RMG Capital Corporation Reports Results
Market Wire, December, 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
real estate accounting