SOURCE: RMG Capital Corporation

November 30, 2009 21:43 ET

RMG Capital Corporation Reports Results

FULLERTON, CA--(Marketwire - November 30, 2009) - RMG Capital Corporation (OTCBB: RMGC), the holding company for Fullerton Community Bank, F.S.B. in Fullerton, California, announced results for the third quarter and the first nine months of 2009.

RMG Capital Corporation announced a net loss of $1.06 million or $0.40 per share for the first nine months of 2009 compared to a profit of $3.03 million or $0.98 per share during 2008's comparable period. The loss was primarily attributable to write-downs of real estate joint ventures totaling more than $2 million and to increase loan loss provisions. Chairman and CEO T. E. Meyer stated, "RMG Capital Corporation exited the real estate development business in the second quarter 2009. The last remaining project consisting of development of small industrial and office buildings is winding down, and will begin to return its original investment by the end of the year. A small profit is ultimately expected."

Results were negatively impacted by the set aside of $4.24 million provision for loan losses compared to $2.23 million during the first nine months of 2008; and $1.38 million in REO costs and loss provisions compared to $102 thousand in REO charges incurred in 2008. More than 50% of these credit related costs were incurred against the construction and land loan portfolio, which has declined to 6% of outstanding loans. As of September 30, 2009, RMG Capital's assets totaled $753 million, a 1.2% decrease from the $769 million level as of September 30, 2008.

As of September 30, 2009, FCB exceeded all regulatory capital requirements and is considered well-capitalized with a Tier 1 Core Capital of 8.50%, Tier 1 Risk Based ratio of 10.92% and Total Risk Based Capital ratio of 12.14%. These ratios exceed minimum required ratios to be considered well-capitalized (5.00% for Tier 1 Core Capital, 6.00% for Tier 1 Risk Based Capital, and 10.00% for Total Risk Based Capital).

RMG Capital Corporation's wholly owned subsidiary Fullerton Community Bank ("FCB") earned $282 thousand for the first nine months of the year compared with $3.78 million the previous year. FCB's net interest income declined 8.1% to $20.14 million during the first nine months of 2009 as the growth in low earning assets, such as fed funds sold and overnight investments, totaled $77.5 million as of September 30, 2009 versus $16.9 million during 2008. An additional factor was the impact of the Bank's nonperforming loans, which together with the increased cash balances effectively reduced the net interest spread to 3.43% from 3.67% the previous quarter. Executive Vice President and Chief Financial Officer, Jon Shigematsu, commented, "A strategic management decision to boost liquidity combined with a continued lack of quality loan demand and solid core deposit growth caused the significant increase in liquid asset levels."

Delinquent loans decreased 13% to $34.7 million, which equals 5.25% of the total loan portfolio, compared to $39.8 million or 6.07% of the portfolio as of June 30, 2009. The majority of this decline was due to payoffs in the troubled land and construction loan portfolio during the third quarter. Meyer commented, "While delinquencies remain high by historical standards, we are encouraged about the payoffs experienced in the land and construction loan categories during the third quarter, and we are making progress toward reducing this loan segment to our stated goal of 5% of our total loan portfolio by year end." FCB's total loan portfolio of $629 million at September 30, 2009 represents a 9.8% reduction from year ago levels and a 4%, or $26 million, reduction from June 30, 2009.

The construction and land portfolio declined by nearly $7.5 million during the third quarter 2009 which when added to the first half performance, represents a 35% decline in FCB's riskiest loan segment since last fiscal year end. Construction and land plus REO (REO portion totals $2.8 million as of September 30, 2009) totaled $37.7 million as of September 30, 2009.

SBA and Business Banking CRE loans declined by $3 million to $196 million outstanding during the third quarter of 2009. This segment of the loan portfolio is essentially owner-occupied industrial buildings with average loan-to-value ratios of 50% at initial boarding of the loan. Delinquent CRE first Trust Deed loans were 6.2% of the total CRE loans at quarter end, as compared to the June 30, 2009 delinquency ratio of 5.5%.

The multifamily loan sector's portfolio totaled $209 million as of September 30, 2009. Its delinquency ratio declined from 2.5% to 1.3% during the most recent quarter. The bulk of FCB's multifamily loans were funded prior to 2007 and most were underwritten with a minimum debt coverage ratio of 1.15 or greater. Meyer stated, "While the performance of our multi-family portfolio during the current economic downturn continues to be strong, we remain diligent in carefully monitoring any emerging weaknesses."

