Monarch Bank (MNRK)
Interview with:
William F. Rountree, Jr., President and CEO
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Monarch Bank, a locally owned and independent community bank, is a responsive customer-oriented bank providing exceptional service and building lasting relationships to individuals and businesses

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Financial
Community Bank
(MNRK-NASD)

Monarch Bank

750 Volvo Parkway
Chesapeake, VA 23320
Phone: 757-222-2100


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William F. Rountree, Jr.
President and
Chief Executive Officer

Interview conducted by:
Lynn Fosse
Senior Editor

CEOCFOinterviews.com
November 2003

BIO:
WILLIAM F. ROUNTREE, JR., 59, has served as a Director, President and Chief Executive Officer of the Bank since its inception in 1998.  Mr. Rountree is a resident of Virginia Beach, was born and raised in Norfolk, and has lived in South Hampton Roads for over 50 years.  Mr. Rountree has over 35 years of banking experience in this market, of which over 2years have been in senior management positions.  After starting his banking career in 1968 with a SunTrust Bank predecessor in Norfolk, Mr. Rountree managed three branches, was a commercial lending officer for six years, and in 1976 was elected Executive Vice President in charge of Commercial Banking for Northern Virginia.  In 1977 he was elected Senior Vice President, Chief Operating Officer and Regional Board Member for First & Merchants National Bank in Norfolk, responsible for credit administration and commercial lending.  First & Merchants appointed him Senior Regional Officer in 1981 in charge of the South Hampton Roads Region.  Subsequently Mr. Rountree was Regional Executive Officer responsible for all retail banking in South Hampton Roads for Bank of America predecessors for over 10 years.  Mr. Rountree’s last two years in banking were in senior marketing positions for NationsBank.  He retired from NationsBank in December 1995, and until March 1998, was employed by Harvey Lindsay Commercial Real Estate as Director of New Business Development.  He joined Monarch Bank on April 1, 1998 as President and Chief Executive Officer.  He has twice served and is now serving on the Board of the Virginia Bankers Association (VBA) and currently is a Board Member of the VBA’s Community Bank Council.   He currently serves on the Board and Executive Committee of Bankers Investment, L.L.C. Among other community and professional involvement, he has been President and Chairman of the Eastern Virginia Medical School Foundation, President of Junior Achievement, President and Campaign Chairman of the United Way of South Hampton Roads, President of Old Dominion University Educational Foundation, a Board Member and Vice Chairman of Cape Henry Collegiate School, and a member of the Board of Visitors of Eastern Virginia Medical School.  Mr. Rountree was Chairman of the 1998 Virginia Beach Neptune Festival and is presently a Board Member.  He currently serves on the Board of the Virginia Beach Foundation and past Chairman of the Virginia Beach Resort Advisory Commission, which he still serves as a Commissioner.   He is an active member of Galilee Episcopal Church, where he serves as a member of the Vestry and teaches Sunday School.   In 1974, Mr. Rountree was selected “Norfolk’s Outstanding Young Man of the Year” and later nominated to “Outstanding Young Men of America.”  He is a graduate of the College of William and Mary, the National Commercial Lending School at University of Oklahoma, and has an advanced degree from Dartmouth College in Credit and Financial Management.

Company Profile:
Monarch Bank (MNRK-NASD) a community bank headquartered in Chesapeake, Virginia, was founded to fill the need for a responsive customer-oriented bank which provides superior service to individuals and businesses in the South Hampton Roads Community (Southeastern Virginia). Monarch Bank is sensitive to the needs of the community and as a locally owned and independent community bank, they respond quickly and directly to their customers. The company takes its commitment to the community seriously and believes that they have the experienced staff and technological resources needed to deliver a comprehensive array of financial products and services.

Monarch Bank is committed to providing quality service to businesses and individuals. They offer a full range of banking services for both consumers and businesses. With the latest in bank technology, they offer on-line internet banking, check imaging, 24-hour telephone banking, commercial courier service, customized loan and deposit products, debit cards, merchant bankcard services, safe deposit boxes, automated teller machines and many other traditional banking products and services.

When it comes to banking services for your business, Monarch Bank understands that "one size doesn't really fit all." Your business has different goals and financial needs than other companies. So whether you're large or small, just getting established, or have been in business for many years, Monarch Bank has custom products to help you reach your goals. All services are designed to grow as your business grows. Monarch Bank offers a variety of personal banking deposit accounts to meet your individual needs: regular and interest checking accounts, statement and money market savings, certificates of deposit, and IRA's. All deposit accounts are insured up to $100,000 by the FDIC.

CEOCFOinterviews: Mr. Rountree, please tell us about Monarch Bank and what motivated you to start the bank.

Mr. Rountree: “Monarch Bank came about due to a lack of small local community banks as many were being acquired by larger banks. Three of our directors were on another community bank’s board, which had been acquired. When Wachovia bought the bank they soon eliminated the local advisory boards. This group cared about the local community so they decided to start a bank. The vision was to have a local community bank that could “build lasting relationships with exceptional service”.

CEOCFOinterviews: Will you tell us a little about the economy in the area in which you service?

Mr. Rountree: “Our headquarters are located in Chesapeake, Virginia and there are acres of businesses everywhere. The local economy is very vibrant. In the past, we have had to depend on the military in this community, but it has become diversified and we now have light manufacturing and many service companies. Just based on our limited experience, we are very fortunate and have seen very few businesses that are struggling right now with most prospering.”

CEOCFOinterviews: How has starting a bank in turbulent economic times affected you?

