes $4.0 million from Multimedia Games.

GCA recorded a loss from operations before income tax provision of $7.5 million compared to income from operations before income tax provision of $9.1 million in the fourth quarter of 2013. Diluted loss per share from continuing operations was $0.09 compared to diluted earnings per share of $0.08 for the 2013 fourth quarter. Cash EPS increased to $0.23 for the fourth quarter of 2014 from Cash EPS of $0.19 in the prior-year period. Excluding the operations of Multimedia Games, Cash EPS was $0.24 for the quarter.

Randy Taylor, Executive Vice President and Chief Financial Officer, commented, “Since completing our acquisition of Multimedia Games less than three months ago, we have been focused on our integration initiatives. As of December 31, 2014, we have eliminated approximately $10.9 million on an annual run rate basis from our overall cost structure and we expect to achieve our targeted annual run rate of $24 million in cost synergies by calendar year end. As part of our integration plans, later this year we intend to consolidate all of our manufacturing operations which will significantly enhance manufacturing efficiencies and reduce costs. Looking forward, our plan continues to focus on the deployment of cash to reduce leverage.”

Multimedia Games Full Quarter Comparative Results

The information set forth in the table below presents standalone historical data for Multimedia Games related to the three months ended December 31, 2014 (inclusive of the 79 days prior to the acquisition by GCA on December 19, 2014) and December 31, 2013. The information set forth in the table below should be read in conjunction with the historical financial statements of Multimedia Games that are incorporated by reference in the Company’s Current Report on Form 8-K/A filed with the SEC on February 27, 2015.

Three Months Ended Three Months Ended
December 31, 2014 December 31, 2013
(in millions, except for unit amounts and prices)

Revenue $48.0 $59.2

Operating (loss) income (1) ($7.4) $15.0

Adjusted EBITDA (2) $22.8 $29.2

Units Sold (3) 537 1,375

Average Sales Price (ASP) $16,318 $17,366 Domestic Participation Installed Units:(4)

Average 13,157 12,520 Quarter End 13,287 12,657

(1) Operating (loss) income for the three months ended December 31, 2014 includes $13.4 million of acquisition costs and purchase accounting adjustments. (2) Adjusted EBITDA is defined as operating income plus depreciation and amortization, non-cash compensation, accretion of contract rights, acquisition costs and purchase accounting adjustments. (3) Unit sales in the three month period ended December 31, 2013, included the sale of 499 units to a single customer in Alabama, of which 221 units were previously on a revenue share arrangement. (4) The installed base (quarter-end) and installed base (average) for the three months ended December 31, 2014, reflect the temporary removal from the installed base of 123 units at a customer’s facility in Oklahoma as the facility is undergoing a renovation. The units were initially removed from the installed base on October 1, 2014.

On a pro-forma basis, as if the acquisition of Multimedia Games was completed on January 1, 2014, the combined company would have reported full year 2014 revenue of $792.6 million and Adjusted EBITDA of $186.9 million and 2014 fourth quarter revenue of $192.7 million and Adjusted EBITDA of $42.7 million.

2015 Outlook

Reflecting the current operating and competitive environment, GCA estimates Adjusted EBITDA of between $218 million and $228 million in 2015 based on following key assumptions:

Single digit revenue growth in our Payments business; Double-digit revenue growth in our Games business; Double-digit increase in research and development costs related to the Games business; Depreciation and amortization of $130 million to $135 million driven by our purchase price allocation for Multimedia Games, which significantly increased amortizable intangible assets; Cap-ex in the range of $60 million to $70 million, including contract rights; and, Interest expense of approximately $95 million exclusive of amortization of debt issuance costs.

Investor Conference Call and Webcast

The Company will host an investor conference call to discuss its fourth quarter and full year 2014 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (888) 656-7430 or for international callers by dialing (913) 981-5582. A replay will be available at 8:00 p.m. ET and can be accessed by dialing (877) 870-5176 or (858) 384-5517 for international callers; the pin number is 9117092. The replay will be available until March 17, 2015. The call will be webcast live from the Company’s website at under the Investor Relations section.

Non-GAAP Financial Information

In order to enhance investor understanding of the underlying trends in our business and to provide for better comparability between periods in different years, we are providing in this press release EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS on a supplemental basis. We define EBITDA as earnings before interest, taxes, depreciation and amortization; Adjusted EBITDA as EBITDA adjusted for non-cash compensation expense, asset impairment charge, accretion of contract rights, acquisition costs and purchase accounting adjustments; Cash Earnings as net income plus non-cash compensation, deferred income tax, amortization, asset impairment charge, accretion of contract rights, acquisition costs, purchase accounting adjustments and write-off of deferred loan fees; and Cash EPS as Cash Earnings divided by our diluted weighted average number of shares of common stock outstanding. We present Adjusted EBITDA and Cash EPS as we use this information to manage our business and consider these measures to be supplemental to our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA; and our credit facility, senior secured notes and senior unsecured notes require us to comply with a consolidated secured leverage ratio that include performance metrics substantially similar to Adjusted EBITDA. Reconciliations between GAAP measures and non-GAAP measures and between actual results and adjusted results are provided at the end of this press release. EBITDA, Adjusted EBITDA, Cash Earnings and Cash EPS are not measures of financial performance under United States Generally Accepted Accounting Principles (“GAAP”). Accordingly, they should not be considered in isolation or as a substitute for, and should be read in conjunction with, our net income, operating income, basic or diluted earnings per share or cash flow data prepared in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements included in this press release, other than statements that are purely historical, are forward-looking statements. Words such as “believes,” “intends,” “expects,” “plan,” “estimate” and similar expressions also identify forward-looking statements. Forward-looking statements in this press release include, without limitation, our estimates of 2015 Adjusted EBITDA and the assumptions and factors upon which it is based.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or assumed, including but not limited to the following: our ability to replace revenue associated with terminated contracts; margin degradation from contract renewals; our ability to introduce new products and services; our ability to execute on mergers, acquisitions and/or strategic alliances, including our ability to integrate Multimedia Games; gaming establishment and patron preferences; our ability to successfully complete the conversion of our third-party processor; our ability to comply with the Europay, MasterCard and Visa global standard for cards equipped with computer chips (“EMV”); national and international economic conditions; changes in gaming regulatory, card association and statutory requirements; regulatory and licensing difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcomes; interest rate fluctuations; inaccuracies in underlying operating assumptions; unanticipated expenses or capital needs; technological obsolescence; and employee turnover. If any of these assumptions prove to be incorrect, the results contemplated by the forward-looking statements regarding our future results of operations are unlikely to be realized.

The forward-looking statements in this press release are subject to additional risks and uncertainties set forth under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report filed on Form 10-K on March 11, 2014, and subsequent periodic reports and are based on information available to us on the date hereof. We do not intend, and assume no obligation, to update any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release.

