Solera National Bancorp Reports 3Q, Nine Months of 2015 Financial Results

Tangible Book Value Per Share Continues to Rise, Reflecting Earnings Growth, New Loans, Improved Loan and Asset Quality


LAKEWOOD, Colo., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Solera National Bancorp, Inc. (OTCQB:SLRK), the holding company for Solera National Bank, a business-focused bank primarily serving the Denver metropolitan area, today reported financial results for the third quarter and nine months of 2015.

For the three months ended September 30, 2015, the Company reported net income of $649,000, or $0.24 per share, compared to a net loss of $442,000, or $(0.17) per share, for the three months ended September 30, 2014.  For the nine months ended September 30, 2015, Solera reported net income of $1.46 million, or $0.54 per share, compared to a net loss of $834,000, or $(0.32) per share, for the nine months of 2014.

Robert J. Fenton, President and CEO, stated: “Our financial performance in 2015 has demonstrated positive, consistent operating results that has led to increasing core earnings. We have remained focused on maintaining operating efficiencies and generating quality business in a highly competitive market.

“Additionally, the Company has made significant progress in reducing the level of criticized assets, while strengthening our credit and risk management practices.  The steady growth in total stockholders’ equity and tangible book value per share has validated our business model and demonstrates that the Company is on a sustained, positive trajectory.”

Operational Highlights

Net interest income after provision for loan and lease losses was $1.12 million for the quarter ended September 30, 2015, the highest quarterly total in 2015 and up from $892,000 for the quarter ended September 30, 2014.  Total interest income was $1.35 million for the three months ended September 30, 2015, which was the Company’s highest quarterly result in 2015.  Income from investment securities declined slightly compared with prior quarters as the company continued to trim its investment portfolio, while interest and fees on loans of $1.11 million was up approximately 6% compared to each of the prior two quarters.

For the nine months ended September 30, 2015, net interest income after provision for loan and lease losses was $3.21 million compared with $3.34 million for the nine months of 2014.  Total interest income for the nine months of 2015 was $3.99 million compared with $4.67 million for the nine months of 2014.  The decline in total interest income for the nine months of 2015 compared with the nine months of 2014 was primarily due to a leaner investment securities portfolio and no residential mortgage loans held for sale, following the Company’s exit from the residential mortgage business and a re-focusing on commercial banking.

Net interest margin was 3.19% in third quarter 2015, reflecting relative stability throughout the year and slightly higher than net interest margin a year ago.  Melissa K. Larkin, CFO, noted: “We have been pleased at our ability to maintain margins over 3%, which we believe reflects our ability to offer attractive value to our customers in a highly competitive marketplace and continued low-interest rate environment.”

Total interest expense was $286,000 in third quarter 2015, up slightly compared with the previous two quarters and primarily reflecting moderate growth of interest-bearing time deposits during the quarter. For the nine months ended September 30, 2015, total interest expense was $830,000 compared with $921,000 for the nine months ended September 30, 2014.

Total noninterest income in third quarter 2015 was $407,000 compared to $571,000 in third quarter 2014, which included significant income from loans sold.  In third quarter 2015, the Company’s noninterest income included a one-time bank owned life insurance benefit of $293,000.  Fenton noted the Company’s Investment Services Division, launched early in 2015, is making a modest but increasing contribution to noninterest income.

Total noninterest income for the nine months of 2015 was $670,000 compared to $3.24 million in the prior year’s period, with the difference reflecting an absence of income from residential loans sold to the secondary market as the Company exited this business in the third quarter of 2014.

Total noninterest expense in third quarter 2015 was $874,000 compared to $1.91 million in third quarter 2014.  Total noninterest expense for the nine months of 2015 was $2.42 million compared with $7.42 million for the nine months of 2014.  Both 2015 periods reflected lower ongoing salary and compensation expenses following the exit of the Company’s residential mortgage division and decisive actions taken to right-size the organization.

The Company’s nine-month 2015 noninterest expense included a $106,000 benefit in the first quarter 2015 from the reversal of a deferred rent obligation associated with the purchase of the Bank’s main office, which had previously been on a long-term lease.  Larkin noted the transaction is generating ongoing cost reductions that have made a positive contribution to Solera’s earnings.

Balance Sheet Review, Credit Quality and Shareholder Value

Total assets were $139.45 million at September 30, 2015, compared to $148.00 million at September 30, 2014 and $144.67 million at December 31, 2014, partially reflecting a decline in investment securities available for sale, which has contributed to an improved interest rate risk profile.  The year-over-year asset comparison reflected an increase in gross loans to $83.77 million at September 30, 2015, up 5.6% from a year earlier, and a reduction in other real estate owned.

