SOURCE: RMG Capital Corporation

March 29, 2011 22:14 ET

RMG Capital Corporation Reports 2010 Results

FULLERTON, CA--(Marketwire - March 29, 2011) - RMG Capital Corporation (PINKSHEETS: RMGC), parent company of Fullerton Community Bank ("FCB"), reported net income of $764 thousand, or $0.27 per share, for the fourth quarter of 2010, compared to a net loss of $3.053 million ($1.09 per share) in 2009. For full year 2010, RMG reported a net loss of $1.077 million, or $0.38 per share, compared with a net loss of $4.109 million, or $1.46 per share, for full year 2009.

"Our third consecutive profitable quarter at FCB confirms that our strategy of aggressively managing our problem assets while minimizing losses is paying off," said Tom Meyer, Chairman and Chief Executive Officer of RMG Capital. Over the final three quarters of 2010, FCB earned $939 thousand, compared to a loss of $4.8 million during the three quarters leading up to March 2010. The turnaround was driven by sharply lower loan and REO losses ($6.4 million compared to $14.9 million). Improved SBA fee income and a reduction in non-interest expense also contributed to the positive trends.

Loan balances ended the year at $533.0 million, down 8.7% from the previous year. Customers paid down loans, new loan demand remained restrained and most new SBA production was sold into the secondary market. Owner-occupied commercial real estate ($188 million) and multifamily ($189 million) remained the largest loan segments of FCB's portfolio.

FCB's asset quality continues to improve; classified assets (including REO) declined substantially to $38.1 million, compared to $49.8 million at September 2010 and $59.1 million at year end 2009. Delinquent loans stood at 4.15% of total loans at year end, compared to 3.78% at the end of the third quarter, and 5.36% at year end 2009. Non-performing assets stood at $22.7 million at year end, compared to $31.7 million in March 2010.

"We are pleased with the continued reduction in our classified assets and will continue to work to reduce them even further," commented Mr. Meyer. "The risk in our balance sheet because of these reductions is significantly less than it was a year ago."

FCB's Texas Ratio also improved. It stood at 32.2% as of quarter end, compared to 35.6% in September, 36.8% in June and 45.5% in March. A widely used measure to gauge banks' credit problems, the Texas Ratio is calculated by dividing non-performing assets (loans plus REO) by Tier 1 Capital plus Allowance for Loan Losses.

Regulatory capital ratios of FCB continued to exceed regulatory standards, and all showed marked improvement during the quarter. The chart below shows the steady regulatory capital ratio growth since December 2008.

                                 12/31/08   12/31/09   6/30/10    12/31/10
                                 --------   --------   --------   --------

Total Risk-Based Capital            10.57%     12.12%     12.22%     13.03%

Tier 1 Capital                       8.34%      8.38%      8.50%      8.68%

Tier 1 Risk-Based Capital            9.58%     10.87%     10.96%     11.77%

"Fullerton Community Bank has made great strides in improving its capital position without diluting existing stakeholders," said Mr. Meyer. "The improved capital ratios are another indication of the Bank's financial recovery."

FCB's Real Estate Owned portfolio stood at $3.2 million at year end, down from $9.5 million at year end 2009 and $11.9 million at September 2010, as the bank successfully sold off a number of foreclosed properties in the fourth quarter.

FCB increased the number of checking and savings accounts from 14,916 at the end of 2009 to 15,855 at the end of 2010. In addition, the Bank was able to reduce its reliance on higher cost CDs. CDs were 44% of total deposits at the end of 2009 and ended 2010 at 37%. FCB reduced its advances with the Federal Home Loan Bank by 7% since December 2009, further reducing its reliance on higher cost borrowing.

Management continues to focus on "right-sizing" the Bank given its capital position and economic environment. Total assets declined by 6% over the last 12 months while employee compensation costs fell 12%.