About GCA

GCA is dedicated to providing integrated gaming payments solutions, video and mechanical reel gaming content and technology solutions, as well as compliance and efficiency software. The Company’s Payments business provides: (a) access to cash at gaming facilities via Automated Teller Machine (“ATM”) cash withdrawals, credit card cash access transactions, point-of-sale (“POS”) debit card transactions, and check verification and warranty services; (b) fully integrated gaming industry kiosks that provide cash access and related services; (c) products and services that improve credit decision making, automate cashier operations and enhance patron marketing activities for gaming establishments; (d) compliance, audit and data solutions; and, (e) online payment processing solutions for gaming operators in States that offer intra-state, Internet-based gaming and lottery activities. The Company’s Games business, under the Multimedia Games brand, provides: (a) comprehensive content, electronic gaming units and systems for Native American and commercial casinos, including the award-winning TournEvent(R) slot tournament solution; and, (b) the central determinant system for the video lottery terminals (“VLTs”) installed at racetracks in the State of New York. More information is available at GCA’s website at

(In thousands, except earnings per share amounts)

Year Ended December 31,
2014 2013 2012

Revenues $ 593,053 $ 582,444 $ 584,486

Costs and expenses

Cost of revenues (exclusive of depreciation and amortization) 440,071 439,794 436,059 Operating expenses 95,452 76,562 75,806 Research and Development 804 — — Depreciation 8,745 7,350 6,843 Amortization 14,199 9,588 9,796

Total costs and expenses 559,271 533,294 528,504

Operating income 33,782 49,150 55,982

Other expenses

Interest expense, net of interest income 10,756 10,265 15,519 Loss on extinguishment of debt 2,725 — —

Total other expenses 13,481 10,265 15,519

Income from operations before tax 20,301 38,885 40,463

Income tax provision 8,161 14,487 14,774

Net income 12,140 24,398 25,689

Foreign currency translation (1,258) 269 218

Comprehensive income $ 10,882 $ 24,667 $ 25,907

Earnings per share

Basic $ 0.18 $ 0.37 $ 0.39 Diluted $ 0.18 $ 0.36 $ 0.38

Weighted average common shares outstanding

Basic 65,780 66,014 65,933 Diluted 66,863 67,205 67,337

(In thousands)

Year Ended December 31, Selected Balance Sheet Information: 2014 2013 Current assets

Cash and cash equivalents
$ 89,095 $ 114,254 Settlement receivables
43,288 38,265

Current liabilities

Settlement liabilities
119,157 145,022 Current portion of long-term debt
10,000 1,030

Non-current liabilities

Long-term debt, less current portion and original issue discount
1,178,787 101,970

Total stockholders’ equity 231,473 218,604

Year Ended December 31, Selected Cash Flows Information: 2014 2013 2012
Cash flows from investing activities

Acquisitions, net of cash acquired $ (1,072,819) $ — $ — Capital expenditures (18,021) (13,900) (12,786)

Cash flows from financing activities

Proceeds from long-term debt 1,200,000 — —


Three months ended December 31, Twelve months ended December 31,
December 31, 2014 December 31, 2013 December 31, 2014 December 31, 2013 Reconciliation of net income to cash earnings (amounts in thousands, except earnings per share amounts)

Net (loss) income $ (5,749) $ 5,704 $ 12,140 $ 24,398 Equity compensation expense 1,343 1,376 8,876 5,078 Deferred income tax (1,941) 3,308 6,613 13,643 Amortization 5,723 2,614 14,199 9,588 Asset Impairment 3,129 — 3,129 — Accretion of contract rights 301 — 301 — Acquisition costs and purchase accounting adjustments 10,041 — 10,995 — Write-off of deferred loan fees 2,725 — 2,725 —

Cash earnings $ 15,572 $ 13,002 $ 58,978 $ 52,707

Diluted weighted average number of common shares outstanding 66,397 67,394 66,863 67,205

Diluted cash earnings per share (“Cash EPS”) $ 0.23 $ 0.19 $ 0.88 $ 0.78

Reconciliation of operating income to EBITDA and Adjusted EBITDA

Operating income $ 376 $ 11,196 $ 33,782 $ 49,150 Plus: depreciation and amortization 8,766 4,543 22,944 16,938

EBITDA $ 9,142 $ 15,739 $ 56,726 $ 66,088
Equity compensation expense 1,343 1,376 8,876 5,078 Asset Impairment 3,129 — 3,129 — Accretion of contract rights 301 — 301 — Acquisition costs and purchase accounting adjustments 10,041 — 10,995 —

Adjusted EBITDA $ 23,956 $ 17,115 $ 80,027 $ 71,166


2015 Guidance Range1
Low High

Reconciliation of projected operating income to projected EBITDA and projected Adjusted EBITDA

Projected operating income $ 79,800 $ 89,800 Plus: projected depreciation and projected amortization 133,700 133,700

Projected EBITDA $ 213,500 $ 223,500

Projected equity compensation expense 9,200 9,200 Projected accretion of contract rights 9,700 9,700 Projected non-recurring litigation settlement (14,400) (14,400)

Projected Adjusted EBITDA $ 218,000 $ 228,000


1. All figures presented are projected estimates for the year ending December 31, 2015.

(unaudited for other data)
(amounts in thousands, unless otherwise noted)

For the Year Ended December 31,
2014 2013 2012


Cash advance $ 233,950 $ 231,134 $ 227,517 ATM 281,469 286,049 303,159 Check services 21,118 21,611 25,401 Games 7,406 — — Other 49,110 43,650 28,409 Corporate — — — Total revenues $ 593,053 $ 582,444 $ 584,486

Operating income

Cash advance $ 63,565 $ 60,977 $ 63,785 ATM 24,934 25,347 32,333 Check services 10,812 12,365 13,930 Games 2,151 — — Other 22,107 19,631 14,457 Corporate (89,787) (69,170) (68,523) Total operating income $ 33,782 $ 49,150 $ 55,982

For the Year Ended December 31,
2014 2013 2012

Other data

Aggregate dollar amount processed (in billions)

Cash advance $ 5.0 $ 4.9 $ 4.8 ATM $ 12.7 $ 12.9 $ 13.6 Check warranty $ 1.1 $ 1.1 $ 1.2 Number of transactions completed (in millions)

Cash advance 8.8 8.8 9.0 ATM 65.0 66.2 72.3 Check warranty 3.6 3.7 4.3 View photo.FinanceInvestment & Company InformationOperating income Contact: Investor Relations
(702) 262-5068
Richard Land, James Leahy
212-835-8500 or

Tailor home loan rates

FALLING interest rates are causing a surge of activity as Mount Isa area residents are looking for ways to save more money on their home loan, says Yellow Brick Road Mount Isa branch principal Steve Williams.

The Reserve Bank kept the cash rate on hold in March following a significant rate cut in February, dropping the rate to a historic low of 2.25 per cent.

Mr Williams said his branch was urging Mount Isa residents to look beyond the cuts and pay attention to where their rate fitted in comparison to the rest of the market. ‘‘Getting an interest rate that’s among the most competitive on the market is one of the best ways to make your financial goals and dreams a reality.”

Steve Williams’ top 10 tips to spend less on your loan and more on your dreams

1. Have a plan: You should plan to own your home as fast as possible, and therefore pay as little interest as possible.

2. Pay attention to the rate: Stay up to date with what the market value is on rates. Consider a $450,000 loan over 25 years. If you had a 4.95 per cent mortgage and refinanced at 4.39 per cent – your repayments would decrease by $147 a month, saving you over $55,000 in interest over the life of your loan.

