SOURCE: RMG Capital Corporation

November 18, 2010 17:46 ET

RMG Capital Corporation Reports Third Quarter Earnings for 2010

FULLERTON, CA--(Marketwire - November 18, 2010) - RMG Capital Corporation (OTCBB: RMGC), parent company of Fullerton Community Bank ("FCB"), reported net income of $66 thousand, or $0.02 per share, for the third quarter of 2010, compared to a net loss of $358 thousand ($0.13 per share) in 2009. For the first nine months, RMG reported a net loss of $1.84 million, or $0.65 per share, compared with a net loss of $1.06 million, or $0.40 per share, for the same period in 2009.

"We believe that posting two consecutive profitable quarters is indicative of the improving conditions within our loan portfolio during this period," said Tom Meyer, Chairman and Chief Executive Officer of RMG Capital. "This validates our ongoing strategy of working out our problem assets while building on FCB's attractive core deposit base."

FCB continued to make progress in managing problem assets. Non-performing loans fell to $13.1 million at September 2010. This compares with totals of $18.3 million at June 2010 and $24.3 million at March 2010. Classified assets remained steady from the prior quarter at $49.8 million. However, they are down from the March balance of $60.4 million. Delinquent loans stood at 3.78% of total loans at the end of September, an improvement from June 2010 (3.90%) and March 2010 (4.99%).

FCB's Texas Ratio stood at 35.55% as of quarter end, compared to 36.76% at June 2010 and 45.49% at March 2010. 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 improvement during the quarter. The chart below shows the steady capital ratio growth since December 2008.

-------------------------------------------------------------------------
                              12/31/08   12/31/09   6/30/10   9/30/10

-------------------------------------------------------------------------
Total Risk-Based
 Capital Ratio                  10.57%     12.12%    12.22%    12.55%
-------------------------------------------------------------------------
Tier 1 Capital Ratio             8.34%      8.38%     8.50%     8.67%
-------------------------------------------------------------------------
Tier 1 Risk-Based
 Capital Ratio                   9.58%     10.87%    10.96%    11.29%
-------------------------------------------------------------------------

"We're pleased to report that our capital ratios have improved during this challenging banking period," said Meyer. "Realizing net income the last two quarters and an overall reduction in loan balances has driven our capital levels to their highest points in many years."

Loan balances declined as borrowers refinanced elsewhere and because of our conscious effort to reduce problem assets. Loan demand remains restrained except in SBA lending. Most of the SBA production is being sold to limit balance sheet growth. In the quarter, FCB earned $300,000 on the sale of SBA loans. Net loans began the year at $583.9 million and have been reduced to $549.7 million at September 2010. Owner-occupied commercial real estate ($195 million) and multifamily ($192 million) remain the largest loan segments of the Bank's portfolio; land and construction, the source of nearly half of the Bank's charge-offs since 2008, now stands at only $20 million.

"We have been successful at reducing our land and construction loans to only 3.6% of the loan portfolio," commented Jon Shigematsu, Chief Financial Officer. "We are also pleased that non-performing loans within our two largest loan segments have both dropped over 50% since March."

The Real Estate Owned portfolio stood at $11.9 million at quarter end, up from $7.3 million at June 2010 and $9.5 million at year end, as the Bank foreclosed on four additional properties. The new REO includes a $2 million lot in La Jolla and a $2 million industrial property in Santa Fe Springs. FCB continues to aggressively market its REO portfolios, seeking maximum value.

FCB's deposit mix continued its shift toward non-term deposits. Checking and savings balances have increased from $289.1 million at September 2009 (51.3% of total deposits) to $310.5 million at September 2010 (59.0% of total deposits). At September 2010, non-interest checking balances stood at $79.1 million, or 14.9% of total deposits. This is an improvement over the $72.1 million of non-interest checking balances held a year ago. As a result of the non-term deposit shift and maturity of relatively high rate CDs, FCB's cost of deposits continued to decline to 0.90%, compared to 1.09% at December 2009 and 1.31% at September 2009.

"Our ability to positively shift our deposit mix is the result of the high quality service we offer our customers," commented Carol Snodgress, COO. "Growing non-interest checking balances remains an important goal for the Bank and we are pleased with the progress made in the last year."

FCB has reduced its advances with the Federal Home Loan Bank by 20% since September 2009, further reducing a reliance on higher cost borrowing.

The year-to-date net interest income before the provision for loan losses declined from $18.9 million for the period ended September 2009 to $17.1 million for the period ended September 2010. The primary reason for the reduction was the lower level of loans in the current nine month period.

Management continues to focus on right-sizing the Bank given the economic environment and its strategic needs. While FCB's assets declined by 8% over the last 12 months, employee compensation costs fell 12.5% compared to the year ago period. Total year-to-date non-interest expenses as of September 2010 are down $1.5 million over the comparable period last year.

