Monarch Bancorp, the holding company for Monarch Bank in Laguna Niguel, reported net losses for the second quarter and first six months but said the red ink belies a profitable operation in the last part of the quarter.
The company posted a consolidated net loss of about $50,000 in the quarter, contrasted with year-earlier net income of $100,000. For the half, the holding company reported a consolidated loss of $108,732, contrasted with net earnings of $153,409 last year.
The bank accounted for $26,000 of the fourth quarter loss and had a six-month net loss of $57,762. In its fiscal 1985, the bank posted second-quarter net income of $100,000 and six-month earnings of $201,861.
This year's losses were expected, said Terry J. Metrovich, Monarch's president and chief executive. The red ink came mainly from operations, he said, although a drive to write down inflated assets contributed to the losses.
Metrovich, who was hired in February, said he cut overhead expenses in April primarily with the layoff of 14 employees, resulting in a $35,000-a-month savings in personnel costs. Most of the employees were in bank administration.
"It was a matter of cleaning things up around here," Metrovich said. "Next year we should have this all behind us."
Metrovich said the bank has been profitable since April, earning $64,000 in the last two months of the quarter. That money, however, was put into reserves for operational and loan losses incurred over the last 18 months. He said he hopes profits for the rest of the year will offset the losses incurred in the first half.
In its effort to rebound from operating problems and, to a lesser extent, its loan losses, Monarch has purposely reduced its assets to ensure that its ratio of capital to assets is in line with the 6% required by regulators. At the end of June, the ratio was above 7%.
Also at the end of June, the bank's assets totaled $66.9 million, down 21.7% from its $85.4 million in assets a year earlier. Similarly, the company's total assets declined 21.7%, to $66.9 million from $85.5 million.
The bank's total loan portfolio fell 13.8% at the end of June, to $56.8 million from $65.9 million a year earlier. Total deposits dropped 22.5% to $60.7 million from $78.3 million.