SOURCE: RMG Capital Corporation

September 18, 2009 21:11 ET

RMG Capital Corporation Reports Results

FULLERTON, CA--(Marketwire - September 18, 2009) - RMG Capital Corporation (OTCBB: RMGC), the holding company for Fullerton Community Bank, F.S.B. in Fullerton, California, announced results for the second quarter and the first half of 2009.

RMG Capital Corporation announced a net loss of $698 thousand or $0.25 per share for the first six months of 2009 compared to a profit of $2.66 million or $0.88 per share for the first half of 2008. The first six months loss was primarily attributable to write-downs of real estate joint ventures totaling more than $2 million. Chairman and CEO T. E. Meyer stated, "RMG Capital Corporation has now exited the real estate development business. As of June 30, 2009, only one investment totaling $900 thousand remains on the company's books." Meyer also noted, "This last remaining project consisting of small industrial and office buildings is winding down and will begin to pay down later this year. A small profit is expected."

Results were also negatively impacted by the $2.3 million provision for loan losses compared to $950 thousand during the first half of 2008, and $862 thousand in REO costs and loss provisions compared to $83 thousand in REO charges incurred in 2008. As of June 30, 2009, RMG Capital's assets totaled $753 million compared to $745 million as of June 30, 2008.

RMG Capital Corporation's wholly owned subsidiary, Fullerton Community Bank ("FCB"), earned $415 thousand for the first half of the year compared with $3.17 million the previous year. FCB's net interest income declined 5.5% to $13.7 million during the first half of 2009 as the impact of the Bank's nonperforming loans reduced the net interest spread to 3.67%. An additional factor which negatively impacted the net interest spread was the growth of fed funds sold and overnight investment vehicles. These balances stood at $53.3 million as of June 30, 2009 versus $1.2 million as of June 30, 2008. Executive Vice President and Chief Financial Officer, Jon Shigematsu, commented, "It was a strategic management decision to boost liquidity combined with a general lack of quality loan demand and solid deposit growth that caused the significant increase in liquid asset levels."

FCB's total loan portfolio of $655 million at June 30, 2009 represents a 3% decline from year ago levels and a 5.8%, or $39 million, decline from March 31, 2009. Delinquent loans increased to $39.8 million or 6.07% of the total loan portfolio compared to $33.1 million and a ratio of 4.77% as of March 31, 2009. The majority of this increase is attributable to an increase in delinquency rates in the SBA commercial real estate segment. Meyer commented, "While delinquencies trended up in this loan category, we remain adequately collateralized from the underlying commercial real estate."

SBA and Business Banking CRE loans declined by $14 million to $199 million during the second quarter 2009. This represents 30% of FCB's outstanding loans. 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 5.0% of the total CRE loans at quarter end, but are trending upwards from the March 31, 2009 delinquency ratio of 1.8%. The multifamily loan sector's portfolio totaled $210 million as of June 30, 2009. Its delinquency ratio increased from 1.4% to 2.5% during the 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, "We are pleased with the performance of our multi-family portfolio during the current economic downturn."

Traditional single family mortgage loans comprise another $54 million, or 10% of the total loan portfolio. FCB discontinued mortgage banking originations during the second quarter 2004. The great majority of the loans have been held longer than six years, which helps to explain a relatively low delinquency ratio of 1.6% in this segment. There are no sub-prime, Alt-A, or Option ARMS in the mortgage portfolio. The non-CRE Business Banking and consumer loan portfolios each represent 8% of FCB's entire portfolio and continue to perform well reporting delinquency ratios at June 30, 2009 of 1.07% and 1.53% respectively.

The construction and land portfolio declined by $8 million during the second quarter 2009 which when added to the first quarter's $8.8 million decline, represents a 28% decline in FCB's riskiest loan segment. Construction and land plus REO (REO portion totals $4.6 million) totaled $45 million as of June 30, 2009 or 6.9% of total loans. Meyer added, "We continue to reduce the Bank's exposure to speculative land and construction loans, and have already had an additional $4.8 million of loans paid-off in this segment during the month of July."

Provision for loan losses totaled $2.3 million for the first six months ended June 30, 2009. Total reserves of $12.4 million currently comprise 1.9% of the entire loan portfolio, more than doubling year ago levels of 0.8% of the loan portfolio.