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



Assets                                            12/31/10      12/31/09
                                                ------------- -------------
Cash and Due from Banks                         $  99,240,000 $  73,185,000
Loans, net                                        533,025,000   583,895,000
Investment Securities Available for Sale, at
 fair value                                                 0     5,746,000
Mortgage-backed Securities Available for Sale,
 at fair value                                      6,486,000     9,435,000
Mortgage-backed Securities Held to Maturity        11,147,000    13,787,000
Accrued Interest Receivable                         2,262,000     2,755,000
Investments in Real Estate, ventures                  600,000       700,000
Federal Home Loan Bank Stock, at cost               8,709,000     9,800,000
Cash Surrender Value of Life Insurance              8,210,000     7,947,000
Premises and Equipment, net                         5,550,000     5,980,000
Other Real Estate Owned                             3,159,000     9,490,000
Other Assets                                       12,154,000    14,349,000
                                                ------------- -------------
   Total Assets                                 $ 690,542,000 $ 737,069,000
                                                ============= =============


Liabilities and Stockholders' Equity
                                                ------------- -------------
Liabilities
  Deposit Accounts                              $ 510,386,000 $ 548,248,000
  FHLB Borrowings                                 108,900,000   117,300,000
  Other Borrowings                                    965,000     1,000,000
  Junior Subordinated Debentures                   18,558,000    18,558,000
  Accounts Payable and other Liabilities            9,218,000     8,472,000
                                                ------------- -------------
    Total Liabilities                             648,027,000   693,578,000
                                                ------------- -------------


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; 2,816,319 shares issued and
   outstanding                                      3,389,000     3,361,000
  Accumulated other comprehensive Income (loss)       104,000        31,000
  Retained earnings                                34,199,000    35,276,000
                                                ------------- -------------
    Total Stockholders' Equity                     42,515,000    43,491,000
                                                ------------- -------------
                                                $ 690,542,000 $ 737,069,000
                                                ============= =============




RMG Capital Corporation
Consolidated Statement of Income (Unaudited)




                      Quarter                     Quarter
                       Ending     Year-to-Date     Ending     Year-to-Date
                      12/31/10      12/31/10      12/31/09      12/31/09
                    ------------  ------------  ------------  ------------
Interest income:
  Interest on loans $  7,827,000  $ 32,789,000  $  8,984,000  $ 38,357,000
  Interest and
   dividends on
   investments           193,000       876,000       281,000       960,000
                    ------------  ------------  ------------  ------------
    Total Interest
     Income            8,020,000    33,665,000     9,265,000    39,317,000
                    ------------  ------------  ------------  ------------

Interest expense:
  Interest on
   deposit accounts    1,164,000     4,922,000     1,724,000     7,474,000
  Other interest
   expense             1,372,000     6,077,000     1,656,000     7,010,000
                    ------------  ------------  ------------  ------------
    Total Interest
     Expense           2,536,000    10,999,000     3,380,000    14,484,000
                    ------------  ------------  ------------  ------------
    Net Interest
     Income before
     provision for
     loan losses       5,484,000    22,666,000     5,885,000    24,833,000
                    ------------  ------------  ------------  ------------

Provision for loan
 losses                  391,000     5,955,000     7,707,000    11,963,000
                    ------------  ------------  ------------  ------------
    Net Interest
     Income            5,093,000    16,711,000    (1,822,000)   12,870,000
                    ------------  ------------  ------------  ------------

Noninterest income:
  Loan servicing
   and other fees        814,000     3,035,000       671,000     2,619,000
  Gain on sale of
   loans, net            232,000       580,000       144,000       655,000
  Other                1,575,000     1,815,000       436,000       895,000
                    ------------  ------------  ------------  ------------
    Total noninterest
     income            2,621,000     5,430,000     1,251,000     4,169,000
                    ------------  ------------  ------------  ------------

Noninterest expense:
  Compensation and
   other employee
   benefits            2,462,000    11,618,000     2,670,000    13,142,000
  Occupancy              378,000     1,453,000       391,000     1,458,000
  Equipment rental
   and data
   processing            228,000       944,000       253,000       998,000
  Office expense
   and supplies          112,000       486,000       131,000       526,000
  Real estate
   operations, net        (2,000)       (2,000)     (929,000)    1,126,000
  Loss on sales of
   REO, net                8,000       309,000       (34,000)       36,000
  Losses on REO
   valuation and
   operations, net     1,436,000     3,783,000       963,000     2,327,000
  Other                1,855,000     6,010,000     1,915,000     5,378,000
                    ------------  ------------  ------------  ------------
    Total noninterest
     expense           6,477,000    24,601,000     5,360,000    24,991,000
                    ------------  ------------  ------------  ------------
    Income before
     income tax
     provision         1,237,000    (2,460,000)   (5,931,000)   (7,952,000)

Income tax provision     473,000    (1,383,000)   (2,878,000)   (3,843,000)
                    ------------  ------------  ------------  ------------

    Net Income      $    764,000  $ (1,077,000) $ (3,053,000) $ (4,109,000)
                    ============  ============  ============  ============

Contact Information

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