Mr. Rountree: “It has been a real learning experience. When we first started putting the bank together, rates were headed upward. That was fine when we were raising the capital and we could get a decent return on the money that was sitting there. In the last two years, there have been historic drops in the Prime Rate alone, about 575 base points, which has been very tough on our margins. The other problem that we had was by the time we opened, rates were falling and nobody wanted a fixed rate loan. About 60% of the portfolio is asset-sensitive, in other words, tied to an index.  We have seen our margins tighten up and very early it has taught me that you cannot be dependent on loan income alone. During the last two or three years, we have been working to develop sources of “other income” such as our residential mortgage company, Monarch Home Funding. We now have our own investment company called Monarch Investments. We have an insurance company, Bankers Insurance, that we own with 28 Virginia community banks. We have just acquired a commercial mortgage company.”

CEOCFOinterviews: Will you tell us about your typical customer and the type of services you provide that may attract new customers?

Mr. Rountree: “The typical customer is a small to mid-sized business. Flexibility, personal service, knowing the local market and having locals dealing with locals has been our formula. We also have Private Banking which deals with professionals and corporate executives. We do have some special products we work with, especially in Private Banking. One of the neat things we have done in our Private Banking is exclusive partnering with a concierge service. When a new client joins our private banking group, they immediately can take advantage of those concierge services. Our employees are also offered the same concierge service. We have drycleaners coming to the bank, and picking up peoples laundry and then bringing it back.”

CEOCFOinterviews: How do you make your customers aware of the service that you offer?

Mr. Rountree: “Last fall, we hired someone as a special consultant who had been manager of retail banking for four community banks and who also had worked for several large banks and specialized in implementing a sales and service culture. We began implementing this sales culture in January, and we started with product knowledge. We had play-offs in the bank and everybody from me to the tellers to the operations people in the backroom had to study and know their product knowledge to compete in a Jeapordy game that some staff members created. Part of this process involves developing relationship plans for each customer based on their financial needs, and involves cross-selling. Since we’ve started this process, our products sold per branch and cross-sell ratio has gone up significantly.”

CEOCFOinterviews: How many branches do you have now, and what is your plan going forward?

Mr. Rountree: “We presently have four offices with a fifth to open early next year. We have committed to the board to have strong controlled growth. We will only have one new office at a time; thus, and we can put our energy into making it profitable. We want to open a new office every twelve to eighteen months and right now, we are approaching eighteen months and are planning to open our first office in Norfolk.”

CEOCFOinterviews: What does the butterfly logo signify?

Mr. Rountree: “We just stumbled onto the butterfly logo, but it is one of the best things that has ever happened to us! Having the name Monarch, we looked at several options and the butterfly was the last thing that came on the table, and I said “I love it.” I spent two-and-a-half years at NationsBank in a senior marketing position and I saw many marketing possibilities with the butterfly. We have butterfly gardens at each one of our offices. We have hand-made butterfly benches, made by a local artist, shaped and painted like the Monarch butterfly that you see when you enter the vestibules. They are custom made and each one is a little different, but they all signify the Monarch butterfly. We have Monarch bumper stickers that say ‘I break for butterflies.’ and brochures that tell people how to create a butterfly garden in their own yard. In the house that I just moved from, I had converted the whole yard to a butterfly garden and it was just fabulous. I think I had 22 monarchs last October when they were migrating from up north and into Central Mexico.”

CEOCFOinterviews: Do you do much advertising?

Mr. Rountree: “We mostly do product advertising but we have chosen not to do any branding until we get a little bit larger. Right now, we are advertising a 24-month penalty-free CD twice a week. We try to keep our name out there as far as public relations and prepare two or three press releases a month about Monarch Bank, our employees, and any new initiatives.”

CEOCFOinterviews: What do you look for in your people?

Mr. Rountree: “When hiring a new employee we look for integrity, a team player and most of all, someone with a good heart. We look for people that are experienced and proven. We try to hire people that are highly desirable in the market place, local and experienced.”

CEOCFOinterviews: Please tell us about your community involvement.

Mr. Rountree: “We are committed to our community but we realize that we cannot be everything to everybody. We have chosen children’s charities as an area in which to concentrate. For the last two years, we have helped 13 different children’s charities. We hold a charitable golf tournament, and the first year we raised $40,000 dollars as well as making a contribution from the Bank. This year, we raised almost fifty thousand.  All of our people are involved in community activities.  It is harder when you are a small community bank to free people up, like you can in large banks, because everybody has to wear so many hats but we try to help out in every way that we can.”

CEOCFOinterviews: Why should investors be interested in Monarch, and what should they know that they might not realize when they first look at the company?

Mr. Rountree: “Investors should know that we are well positioned for interest rates when they start to rise. The balance sheet is very asset sensitive with almost 60% of our outstanding loans rate-sensitive. The other thing that investors do not know about Monarch is that we were posed for the future as far as “other income”. Starting our bank at a time when rates were at historic lows has helped us because I feel that if we can make money in this environment, then we can succeed in just about any environment. The last thing is that we are fanatical about loan quality; we have no loans that are ninety days past due, no-non accruals and no charge-offs. Since our inception of April of 1999, we have only had one charge off and that was $500 dollars!”

CEOCFOinterviews: What are your biggest challenges and how are you ready?

Mr. Rountree: “My biggest challenge today are the tight margins in this low interest rate environment. The other challenge is our unbelievable growth and not yet having all the key people on board. As we grow larger and are more profitable, we are adding more needed managers.”

CEOCFOinterviews: As CEO, what is your focus on a day-to-day basis?

Mr. Rountree: “One of my favorite things and a strength is to develop new business. I do not have many people to delegate to and therefore often I get tied down with administration. I would like to get out and visit my offices more. I deal with shareholders and since we have recently gone public, I hear from and meet with institutional investors regularly, particularly, small mutual fund companies specializing in community banks.”

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