3. Be prepared to refinance: To save on a mortgage, you must be prepared to go to a lender with a lower interest rate than your current one.

4. Understand the loan term: Shorter loan terms usually mean you pay less interest and pay the debt faster. Let’s say you have a $450,000 mortgage at 4.39 per cent, and you opt for a 25-year loan rather than a 30-year: you’d save $68,100 in interest alone.

5. Repayment frequency is key: The higher the frequency of payment, the slower the interest accrues and the faster you pay off the mortgage. If you pay half the monthly repayment amount fortnightly, rather than monthly, or a quarter of the monthly payment weekly, you end up saving the equivalent of an extra month’s payment each year. Consider an average mortgage of around $450,000 and a 30-year term at 4.39 per cent. You’d save around four years and four months off your loan term and more than $60,000 in interest.

6. Put windfalls into your home loan: Tax refunds, Medicare rebates and work bonuses should go into the home loan, cutting interest and speeding repayment.

7.Have the right loan: Ensure your mortgage allows you to put in lump sum amounts. Many fixed rate loans don’t allow this. If you’re offered an offset mortgage that lets you put your income directly into the loan, make sure this suits you.

8.Do it early: Increasing your repayments and putting in lump sums is most effective when you do it early in the term of the loan.

9. Know your fees: The headline repayment figure in your mortgage agreement is not the only number you should look at. Lenders charge different fees, so be cognisant of any incidentals that may not be captured in the comparison rate.

10. Beware of interest only: Don’t select an interest-only loan if you want to repay it quickly. Always opt for principal plus interest. When borrowers ‘‘set and forget’’ their mortgage, they usually pay too much interest and have the debt longer than they should.


The Mortgage Mistake You May Not Realize You're Making

It’s no secret you need cash on hand to get a mortgage, but you may not know that the way you handle that cash as you apply for a loan can seriously derail your homeownership chances.

Keeping your money in one place is vital to a mortgage transaction. Cash to close and savings after closing escrow are critically important to sealing the deal. Here is what you need to know if you’ve been moving money around and are applying for a mortgage.

It’s an Issue for Banks

Moving money around in different accounts may raise concerns for suspicious activity with mortgage lenders. Lenders these days must be able to document the paper of funds on each and every loan made. While 99.9% of mortgage borrowers are simply moving money from one bank account to another for various convenience reasons, they’re creating a red flag for lenders when the origin of the funds cannot be substantiated.

When you move money around, the lender has to document each account the money passes through. Let’s use an example. You have a standard checking account that does not contain significant assets, but it’s used for your monthly accounting of bills and expenses. If you moved the money for your down payment into your checking account from your savings account while continuing to pay bills, it could appear to the mortgage lender like you are spending part of your down payment, creating a cash to close roadblock. A better solution? Keep the money in the same place. Transfer the money when needed, sending it directly to escrow on your loan transaction, simplifying the paper trail.

Create a Paper Trail

To best avoid lending condition surrounding money movement, be prepared to show the full statements of the monies leaving each account. It is customary within mortgage lending to provide two months of statements for each account needed for cash to close escrow and/or for savings required after-the-fact as a safety cushion. This paper trail must appear to the naked eye that the money begins in one account, goes to another, and ends up at close of escrow. As long as the paper trails is clear and conspicuous, the lender should have no concerns with these monies so long as the funds can be supported. The same goes for gift funds. Gift monies will also need a clear paper trail. The same requirements that come into play may be needed for that safety cushion, depending on your loan program.

Here’s a quick guide to typical requirements for “safety net” funds your lender may require:

Conventional Loans: Two months of mortgage payments needed in the bank in most cases if you’re financing a primary home. You’ll need six months of mortgage payments for investment homes for all properties owned.FHA Loans: No reserve requirementVA Loans: No reserve requirementJumbo Loan: Requirements vary by lender, but you will generally need at least six months of mortgage payments in assets after closing escrow.

The bottom line: If you plan to use a bank statement that shows a history of money movement, including money transfers and other various accounts and/or additional monies being deposited independent of your income, you’re going to have some homework to do.

Just because you have a paper trail doesn’t mean you’re home free yet. If you have a joint bank account or have cash outside of your normal income that’s entering your account, you have a few more steps to satisfy lenders. Here are the details.

Joint Bank Accounts

If you’ve been moving money in and out of a joint bank account with another party who is not a party to the mortgage transaction, the lender is going to request a letter from this other individual stating you have 100% access to those funds.

Cash Deposits

Placing cash deposits in your bank account independent of your normal income can be problematic for getting a mortgage. Since these deposits can’t easily be traced to their origin, it may raise some suspicious activity concerns even though they can be legitimate deposits from other income sources like freelancing gigs or side jobs.

Lenders want to see at least two months of mortgage statements without cash deposits and without large movements of money. Otherwise, expect these transfers and deposits to be identified, questioned and documented. While these requirements can seem like a nuisance to the average homebuyer,it’s a byproduct of the quality of loans being made in the market today. By fully documenting everything and leaving no stone unturned, lenders can do their due diligence in further substantiating a mortgage borrower’s ability to qualify. As such, these credit requirements help ensure there is little risk to buying a home or taking on a mortgage you cannot afford. (Here’s a calculator to help you figure out that home affordability number.)

In addition to income and a paper trail for your homebuying funds, make sure your credit score is in good shape before you head to your lender to get pre-approved or apply for a mortgage,. You can get your free annual credit reports at under federal law. And you can see your credit scores for free every month on

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Monarch Financial Reports Higher Income, Strong Loan Growth, and Declares Cash Dividend

CHESAPEAKE, Va., Jan. 30, 2015 (GLOBE NEWSWIRE) — Monarch Financial Holdings, Inc. (MNRK), the bank holding company for Monarch Bank, reported improved fourth quarter and annual financial performance. The Board of Directors also announced a quarterly common stock cash dividend of $0.08 per common share, payable on February 27, 2015, to shareholders of record on February 10, 2015.

Annual 2014 highlights are:

Net income of $11,211,850, for Return on Equity of 10.95% Diluted earnings per share of $1.05 Cash dividends of $0.31 paid per share, up 29% from 2013 Loans held for investment grew $59.9 million, up 8.4% Non-performing assets at 0.28% of total assets Net Interest Margin was 4.25% $1.6 billion in mortgage loans closed, with 80% home purchases

Fourth quarter 2014 highlights are:

Quarterly net income of $2,683,163, up 24% Return on equity of 10.03% Diluted earnings per share of $0.25 Loans held for investment grew $58.9 million $446 million in mortgage loans closed with 69% home purchase

“We are pleased with our quarterly and annual financial performance, with very strong organic loan growth finally taking hold in the fourth quarter. Unlike many of our peers we have grown loans with our bankers, in our markets, and have not purchased loans to drive this growth. Mortgage production was in line with the previous year with our best year ever for purchase mortgage loan closings. We improved our performance in all three lines of business to include banking, mortgage, and wealth management,” stated Brad E. Schwartz, Chief Executive Officer. “Non-performing assets remained low, our margin improved due to asset mix and pricing discipline, and our capital grew stronger with our retention of earnings. The market has responded to our performance with price appreciation in our common stock that, when combined with the increase in our common stock dividends, produced a 14% total shareholder return for 2014.”