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



Assets                                            09/30/10      09/30/09
                                                ------------- -------------
Cash and Due from Banks                         $  79,241,000 $  77,642,000
Loans, net                                        546,733,000   615,498,000
Investment Securities Available for Sale, at
 fair value                                         1,503,000     5,003,000
Mortgage-backed Securities Available for Sale,
 at fair value                                      7,346,000     7,518,000
Mortgage-backed Securities Held to Maturity        11,790,000    14,615,000
Accrued Interest Receivable                         2,509,000     2,810,000
Investments in Real Estate, ventures                  600,000       900,000
Federal Home Loan Bank Stock, at cost               9,072,000     9,800,000
Cash Surrender Value of Life Insurance              8,142,000     7,649,000
Premises and Equipment, net                         5,695,000     6,062,000
Other Real Estate Owned                            11,892,000     2,506,000
Other Assets                                       14,647,000     9,565,000
                                                ------------- -------------
    Total Assets                                $ 699,170,000 $ 759,568,000
                                                ============= =============


Liabilities and Stockholders' Equity
                                                ------------- -------------
Liabilities
  Deposit Accounts                              $ 528,793,000 $ 562,494,000
  FHLB Borrowings                                  96,900,000   121,800,000
  Other Borrowings                                  3,505,000     1,000,000
  Junior Subordinated Debentures                   18,558,000    18,558,000
  Accounts Payable and other Liabilities            9,656,000     9,163,000
                                                ------------- -------------
    Total Liabilities                             657,412,000   713,015,000
                                                ------------- -------------

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; 2,816,319 shares issued and
   outstanding                                      3,382,000     3,388,000
  Accumulated other comprehensive Income (loss)       119,000        13,000
  Retained earnings                                33,434,000    38,329,000
                                                ------------- -------------
    Total Stockholders' Equity                     41,758,000    46,553,000
                                                ------------- -------------
                                                $ 699,170,000 $ 759,568,000
                                                ============= =============



RMG Capital Corporation
Consolidated Statement of Income (Unaudited)



                      Quarter                     Quarter
                       Ending     Year-to-Date     Ending     Year-to-Date
                      09/30/10      09/30/10      09/30/09      09/30/09
                    ------------  ------------  ------------  ------------
Interest income:
  Interest on loans $  8,255,000  $ 24,962,000  $  9,552,000  $ 29,373,000
  Interest and
   dividends on
   investments           223,000       683,000       242,000       679,000
                    ------------  ------------  ------------  ------------
    Total Interest
     Income            8,478,000    25,645,000     9,794,000    30,052,000
                    ------------  ------------  ------------  ------------

Interest expense:
  Interest on
   deposit accounts    1,218,000     3,758,000     1,887,000     5,750,000
  Other interest
   expense             1,518,000     4,705,000     1,732,000     5,354,000
                    ------------  ------------  ------------  ------------
    Total Interest
     Expense           2,736,000     8,463,000     3,619,000    11,104,000
                    ------------  ------------  ------------  ------------
    Net Interest
     Income before
     provision for
     loan losses       5,742,000    17,182,000     6,175,000    18,948,000
                    ------------  ------------  ------------  ------------

Provision for loan
 losses                2,007,000     5,564,000     1,951,000     4,256,000
                    ------------  ------------  ------------  ------------
    Net Interest
     Income            3,735,000    11,618,000     4,224,000    14,692,000
                    ------------  ------------  ------------  ------------

Noninterest income:
  Loan servicing and
   other fees            859,000     2,221,000       633,000     1,948,000
  Gain on sale of
   loans, net            291,000       348,000       214,000       511,000
  Other                   82,000       240,000        74,000       459,000
                    ------------  ------------  ------------  ------------
    Total
     noninterest
     income            1,232,000     2,809,000       921,000     2,918,000
                    ------------  ------------  ------------  ------------

Noninterest
 expense:
  Compensation and
   other employee
   benefits            2,863,000     9,156,000     3,399,000    10,472,000
  Occupancy              361,000     1,075,000       371,000     1,067,000
  Equipment rental
   and data
   processing            228,000       716,000       242,000       745,000
  Office expense and
   supplies              125,000       374,000       132,000       395,000
  Real estate
   operations, net             0             0             0     2,055,000
  Loss on sales of
   REO, net              (25,000)      301,000       (15,000)       70,000
  Losses on REO
   valuation and
   operations, net       425,000     2,347,000       527,000     1,364,000
  Other                1,437,000     4,155,000     1,118,000     3,463,000
                    ------------  ------------  ------------  ------------
    Total
     noninterest
     expense           5,414,000    18,124,000     5,774,000    19,631,000
                    ------------  ------------  ------------  ------------
    Income before
     income tax
     provision          (447,000)   (3,697,000)     (629,000)   (2,021,000)

Income tax provision    (513,000)   (1,856,000)     (271,000)     (965,000)
                    ------------  ------------  ------------  ------------

    Net Income      $     66,000  $ (1,841,000) $   (358,000) $ (1,056,000)
                    ============  ============  ============  ============

Contact Information

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