Operationally, FCB continues to make significant progress attracting lower cost deposits, primarily from business banking relationships. As of June 30, 2009, core deposits have increased to $270 million, or 10% from year-end 2008. 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 $851 thousand year-to-date in deposit related non-interest income which is a 17.5% increase over the same period 2008. 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.

As of June 30, 2009, FCB exceeded all regulatory capital requirements and is considered well-capitalized with a Tier 1 Core Capital of 8.57%, Tier 1 Risk Based ratio of 10.53% and Total Risk Based Capital ratio of 11.54%.

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                                           06/30/09      06/30/08
                                               ------------- -------------
Cash and Due from Banks                        $  53,509,000 $  14,396,000
Federal Funds Sold                                         0             0
                                               ------------- -------------
   Total cash and cash equivalents                53,509,000    14,396,000

Loans, net                                       643,312,000   673,201,000
Mortgage-backed Securities AFS, at fair value      2,403,000     3,114,000
Mortgage-backed Securities HTM                    15,565,000    21,214,000
Accrued Interest Receivable                        2,869,000     3,570,000
Investments in Real Estate, net                      900,000     3,029,000
Real Estate Acquired through Foreclosure           4,635,000       169,000
Federal Home Loan Bank Stock, at cost              9,800,000     9,446,000
Cash Surrender Value of Life Insurance             7,589,000     7,751,000
Premises and Equipment, net                        6,007,000     5,978,000
Other Assets                                       8,759,000     4,414,000
Land and Other Development Costs                           0             0
                                               ------------- -------------
    Total Assets                               $ 755,348,000 $ 746,282,000
                                               ============= =============

Liabilities and Stockholders' Equity
Liabilities
  Deposit Accounts                             $ 551,933,000 $ 469,858,000
  FHLB Borrowings                                128,800,000   196,500,000
  Other Borrowings                                 1,000,000     1,000,000
  Junior Subordinated Debentures                  18,558,000    18,558,000
  Accounts Payable and other Liabilities           8,157,000     9,086,000
                                               ------------- -------------
    Total Liabilities                            708,448,000   695,002,000
                                               ------------- -------------

Minority Interest and Noncontrolling Interest
 in Consolidated Subsidiary                                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; 2,808,633 shares issued and
   outstanding                                     3,370,000     3,384,000
  Accumulated other comprehensive Income (loss)       20,000        16,000
  Retained earnings                               38,687,000    43,057,000
                                               ------------- -------------
    Total Stockholders' Equity                    46,900,000    51,280,000
                                               ------------- -------------
                                               $ 755,348,000 $ 746,282,000
                                               ============= =============



RMG Capital Corporation
Consolidated Statement of Income (Unaudited)

                                                Year-to-Date  Year-to-Date
                                                  06/30/09      06/30/08
                                                ------------  ------------
Interest income:
  Interest on loans                             $ 19,821,000  $ 22,555,000
  Interest and dividends on investments              437,000       899,000
                                                ------------  ------------
    Total Interest Income                         20,258,000    23,454,000
                                                ------------  ------------

Interest expense:
  Interest on deposit accounts                     3,863,000     4,917,000
  Other interest expense                           3,622,000     4,209,000
                                                ------------  ------------
    Total Interest Expense                         7,485,000     9,126,000
                                                ------------  ------------
    Net Interest Income before provision for
     loan losses                                  12,773,000    14,328,000
                                                ------------  ------------

Provision for loan losses                          2,305,000     1,033,000
                                                ------------  ------------
    Net Interest Income                           10,468,000    13,295,000
                                                ------------  ------------

Noninterest income:
  Loan servicing and other fees                    1,315,000     1,448,000
  Real estate operations, net                     (2,977,000)     (228,000)
  Gain on sale of loans, net                         297,000       124,000
  Other                                              385,000       175,000
                                                ------------  ------------
    Total noninterest income                        (980,000)    1,519,000
                                                ------------  ------------

Noninterest expense:
  Compensation and other employee benefits         7,073,000     7,368,000
  Occupancy                                          696,000       709,000
  Equipment rental and data processing               503,000       522,000
  Other expense and supplies                         263,000       255,000
  Other                                            2,345,000     1,645,000
                                                ------------  ------------
    Total noninterest expense                     10,880,000    10,499,000
                                                ------------  ------------
    Income before income tax provision            (1,392,000)    4,315,000

Income tax provision                                (694,000)    1,671,000
                                                ------------  ------------

    Net Income                                  $   (698,000) $  2,644,000
                                                ============  ============

Contact Information

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