For 2014 net income was $11,211,850 compared to $11,091,007 for the same period in 2013, a 1% increase. The 2014 return on average equity (ROE) was 10.95%, and the return on average assets (ROA) was 1.13%. Annual diluted earnings per share were $1.05 compared to $1.08 in 2013, as our higher earnings were more than offset by the number of additional outstanding shares.

Net income was $2,683,163 for the fourth quarter of 2014 compared to $2,156,566 for the same period in 2013, a 24% increase. The quarterly annualized return on average equity (ROE) was 10.03%, and the annualized quarterly return on average assets (ROA) was 1.04 %, both metrics up from the same period a year ago. Diluted earnings per share for the fourth quarter were $0.25, up 25% from the previous year.

Total assets at December 31, 2014 were $1.07 billion, up 5% from the prior year. In 2014 loans held for investment grew 8% to $773 million and mortgage loans held for sale grew 48% to $148 million. The vast majority of the net loan growth occurred in the fourth quarter. Total deposits grew 3% to $919 million, with demand deposits growing $40 million or 15% for the year. Demand deposits now represent 33% of total deposits, an achievement driven by our dedicated cash management and banking office teams. While the current rate environment does not appropriately reward banks for a transaction-focused funding strategy, this strategy should deliver net interest margin protection when rates eventually rise.

“We are pleased to deliver over 8% quarterly and year over year loan growth. We are equally proud that we produced each and every loan and have not been tempted by participation loans or other loan purchase programs we see in the marketplace,” stated E. Neal Crawford Jr., President of Monarch Bank. “We continue to hire talented bankers and expect to continue expanding the banking team into 2015. Our Richmond and Peninsula expansion is driving quality loan growth and deposit growth while our cash management and private banking teams continue to focus on growing core deposits.”

Non-performing assets were 0.28% as of December 31, 2014 compared to 0.25% one year prior, and non-performing loans to loans held for investment were 0.37% compared to 0.31% one year prior. Non-performing assets were $3.0 million, comprised of $175 thousand 90 days or more past due and still accruing interest, $2.7 million in non-accrual loans and $144,000 in one parcel of other real estate owned that is already under contract for sale. The allowance for loan losses represents 1.16% of total loans held for investment and 311% of non-performing loans.

Average equity to average assets rose to 10.39% at year-end 2014, an increase from 9.73% one year prior. Cash dividends of $0.08 per share were paid in the fourth quarter of 2014, and a total of $0.31 per share was paid during the year, an increase of 29% over 2013. Total risk-based capital to risk weighted assets at Monarch Bank equaled 13.79%, significantly higher than the required level to meet the highest rating of “Well Capitalized” by federal banking regulators. We also already meet the new Basel III capital standards for a well-capitalized bank. 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, was flat for the year driven by the large volume of mortgage loans held for sale in the first six months of 2013 compared to the balances carried in 2014. These balances are driven by mortgage loan closings. Excluding the mortgage loans held for sale volatility, the net interest income from core banking operations increased 5.9% or $1.9 million. Our net interest margin for 2014 was 4.25%, up from 4.10% due to asset mix, loan and deposit pricing, mortgage loans held for sale pricing, fee income capture, and the additional income from loans previously on non-accrual status. Loan growth that occurred late in the year had minimal impact on net interest income even though it should contribute to net interest income on a going forward basis.

Non-interest income decreased $2.8 million in 2014 over the previous year driven by lower mortgage revenues, which was more than offset by a reduction of $3.6 million in commissions and incentives. Net overhead, or the difference between non-interest income and non-interest expenses, increased only $372 thousand or 1.7% due to increased spending for facilities, technology, technology risk management, compliance and marketing. Salaries and benefits were held flat for the year, a significant accomplishment with our increased benefits costs. Investment revenues related to Monarch Bank Private Wealth totaled $1.6 million for the year compared to $1.1 million the previous year, a noteworthy increase. The Company is recognized by Raymond James Financial Services as a top performing bank investment program, with $235 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. $446 million in mortgage loans were closed during the fourth quarter of 2014 (69% purchase) compared to $350 million in the fourth quarter of 2013 (80% purchase). Monarch closed $1.6 billion in mortgage loans during 2014 compared to $2.0 billion in 2012. While volumes year over year declined approximately 20%, revenues from mortgage lending declined only 5% due to a strong focus on loan product mix, secondary market pricing, and fee income.

“Our focus on the purchase market paid off in 2014 when we had the best year of purchase mortgage business in our history. We closed $1.3 billion in home purchase loans and $0.3 billion in refinances, and altogether closed over 6,000 loans during the year,” stated William T. Morrison, CEO of Monarch Mortgage. “The year 2015 is beginning with an attractive rate environment and a much stronger pipeline of activity, and we expect it to be a great year for our mortgage operations.”

Monarch Financial Holdings, Inc. is the one-bank holding company for Monarch Bank. Monarch Bank is a community bank with ten banking offices in Chesapeake, Virginia Beach, Norfolk, and Williamsburg, Virginia. Monarch Bank also has loan production offices in Newport News and Richmond, 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 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), 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 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013 ASSETS:

Cash and due from banks $ 14,503 $ 21,083 $ 19,661 $ 18,510 $ 18,971 Interest bearing bank balances 49,761 58,207 37,166 37,033 31,955 Federal funds sold 1,135 3,938 29,761 84,232 53,985

Investment securities, at fair value 23,725 25,137 23,773 23,197 48,822

Mortgage loans held for sale 147,690 138,590 156,584 92,839 99,718

Loans held for investment, net of unearned income 772,590 713,667 700,159 715,088 712,671 Less: allowance for loan losses (8,949) (8,977) (9,070) (9,213) (9,061) Net loans 763,641 704,690 691,089 705,875 703,610

Bank premises and equipment, net 30,247 30,368 31,407 29,902 28,882 Restricted equity securities, at cost 3,633 3,179 3,169 3,156 3,683 Bank owned life insurance 9,687 9,587 7,526 7,467 7,409 Goodwill 775 775 775 775 775 Intangible assets, net — — 15 60 104 Accrued interest receivable and other assets 21,940 23,688 22,973 19,673 18,786 Total assets $ 1,066,737 $ 1,019,242 $ 1,023,899 $ 1,022,719 $ 1,016,700


Demand deposits–non-interest bearing $ 235,301 $ 252,286 $ 240,348 $ 221,357 $ 206,891 Demand deposits–interest bearing 66,682 53,093 51,563 55,949 55,528 Money market deposits 369,221 365,041 377,096 367,590 374,462 Savings deposits 20,003 25,211 24,539 24,327 22,137 Time deposits 228,207 189,142 197,747 224,947 234,100 Total deposits 919,414 884,773 891,293 894,170 893,118