Traditional single family mortgage loans comprise another $48 million, or 7.6% of the total loan portfolio. FCB discontinued mortgage banking originations during the second quarter 2004. The great majority of the loans were originated more than six years ago. There are no sub-prime, Stated Income, or Option ARMS in the mortgage portfolio. Despite the seasoned nature of this portfolio, continued weakness in the housing sector in southern California caused the delinquency ratio to rise this quarter from 1.6% to 4.5%. The non-CRE Business Banking and consumer loan portfolios represent 7.6% and 8.3% respectively of FCB's entire portfolio. Both sectors continue to perform well reporting delinquency ratios at September 30 of 0.70% and 1.83% respectively.

Provision for loan losses totaled $4.2 million for the nine months ended September 30, 2009. Total reserves of $13.2 million currently comprise 2.1% of the entire loan portfolio, more than doubling year ago levels of 1.0% of the total loan portfolio.

Operationally, FCB continues to make significant progress attracting lower cost deposits, primarily from business banking relationships. As of September 30, 2009, core deposits exceeded $290 million, a 25% improvement since year-end 2008. Additionally, noninterest bearing checking accounts increased to $72.3 million, and now comprises 12.7% of total deposits. The growth in deposits has enabled the Bank to eliminate its overnight borrowings of approximately $60 million from the Federal Home Loan Bank. Deposit growth, as well as increased debit card utilization, generated $1.28 million year-to-date in deposit related non-interest income, an 11.3% increase over the same period 2008. EVP and Chief Operating Officer Carol Snodgress said, "We have concentrated on increasing our debit card penetration with our existing customer base, and are pleased with the year to date results." Fee income will be further enhanced during the remainder of the year by the sale of SBA 7(a) guaranteed loans into the re-opened secondary market. Gains on SBA 7(a) loans sold more than tripled to $510 thousand during the third quarter reporting period.

RMG Capital Corporation is the holding company for Fullerton Community Bank. The Bank is a community focused full-service bank which is headquartered in Fullerton, California and has been serving southern California since 1927. The Bank currently has eight retail branches, two regional business banking offices, and an SBA division operating in southern California.

The statements contained in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about RMG Capital Corporation and its subsidiary Fullerton Community Bank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, the Company's actual results or performance may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including but not limited to the general business environment, the California real estate market, competitive conditions in the business and geographic areas in which the Company conducts its business and regulatory actions or changes. The Company disclaims any obligation to subsequently revise or update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

RMG Capital Corporation and Subsidiaries
Consolidated Statement of Financial Condition (Unaudited)


Assets                                           09/30/09      09/30/08
                                              -------------- -------------
Cash and Due from Banks                       $   77,642,000 $  17,121,000
Federal Funds Sold                                         0             0
                                              -------------- -------------
    Total cash and cash equivalents               77,642,000    17,121,000

Loans, net                                       615,498,000   692,601,000
Loans Receivable AFS                                       0             -
Investment Securities AFS                          5,003,000             -
Investment Securities HTM                                  0             -
Mortgage-backed Securities AFS, at fair value      7,518,000     2,870,000
Mortgage-backed Securities HTM                    14,615,000    20,119,000
Accrued Interest Receivable                        2,810,000     3,676,000
Investments in Real Estate, net                      900,000     3,029,000
Real Estate Acquired through Foreclosure           2,506,000       458,000
Investment in Subsidiary                                   0             -
Federal Home Loan Bank Stock, at cost              9,800,000     9,589,000
Cash Surrender Value of Life Insurance             7,649,000     7,818,000
Premises and Equipment, net                        6,062,000     5,885,000
Other Assets                                       9,565,000     6,015,000
Land and Other Development Costs                           0             0
                                              -------------- -------------
    Total Assets                              $  759,568,000 $ 769,181,000
                                              ============== =============