Net loans after allowance for loan and lease losses increased to $82.15 million at September 30, 2015 from $77.78 million a year earlier and $79.29 million at December 31, 2014. The Company had a strong third quarter, adding new customer relationships and originating approximately $6.5 million in new commercial loans.  Fenton noted that with loan payoffs, net loan growth was approximately $600,000 in the quarter, and that payoffs included a number of substandard or special mention loans, which had a positive impact on loan quality.  As a result of the improved loan quality metrics, the Company recorded a $50,000 credit to the provision for loan and lease losses in the third quarter 2015.

Total criticized assets declined to $5.63 million at September 30, 2015 from $11.57 million at September 30, 2014.  The ratio of criticized assets to total assets declined to 4.03% compared to 7.82% a year ago.  The Company had no OREO at September 30, 2015.  The ratio of non-performing loans to gross loans was 0.30% and non-performing assets to total assets were 0.18% at September 30, 2015.  Total deposits at September 30, 2015 were $113.19 million, compared to $122.89 million at September 30, 2014, and $119.11 million at December 31, 2014.  Noninterest-bearing demand accounts increased in third quarter 2015 from second quarter 2015, partially reflecting the Company’s ongoing initiatives to attract deposits as part of an overall client relationship.  Nonmaturity deposits comprised approximately half of the Company's total deposits at September 30, 2015.

The Bank continues to exceed accepted regulatory standards for a well-capitalized institution and improved all capital ratios as of September 30, 2015, with a tier 1 leverage ratio of 13.1%, a tier 1 risk-based capital ratio of 17.3%, and a total risk-based capital ratio of 18.5%.

Tangible book value per share, excluding accumulated other comprehensive income, was $7.22 per share for the three months ended September 30, 2015, and has steadily risen each quarter from $6.64 per share in third quarter 2014.  Total stockholders' equity was $19.84 million at September 30, 2015, compared to $18.44 million at December 31, 2014 and $17.91 million at September 30, 2014.

Fenton concluded: “We’re starting the fourth quarter with a solid loan pipeline and are aggressively pursuing opportunities to win clients through personalized service and customized solutions.  The Denver metropolitan area continues to show significant economic strength, presenting opportunities for our niche lending capabilities, including our commitment to the area’s Hispanic business community.

“In addition to continuing positive results from operations, we anticipate the Company’s fourth quarter financial results will include a tax benefit due to a partial reversal of a deferred tax asset valuation allowance now that the Company has consistently generated core earnings over an extended period of time and has forecasted future profitability.  We expect that our solid 2015 financial results and sound operational platform will enable Solera to continue building shareholder value in the coming quarters.”

About Solera National Bancorp, Inc.
Solera National Bancorp, Inc. was incorporated in 2006 to organize and serve as the holding company for Solera National Bank, which opened for business in September 2007. Solera National Bank is a community bank serving emerging businesses primarily in the Front Range of Colorado.  At the core of Solera National Bank is welcoming, inclusive and respectful customer service, a focus on supporting a growing and diverse Colorado economy, and a passion to serve our community through service, education and volunteerism. For more information, please visit http://www.SoleraBank.com.

Cautions Concerning Forward-Looking Statements:
This press release contains statements that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  The statements contained in this release, which are not historical facts and that relate to future plans or projected results of Solera National Bancorp, Inc. ("Company") and its wholly-owned subsidiary, Solera National Bank ("Bank"), are forward-looking statements.  These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. We undertake no obligation to update or revise any forward-looking statement.  Readers of this release are cautioned not to put undue reliance on forward-looking statements.

FINANCIAL TABLES FOLLOW



 

SOLERA NATIONAL BANCORP, INC.  
CONSOLIDATED BALANCE SHEETS 
(unaudited) 
($000s) 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014 
ASSETS           
Cash and due from banks $  644  $  562  $  908  $  602  $  1,545  
Federal funds sold   365       4,300    2,830    1,055  
Interest-bearing deposits with banks   750    750    2,757    257    257   
Investment securities, available-for-sale   42,733    47,326    47,806    52,900    58,489   
Investment securities, held-to-maturity   3,750    1,000            
FHLB and Federal Reserve Bank stocks, at cost   941    1,091    871    780    849   
Gross loans   83,768    83,178    81,886    80,864    79,290   
Net deferred (fees)/expenses   (6)   28    10    24    53   
Allowance for loan and lease losses   (1,609)   (1,626)   (1,613)   (1,600)   (1,563)  
Net loans   82,153    81,580    80,283    79,288    77,780   
Loans held for sale                 
Premises and equipment, net   1,955    1,999    663    670    714   
Other real estate owned            657    1,392   
Accrued interest receivable   542    563    540    616    659   
Bank-owned life insurance   4,565    4,531    4,497    4,462    4,425   
Other assets   1,047    765    894    1,610    831   
TOTAL ASSETS $  139,445  $  140,167  $  143,519  $  144,672  $  147,996   
             