FHLB borrowings 1,075 1,100 1,125 1,150 1,175 Federal funds 10,000 — — — — Trust preferred subordinated debt 10,000 10,000 10,000 10,000 10,000 Accrued interest payable and other liabilities 18,710 18,145 18,650 17,422 14,661 Total liabilities 959,199 914,018 921,068 922,742 918,954


Common stock 51,864 51,735 51,624 51,584 51,432 Capital in excess of par value 8,336 7,966 7,675 7,357 7,069 Retained earnings 47,354 45,523 43,566 41,232 39,437 Accumulated other comprehensive loss (102) (135) (159) (314) (419) Total Monarch Financial Holdings, Inc. stockholders’ equity 107,452 105,089 102,706 99,859 97,519 Noncontrolling interest 86 135 125 118 227 Total equity 107,538 105,224 102,831 99,977 97,746 Total liabilities and stockholders’ equity $ 1,066,737 $ 1,019,242 $ 1,023,899 $ 1,022,719 $ 1,016,700

Common shares outstanding at period end 10,652,475 10,646,873 10,624,668 10,619,444 10,502,323

Nonvested shares of common stock included in commons shares outstanding 279,750 299,910 299,910 302,710 215,960

Book value per common share at period end (1) $ 10.10 $ 9.87 $ 9.67 $ 9.40 $ 9.29 Tangible book value per common share at period end (2) $ 10.02 $ 9.80 $ 9.59 $ 9.33 $ 9.20 Closing market price $ 13.75 $ 12.56 $ 11.72 $ 12.26 $ 12.31

Total risk based capital – Consolidated company 13.79% 14.16% 14.29% 14.27% 13.91% Total risk based capital – Bank 13.81% 14.18% 14.31% 14.30% 13.95%

(1) Book value per common share is defined as stockholders’ equity divided by common shares outstanding. (2) Tangible book value per common share is defined as stockholders’ equity less goodwill and other intangibles divided by commons shares outstanding

Consolidated Statements of Income Monarch Financial Holdings, Inc. and Subsidiaries Unaudited
Three Months Ended Year Ended
December 31, December 31,
2014 2013 2014 2013 INTEREST INCOME:

Interest on federal funds sold $ 4,980 $ 42,283 $ 84,850 $ 115,963 Interest on other bank accounts 92,156 28,626 244,702 58,027 Dividends on equity securities 33,545 67,540 106,955 277,700 Interest on investment securities 100,957 60,311 359,604 230,496 Interest on mortgage loans held for sale 1,376,920 1,090,070 4,866,818 7,021,186 Interest and fees on loans held for investment 9,752,472 9,388,407 37,327,978 36,645,065 Total interest income 11,361,030 10,677,237 42,990,907 44,348,437 INTEREST EXPENSE:

Interest on deposits 722,537 905,970 3,185,965 3,936,203 Interest on trust preferred subordinated debt 46,337 122,850 416,233 491,910 Interest on other borrowings 16,615 15,002 58,966 358,345 Total interest expense 785,489 1,043,822 3,661,164 4,786,458 NET INTEREST INCOME 10,575,541 9,633,415 39,329,743 39,561,979 PROVISION FOR LOAN LOSSES — — — —

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 10,575,541 9,633,415 39,329,743 39,561,979


Mortgage banking income 16,210,774 13,276,836 62,440,013 65,672,402 Service charges and fees 489,974 502,373 2,058,262 1,941,926 Title income 216,895 124,774 669,785 789,253 Investment and insurance income 382,774 336,002 1,592,398 1,053,429 Other income 72,366 111,924 318,783 425,261 Total non-interest income 17,372,783 14,351,909 67,079,241 69,882,271 NON-INTEREST EXPENSE:

Salaries and employee benefits 8,798,996 8,772,157 34,134,998 34,112,834 Commissions and incentives 6,926,507 5,248,131 24,754,633 28,344,347 Occupancy and equipment 2,412,086 2,220,634 9,548,543 8,449,912 Loan expense 1,676,134 1,526,317 6,652,007 7,891,835 Marketing expense 990,383 807,717 3,111,535 2,873,259 Data processing 715,057 459,681 2,272,785 1,696,535 Telephone 296,396 314,984 1,226,389 1,184,894 Other expenses 1,789,789 1,212,731 6,778,966 6,357,202 Total non-interest expense 23,605,348 20,562,352 88,479,856 90,910,818

INCOME BEFORE TAXES 4,342,976 3,422,972 17,929,128 18,533,432 Income tax provision (1,616,093) (1,179,017) (6,490,273) (6,386,040) NET INCOME 2,726,883 2,243,955 11,438,855 12,147,392

Less: Net income attributable to noncontrolling interest (43,720) (87,389) (227,005) (1,056,385) NET INCOME ATTRIBUTABLE TO MONARCH FINANCIAL HOLDINGS, INC $2,683,163 $2,156,566 $11,211,850 $11,091,007


Basic $ 0.25 $ 0.21 $ 1.06 $ 1.09 Diluted $ 0.25 $ 0.20 $ 1.05 $ 1.08

Weighted average basic shares outstanding 10,648,184 10,486,056 10,619,443 10,167,156 Weighted average diluted shares outstanding 10,689,219 10,535,313 10,658,600 10,299,471

Return on average assets 1.04% 0.86% 1.13% 1.07% Return on average stockholders’ equity 10.03% 8.88% 10.95% 11.97%

Financial Highlights Monarch Financial Holdings, Inc. and Subsidiaries
(Dollars in thousands, For the Quarter Ended except per share data) December 31, September 30, June 30, March 31, December 31,
2014 2014 2014 2014 2013 EARNINGS

Interest income $ 11,361 $ 10,639 $ 10,557 $ 10,434 $ 10,677 Interest expense (786) (928) (977) (971) (1,044) Net interest income 10,575 9,711 9,580 9,463 9,633 Provision for loan losses — — — — — Noninterest income – mortgage banking income 16,211 16,658 17,369 12,202 13,277 Noninterest income – other 1,162 1,241 1,130 1,106 1,075 Noninterest expense (23,605) (23,121) (23,007) (18,747) (20,562) Pre-tax net income 4,343 4,489 5,072 4,024 3,423 Minority interest in net income (44) (46) (121) (16) (87) Income taxes (1,616) (1,635) (1,767) (1,471) (1,179) Net income $ 2,683 $ 2,808 $ 3,184 $ 2,537 $ 2,157


Earnings per share – basic $ 0.25 $ 0.26 $ 0.30 $ 0.24 $ 0.21 Earnings per share – diluted 0.25 0.26 0.30 0.24 0.20 Common stock – per share dividends 0.08 0.08 0.08 0.07 0.07 Average Basic Shares Outstanding 10,648,184 10,635,275 10,620,869 10,600,766 10,486,056 Average Diluted Shares Outstanding 10,689,219 10,670,507 10,660,217 10,641,782 10,535,313


Beginning balance $ 8,977 $ 9,070 $ 9,213 $ 9,061 $ 11,228 Provision for loan losses — — — — — Charge-offs (174) (181) (184) (12) (2,252) Recoveries 146 88 41 164 85 Net charge-offs (28) (93) (143) 152 (2,167) Ending balance $ 8,949 $ 8,977 $ 9,070 $ 9,213 $ 9,061