Liabilities and Stockholders' Equity
                                              -------------- -------------
Liabilities
  Deposit Accounts                            $  562,494,000 $ 492,810,000
  FHLB Borrowings                                121,800,000   194,400,000
  Other Borrowings                                 1,000,000     1,237,000
  Junior Subordinated Debentures                  18,558,000    18,558,000
  Accrued Income Taxes                                     0             0
  Accounts Payable and other Liabilities           9,163,000    10,630,000
                                              -------------- -------------
    Total Liabilities                            713,015,000   717,635,000
                                              -------------- -------------

Minority Interest and Noncontrolling Interest
 in Consolidated Subsidiary                                0             0

Commitments and Contingencies                              0             0

Stockholders' Equity
  Preferred stock, no par value; 1,000,000
   shares authorized: 5,000 shares issued
   and outstanding                                 4,823,000     4,823,000
  Common stock, no par value; 10,000,000
   shares authorized; 2,811,904 shares issued
   and outstanding                                 3,388,000     3,509,000
  Accumulated other comprehensive Income
   (loss)                                             13,000        (2,000)
  Retained earnings                               38,329,000    43,216,000
                                              -------------- -------------
    Total Stockholders' Equity                    46,553,000    51,546,000
                                              -------------- -------------
                                              $  759,568,000 $ 769,181,000
                                              ============== =============








RMG Capital Corporation
Consolidated Statement of Income (Unaudited)


                      Quarter     Year-to-Date    Quarter     Year-to-Date
                      09/30/09      09/30/09      09/30/08      09/30/08
                    ------------  ------------  ------------  ------------
Interest income:
  Interest on loans $  9,552,000  $ 29,373,000  $ 11,053,000  $ 33,608,000
  Interest and
   dividends on
   investments           242,000       679,000       397,000     1,296,000
                    ------------  ------------  ------------  ------------
    Total Interest
     Income            9,794,000    30,052,000    11,450,000    34,904,000
                    ------------  ------------  ------------  ------------

Interest expense:
  Interest on
   deposit accounts    1,887,000     5,750,000     1,982,000     6,899,000
  Other interest
   expense             1,732,000     5,354,000     2,131,000     6,340,000
                    ------------  ------------  ------------  ------------
    Total Interest
     Expense           3,619,000    11,104,000     4,113,000    13,239,000
                    ------------  ------------  ------------  ------------
    Net Interest
     Income before
     provision for
     loan losses       6,175,000    18,948,000     7,337,000    21,665,000
                    ------------  ------------  ------------  ------------

Provision for loan
 losses                1,951,000     4,256,000     1,286,000     2,319,000
                    ------------  ------------  ------------  ------------
    Net Interest
     Income            4,224,000    14,692,000     6,051,000    19,346,000
                    ------------  ------------  ------------  ------------

Noninterest income:
  Loan servicing
   and other fees        633,000     1,948,000       676,000     2,124,000
  Real estate
   operations, net      (512,000)   (3,489,000)       (6,000)     (234,000)
  Loss on sale of
   investments                 -             -             -             -
  Gain on sale of
   loans, net            214,000       511,000             -       124,000
  Other                   74,000       459,000        79,000       254,000
                    ------------  ------------  ------------  ------------
    Total
     noninterest
     income              409,000      (571,000)      749,000     2,268,000
                    ------------  ------------  ------------  ------------

Noninterest
 expense:
  Compensation and
   other employee
   benefits            3,399,000    10,472,000     4,709,000    12,077,000
  Occupancy              371,000     1,067,000       362,000     1,071,000
  Equipment rental
   and data
   processing            242,000       745,000       260,000       782,000
  Other expense and
   supplies              132,000       395,000       151,000       406,000
  Other                1,118,000     3,463,000       981,000     2,626,000
                    ------------  ------------  ------------  ------------
    Total
     noninterest
     expense           5,262,000    16,142,000     6,463,000    16,962,000
                    ------------  ------------  ------------  ------------
    Income before
     income tax
     provision          (629,000)   (2,021,000)      337,000     4,652,000

Income tax
 provision              (271,000)     (965,000)      (48,000)    1,623,000
                    ------------  ------------  ------------  ------------

    Net Income      $   (358,000) $ (1,056,000) $    385,000  $  3,029,000
                    ============  ============  ============  ============

Contact Information

  • Contact:
    Tom Meyer
    Chairman and Chief Executive Officer
    RMG Capital Corporation
    Fullerton Community Bank
    (714) 578-7500