LIABILITIES AND STOCKHOLDERS' EQUITY          
Noninterest-bearing demand deposits   4,362    4,034    4,503    5,853    5,012  
Interest-bearing demand deposits   6,524    6,604    9,781    7,866    7,755  
Savings and money market deposits   42,706    43,405    47,722    48,007    49,593  
Time deposits   59,594    55,169    55,329    57,387    60,529  
Total deposits   113,186    109,212    117,335    119,113    122,889  
            
Accrued interest payable   102    79    72    62    78   
Short-term FHLB borrowings   450    5,846       2,000      
Long-term FHLB borrowings   5,500    5,500    6,500    4,500    6,500   
Accounts payable and other liabilities   370    449    352    556    619   
TOTAL LIABILITIES   119,608    121,086    124,259    126,231    130,086  
            
Common stock   27    27    27    27    27  
Additional paid-in capital   27,130    27,126    27,121    27,120    27,101  
Accumulated deficit   (6,989)   (7,638)   (7,973)   (8,448)   (8,849) 
Accumulated other comprehensive (loss) gain   (175)   (278)   241    (102)   (213) 
Treasury stock, at cost   (156)   (156)   (156)   (156)   (156) 
TOTAL STOCKHOLDERS' EQUITY   19,837    19,081    19,260    18,441    17,910  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $  139,445  $  140,167  $  143,519  $  144,672  $  147,996  
           
            

 

SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
               
  Three Months Ended Nine Months Ended
($000s, except per share data) 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014 9/30/2015 9/30/2014
Interest and dividend income              
Interest and fees on loans $  1,106  $  1,042  $ 1,029  $ 1,079  $  1,038  $  3,177  $  3,259 
Interest on loans held for sale               45       202 
Investment securities   231    242    293    291    341    766    1,153 
Dividends on bank stocks   12    12    11    10    13    35    44 
Other   3    3    1    3    3    7    7 
Total interest income   1,352    1,299    1,334    1,383    1,440    3,985    4,665 
Interest expense              
Deposits   263    246    246    259    263    755    806 
FHLB borrowings   23    27    25    28    35    75    115 
Total interest expense   286    273    271    287    298    830    921 
Net interest income   1,066    1,026    1,063    1,096    1,142    3,155    3,744 
Provision for loan and lease losses   (50)         26    250    (50)   400 
Net interest income after
provision for loan and lease losses
   1,116    1,026    1,063    1,070    892    3,205    3,344 
Noninterest income              
Customer service and other fees   28    30    27    28    29    85    83 
Other income   334    35    36    36    37    405    113 
Gain on loans sold               446       2,878 
Gain on sale of available-for-sale securities   45    35    100    86    59    180    168 
Total noninterest income   407    100    163    150    571    670    3,242 
Noninterest expense              
Employee compensation and benefits   422    373    376    257    820    1,171    4,023 
Occupancy   82    69       182    275    151    767 
Professional fees   49    32    85    101    176    166    683 
Other general and administrative   321    317    290    279    634    928    1,947 
Total noninterest expense   874    791    751    819    1,905    2,416    7,420 
Net income (loss) $  649  $  335  $ 475  $ 401  $  (442) $  1,459  $  (834)
               
Income (loss) per share $  0.24  $  0.12  $  0.17  $  0.15  $  (0.17) $  0.54  $  (0.32)
Tangible book value per share $  7.22  $  6.99  $  6.86  $  6.71  $  6.64  $  7.22  $  6.73 
Net interest margin  3.19%  3.10%  3.14%  3.14%  3.08%  3.15%  3.22%
               
Asset Quality:              
Non-performing loans to gross loans  0.30%  0.18%  0.19%  0.19%  0.20%    
Non-performing assets to total assets  0.18%  0.10%  0.11%  0.56%  0.94%    
Allowance for loan losses (ALLL) to gross loans  1.92%  1.95%  1.97%  1.98%  1.97%    
ALLL to non-performing loans  630.98%  1,113.70%  1,047.40%  1,019.11%  976.88%    
               
Criticized loans/assets:              
Special mention $  638  $  3,544  $  5,260  $  5,448  $  4,855     
Substandard: Accruing   3,589    3,788    4,483    2,759    4,071     
Substandard: Nonaccrual   139    146    154    158    160     
Doubtful   116                 
Total criticized loans $  4,482  $  7,478  $  9,897  $  8,365  $  9,086     
Other real estate owned            657    1,392     
Investment securities   1,144    1,147    548    1,088    1,093     
Total criticized assets $  5,626  $  8,625  $  10,445  $  10,110  $  11,571     
Criticized assets to total assets  4.03%  6.15%  7.28%  6.99%  7.82%    
               
Selected Financial Ratios: (Solera National Bank Only)    
Tier 1 leverage ratio  13.1%  12.6%  12.1%  11.3%  10.3%    
Tier 1 risk-based capital ratio  17.3%  17.3%  17.0%  15.9%  15.6%    
Total risk-based capital ratio  18.5%  18.6%  18.2%  17.1%  16.9%    

 


 

 


            

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