Nonperforming loans:

90 days past due $ 175 $ 243 $ 499 $ 759 $ 472 Nonaccrual loans 2,705 2,180 3,028 1,718 1,740 OREO 144 767 144 302 302 Nonperforming assets 3,024 3,190 3,671 2,779 2,514


Nonperforming assets to total assets 0.28% 0.31% 0.36% 0.27% 0.25% Nonperforming loans to total loans 0.37 0.34 0.50 0.35 0.31 Allowance for loan losses to total loans held for investment 1.16 1.26 1.30 1.29 1.27 Allowance for loan losses to nonperforming loans 310.73 370.49 257.16 371.94 409.63 Annualized net charge-offs to average loans held for investment 0.02 0.05 0.08 -0.09 1.25


Return on average assets 1.04% 1.11% 1.29% 1.06% 0.86% Return on average stockholders’ equity 10.03 10.72 12.63 10.46 8.88 Net interest margin (FTE) 4.42 4.18 4.18 4.25 4.13 Non-interest revenue/Total revenue 60.5 62.7 63.7 56.1 57.3 Efficiency – Consolidated 84.5 83.7 81.8 82.1 85.5 Efficiency – Bank only 61.2 61.7 63.9 59.9 60.4 Average equity to average assets 10.39 10.40 10.18 10.13 9.73

PERIOD END BALANCES (Amounts in thousands)

Total mortgage loans held for sale $ 147,690 $ 138,590 $ 156,584 $ 92,839 $ 99,718 Total loans held for investment 772,590 713,667 700,159 715,088 712,671 Interest-earning assets 1,003,332 945,697 949,872 956,160 952,981 Assets 1,066,737 1,019,242 1,023,899 1,022,719 1,016,700 Total deposits 919,414 884,773 891,293 894,170 893,118 Other borrowings 21,075 11,100 11,125 11,150 11,175 Stockholders’ equity 107,451 105,089 102,706 99,859 97,519

AVERAGE BALANCES (Amounts in thousands)

Total mortgage loans held for sale $ 131,471 $ 138,382 $ 116,851 $ 70,856 $ 104,104 Total loans held for investment 725,093 701,137 698,851 704,917 695,074 Interest-earning assets 958,904 930,420 927,552 910,929 935,059 Assets 1,021,591 999,358 993,003 970,815 990,734 Total deposits 883,478 867,980 867,217 848,969 869,113 Other borrowings 14,575 11,124 11,150 11,174 11,199 Stockholders’ equity 106,088 103,908 101,092 98,374 96,415

MORTGAGE PRODUCTION (Amounts in thousands)

Dollar volume of mortgage loans closed $ 445,846 $ 440,784 $ 446,863 $ 271,233 $ 349,695 Percentage of refinance based on dollar volume 30.9% 16.0% 15.0% 19.1% 20.3%

Financials IndustryBanking & Budgetingmortgage loans Contact:

Brad E. Schwartz - (757) 389-5111,


Redwood Capital Bancorp Reports Record Profitability — Cash Dividend Declared

EUREKA, Calif., Jan. 28, 2015 (GLOBE NEWSWIRE) — REDWOOD CAPITAL BANCORP (RWCB.OB), the only locally owned and operated community bank holding company in Humboldt County, announced unaudited financial results for the three and twelve month periods ended December 31, 2014. The community bank holding company reported record annual profits and reaffirmed its ongoing quarterly cash dividends.

President and CEO John Dalby stated, “We continue to be pleased with the core earnings performance of the company, the low level of nonperforming assets relative to our peers and the growth within our local loan portfolio during this persistently challenging economic environment. Likewise, we remain proud of our dedicated staff who continually contribute to the growth and profitability of our organization. In 2014, Redwood Capital Bank was again awarded a 5-Star rating from Bauer Financial, one of the most well-known and respected financial rating agencies within the banking trade, as well as being ranked the Best Bank to Work for in California and #8 nationally by American Banker. These results and accolades suggest that our focus on putting local deposits to work by making loans to our local business, mortgage and consumer customers is building toward sustainable growth and positive earnings trends for the future.”

Total assets as of December 31, 2014 were $280.1 million, an increase of 2% over the September 30, 2014 figure and a 11% change from the December 31, 2013 reported figures. Total deposits stood at $251.8 million as of December 31, 2014, 2% greater than the September 30, 2014 figures and 11% higher than the December 31, 2013 numbers. The company again reported strong loan growth for the quarter and year. Total loans as of December 31, 2014, net of unearned income, were $205.2 million, an increase of 3% over the prior quarter and 17% over the year ended December 31, 2013.

Consolidated net interest income for the three and twelve months ended December 31, 2014 totaled $2,618,000 and $9,947,000, respectively. In comparison, there was virtually no change in consolidated net interest income from the previous quarter while the year ended December 31, 2014 is up a strong 11% over the year ended December 31, 2013. The company also reported net income for the fourth quarter of 2014 of $447,000, while record earnings for the year ended December 31, 2014 were reported as $2,011,000. The earnings represented a 29% decrease over the September 30, 2014 quarter and a strong increase of 8% over the year ended December 31, 2013. The fluctuations in net income during the fourth quarter are attributed to higher credit related costs and lower non-interest income results.

Additionally, the Board of Directors declared a quarterly cash dividend of $.06 per share, payable on February 6, 2015 to shareholders of record at the close of business on January 26, 2015. The dividend is equivalent to an annual rate of $0.24 per share or 2.44%, based upon a market price of $9.85 per common share. Since December 31, 2011, the rise in the company’s stock price, combined with dividends, has generated a total return of over 80%.

“We are very pleased with the opportunity to enhance shareholder value by deploying excess capital in a sound manner consistent with the desire of our Board of Directors and our shareholders at large. We continue to be a well-capitalized organization with the ability to take advantage of strategic opportunities as they arise. The entire Redwood Capital Bank team is excited about the opportunities before us in 2015,” Dalby concluded.

For more information regarding Redwood Capital Bancorp, please visit our website at, contact Fred Moore, CFO, at (707) 444-9840, or stop by our headquarters and main office at 402 “G” Street, Eureka, CA 95501.

This press release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to fluctuations in interest rates, inflation, government regulations and general economic conditions, and competition within the business areas in which the bank is conducting its operations, including the real estate market in California and other factors beyond the bank’s control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Redwood Capital Bancorp Selected Consolidated Financial Results – Unaudited (In Thousands – except share data)

Period Ended %
12/31/2014 9/30/2014 Change

Balance Sheet Data (at period end)

Total assets $280,134 $273,665 2% Total deposits 251,812 245,835 2% Total loans (net) 205,182 200,024 3% Common equity 17,478 17,134 2% Common shares outstanding 1,861,411 1,861,411 0%

Summary of Operations (Current Quarter)

Interest income 2,779 2,772 0% Interest expense 161 159 2% Net Interest Income 2,618 2,613 0% Non-interest income 291 363 -20% Non-interest expense 2,061 1,911 8% Net Income before provision 848 1,065 -20% Provision for loan losses 138 50 175% Income before taxes 710 1,015 -30% Income taxes 263 382 -31% Net Income 447 633 -29% Earnings per share (fully diluted) $0.24 $0.34 -29% Book value per common share $9.39 $9.20 2.0%

Period Ended %
12/31/2014 12/31/2013 Change

Balance Sheet Data (at period end)

Total assets $280,134 $253,003 11% Total deposits 251,812 227,449 11% Total loans (net) 205,182 175,305 17% Common equity 17,478 15,124 16% Common shares outstanding 1,861,411 1,809,882 3%

Summary of Operations (Current Quarter)

Interest income 2,779 2,494 11% Interest expense 161 168 -4% Net Interest Income 2,618 2,326 13% Non-interest income 291 338 -14% Non-interest expense 2,061 1,799 15% Net Income before provision 848 865 -2% Provision for loan losses 138 150 -8% Income before taxes 710 715 -1% Income taxes 263 276 5% Net Income 447 439 2% Earnings per share (fully diluted) $0.24 $0.24 -1% Book value per common share $9.40 $8.37 12%

Summary of Operations (Year to Date)

Interest income 10,575 9,765 8% Interest expense 629 808 -22% Net Interest Income 9,947 8,957 11% Non-interest income 1,221 1,573 -22% Non-interest expense 7,693 7,078 9% Net Income before provision 3,475 3,452 1% Provision for loan losses 438 425 3% Income before taxes 3,038 3,027 0% Income taxes 1,027 1,158 -11% Net Income 2,011 1,869 8% Earnings per share (fully diluted) $1.08 $1.03 5% Book value per common share $9.39 $8.37 12% Banking & BudgetingInvestment & Company Informationbank holding company Contact:


Loan sharks could take advantage of payday lending caps, according to CAB

Loan sharks could take advantage of payday lending caps, according to CAB

DEBT ADVICE: Darlington Citizens Advice Bureau’s Dawn Gill and Neeraj Sharma

First published in News by Joanna Morris

LOAN sharks could cash in following caps on payday lending, according to the Citizens’ Advice Bureau.

Caps limiting the interest rate and fees instated by so-called payday lenders have been introduced by the Financial Conduct Authority in a bid to protect people struggling with debt.

As of Friday, January 2, companies such as Wonga – who previously had annual interest rates higher than 5,000 per cent – must comply with regulations that will see interest and fees capped at 0.8 per cent per day.

Under the new rules, the total cost of a loan will be limited to 100 per cent of the original sum and default fees will be capped at £15.

While the move has been welcomed by the Darlington Citizens Advice Bureau (CAB), the organisation has warned the changes may cause more vulnerable people to fall prey to loan sharks.

Darlington CAB’s Dawn Gill expressed fears that loan sharks could take advantage of those now unable to access as much money as they need.

She said: “Caps are a good thing but clients will still want money from somewhere – they’re being protected from high interest rates but companies may not lend as much.

“They may not be able to get as much as they were expecting or anything at all.

“If they don’t get what they want, they are in danger of reaching out to someone like a loan shark instead of coming to us, for example.

“We haven’t seen it happen yet but the changes are still new and it’s a worry.”

Ms Gill urged payday lenders to work with CABs in order to help their clients manage their finances.

She said: “The ideal situation would be for payday lenders to refer their clients to us before they take out a loan at all and let us help them to maximise and manage their income.

“I’d advise people to come to us and let us help them find ways to manage.

“We can help with benefits, cutting energy bills or working out incomings and outgoings and priorities.

“There are a lot of people prioritising paying back intimidating people who knocked at their door with money rather than paying their rent or council tax but they could end up losing their home.”

To anonymously report a loan shark, contact the Illegal Money Lending Team by emailing or calling 0300-555-2222.


Sen. Brown proposes alternative to 'payday loans' – 21 News Now …

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With millions of Americans turning to payday loans to make ends meet, U.S. Senator Sherrod Brown is proposing a short-term cash advance solution.

Low-income workers nationally would be allowed an advance on their income tax refund, rather than turning to payday loans for a quick influx of money, under a proposal U.S. Sen. Sherrod Brown made on Wednesday.

The proposal would allow low-income families and individuals to receive a portion of their earned income tax credit, ahead of tax time.

Those who are eligible could receive the early refund without fees or interest on the tax credit up to $500. The amount received early would be deducted from the person’s refund at tax time.

Senator Brown says the bill isn’t designed to help everybody, but those working hard and still receiving a relatively low income.

“The couple of months before they’re eligible to get their tax refund they might have some serious financial problems where they just need a few hundred dollars to be able to tide themselves over until they get their refund, we would advance $500 of this no more than that under our plan,” said Sen. Brown.

Brown said his proposal is an alternative to payday loans, which can carry hidden fees and large interest rates.

“Ohioans shouldn’t be trapped with a lifetime of debt from predatory loans particularly if they have tax refunds waiting for them,” Brown said. “Three-quarters of Americans who turn to costly, high-interest payday loans may have money that they can claim each tax season in the form of the Earned Income Tax Credit.”

To participate, workers would enroll in the program through the employers mid-year and request the early payment.


Dear John: Cash in pension after losing job?

Dear John: I am 58 years old and currently unemployed. I have been in the banking industry for the past 34 years. I lost my job in June.

While I have savings to last me through next July, I have debt that I would like to pay off. I am considering cashing in one of my pension plans with my previous employer. I know cashing in a pension is probably never a good idea unless you roll over, but I would like your advice on my situation.

I have a conventional pension plan worth $185,000 I am looking to cash in. I also have 401(k) plans that I will not touch totaling about $225,000.

Cashing in the $185,000 will allow me to pay off my mortgage, credit-card debt and private loans totaling about $60,000.

I am also saddled with student loans for my two daughters of about $40,000. Interest on the credit cards run about 9 percent and the mortgage is at 5 percent but only has 2 ½ years left to pay off. The private loan is no-interest, but the student debt is costing me 8 percent.

Payments for this debt total about $2,600 per month. These payments are eating up my savings, but I will still last until July.

Employment prospects do not look good. If I can pay off, I would be free of those payments and might possibly find a lower-paying job and not have to worry about the debt.

My salary in my banking career was in the mid-six figures — good money.

Even after cashing in, I would still have my 401(k) and my Social Security to live on when I reach 62. My wife will have hers at 62 as well.

She only has a small pension due her, which will pay about $150 per month. All of these incomes add up to about $4,700 per month once I formally retire. With no debt, I think am OK.

If I did not cash in the $185,000, that would give me another $1,500 per month. I do not believe I will have to pay any penalty to cash in as I was over 55 when I became unemployed.

I do not want to cash everything in and just live on Social Security alone, or work for the rest of my life. I’d like to find a job I can live with, even at a greatly reduced salary, and not have to worry about bills.

Please let me know your thoughts on my issue. Thanks for your time. Mike

Dear Mike: Ah, the Golden Years! Aren’t they great?

I asked Scott Brewster, a certified financial planner in Brooklyn, to opine on your situation.

“Sorry to hear,” says Brewster, who is a member of the Financial Planning Association. “It must be very stressful after 34 years in the banking industry to lose one’s job making mid-six figures and struggle to find another job.”

Brewster doesn’t think that cashing in your pension early is the solution you need.

“You probably are correct that since you were separated from service after age 55 you might not be hit with the 10 percent penalty on withdrawing your pension money,” he says. If the funds were in an Individual Retirement Account, the early withdrawal penalty would apply until the age of 59 ¹/? .

But Brewster warns that “you will get taxed on the withdrawal, and $185,000 cashed in might only leave you with $110,000 after taxes. Not only that, you would be reducing your retirement nest egg by close to 50 percent.”

He says the real issue is that you are struggling to find work and even with your loans paid off, you are going from making a mid-six-figure income to just looking to get by in a few years on Social Security and a 401(k) that is about equal to what you made in one year while working.

“My action plan for you,” says Brewster, “would be to make getting another job your No. 1 priority. Working on finding your next job eight hours a day is not enough. You need to put in overtime securing your next job so that you not only avoid cashing in your pension but are in a position to keep saving more for retirement and pay off your debts from your income.”

Mike, (this is John speaking) you and I know that the job market stinks and that you are at an age and salary level when employers think they can get a better deal with someone younger.

So you need to make prospective employers know that you don’t have what they call “salary demands.” You have, instead, salary suggestions. And that you are very flexible.

And you need to connect anyone from your previous job who might be able to help you find work. Beg them if that’s what it takes.

“If you work long and hard all the way until next July when your savings will run out, and you do not find a new job, then you can — without guilt — pull money from your pension, because then you have tried everything you possibly could to not do so,” says Brewster.

And even then, Brewster says, he would only pull out what you need to make the minimum loan payments and keep working at the job hunt. “And yes, it is a hunt. You have killed it for a long time, and you need to go back out and continue to kill it,” he says.

“With 34 years of experience under your belt, don’t sell yourself short. This period of unemployment will pass, and if you throw all your energy into getting to the other side, you will be stronger for it and will have your pension still intact along with your 401(k),” Brewster says.

Both he and I wish you the best of luck. Stay optimistic and smile when you interview. Prospective employers like to hire happy people.

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What is accrual accounting used for in finance?


Accrual accounting is also known as the accrual basis, or accrual method, of accounting. Its basic premise holds that transactions should be recorded when they occur and not when payments are actually received. Financial accounting, which forms the basis for constructing financial statements, relies heavily on the accrual basis. Accrual accounting is the alternative to the cash basis of accounting, which records revenues and expenses when cash changes hands.

The accrual method is required for (and favored by) most medium and large businesses, relegating cash accounting to small businesses and individuals. Certain financial arrangements create timing gaps between the provision of a service or good and the actual payment for the service or good; perhaps the most common example is a credit account or business loan. These payments may not actually be received during the same accounting period, necessitating the use of accounts payable and accounts receivable to track projected inflows and outflows. Under cash accounting, businesses that sell on credit are not able to report sales until the money is collected.

With accrued income and accrued expenses able to reflect business activity more accurately, investors and lenders have a better grasp of the operational efficacy and overall leverage of a company. The accrual method additionally requires that expenses and revenues match, which complements the matching principle as laid out in generally accepted accounting principles and reflected in the income statement and balance sheet.

Accruals can also be used for taxes and wages, helping to ensure that the full amount of these expenses is recognized. Managers and owners tend to prefer the accrual method because it provides a more accurate reflection of monthly expenditures and profit. For the most part, however, businesses do not have a choice. The Internal Revenue Service (IRS) requires that businesses use accrual accounting once they get big enough, and any business with an inventory must use the accrual method. Only qualifying small businesses can elect to choose between cash and accrual, and they must stick with their decision.

Smaller operations historically favored the cash basis of accounting due to its ease of use. While accrual accounting may have compelled the hiring of an accountant, cash basis accounting could often be handled with a small team or even by the sole proprietor him or herself. The permeation of enterprise software that can perform accrual accounting, such as QuickBooks, is slowly changing the small business reliance on cash accounting.

One negative consequence of the accrual basis of accounting stems from its tendency to ignore time. If a company relies heavily on credit accounts to generate sales, the accrual method does not provide an accurate account of real cash flow. This can cause problems if the company does not track cash flow separately and have an effective accounts receivable collections operation. This can also be of concern to investors and lenders that might see great revenue numbers listed on the income statement, only to later find out that collections were lacking and that the company cannot maintain operations. This is one of the reasons why the statement of cash flows is considered a core financial document.


Bank Loan ETFs: The Effects of an Illiquid Underlying Market

Fixed-income exchange traded funds have become more liquid than their underlying markets as more investors turn to the easy-to-use investment tool. However, sudden changes in market sentiment could cause price disparities with the underlying assets, like what is happening with bank loan-related ETFs.

For instance, passive index-based PowerShares Senior Loan Portfolio (BKLN) , the largest bank loan ETF on the market with $6.1 billion in assets under management, has dipped 1.7% since the end of June while the benchmark S&P/LSTA U.S. Leveraged Loan 100 Index only fell 0.9%, reports Lisa Abramowicz for Bloomberg.

BKLN is trading at a 0.54% discount to its net asset value, according to Morningstar data. The ETF has been trading at an average discount to the underlying index for the past year, the longest period in its history. [Fixed-Income Traders Increasingly Rely on Junk Bond ETFs]

The disparity between the ETF price and its benchmark suggests that the ETF market may be more liquid than the underlying high-yield, junk bond market, which isn’t really surprising as ETFs are traded daily like a stock on an exchange and would reveal more immediate price moves than bond securities. [Rate Risk Raises Liquidity Concerns in Junk Bond ETFs]

“Fixed-income ETFs are oftentimes a better reflection of where the underlying pricing might be headed,” John Hoffman, Invesco PowerShares’ global head of ETF capital markets, said in the Bloomberg article. “It’s trading in more real time than the underlying components.”

Year-to-date, BKLN only gained 0.2%, whereas the Highland/iBoxx Senior Loan ETF (SNLN) , which tracks the Markit iBoxx Liquid Leveraged Loan Index, increased 1.4%. There are also two actively managed options, including the SPDR Blackstone/GSO Senior Loan ETF (SRLN) and First Trust Senior Loan ETF (FTSL) . Year-to-date, SRLN gained 0.9% and SRLN rose 1.8%.

Additionally, SNLN shows a 0.16% discount to its NAV, SRLN has a 0.01% discount and FTSL has a 0.12% premium. The pricing action suggests that investors are willing to take a slight loss to exit BKLN.

“There’s been more sell pressure rather than buy pressure,” Hoffman added. “There’s a conversion price” to turning the loans underpinning the shares into cash.

The ETFs track senior floating-rate bank loans. Due to their floating rate component, bank loans are seen as an attractive alternative to traditional high-yield corporate bonds in a rising rate environment. Bank loan securities allow their interest rate to shift, or float, along with the rest of the market, whereas a fixed interest rate stays constant until maturity. However, the assets have become less attractive as rates fell this year – 10-year Treasury bond yields are now at 2.19% after starting off at around 3.0% in January.

For more information on the fixed-income market, visit our bond ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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