Solera National Bancorp Announces Fourth Quarter, Full Year 2015 Financial Results

Fifth Consecutive Quarterly Profit and Record Full Year Earnings


LAKEWOOD, Colo., Jan. 26, 2016 (GLOBE NEWSWIRE) -- Solera National Bancorp, Inc. (OTC:SLRK), the holding company for Solera National Bank, a business-focused bank primarily serving the Denver metropolitan area, today reported financial results for the three and twelve months ended December 31, 2015.

Highlights for the quarter and full year ended December 31, 2015 include:

  • Fifth consecutive quarter of profitability
  • Record net income of $1.78 million in 2015 compared to a net loss of $433,000 in 2014
  • Return on average assets and return on average equity of 1.25% and 9.12%, respectively, for full year 2015
  • Efficiency ratio of 66.9% for full year 2015 compared to 109.1% for full year 2014
  • Solid asset quality; minimal non-performing loans at December 31, 2015

For the three months ended December 31, 2015, the Company reported net income of $319,000 compared to net income of $649,000 in the third quarter of 2015 and net income of $401,000 in the fourth quarter of 2014.  Earnings per common share were $0.12 for the fourth quarter of 2015, compared to $0.24 for the linked quarter and $0.15 for the prior year quarter.  Third quarter 2015 results included a one-time bank owned life insurance benefit of $293,000, or $0.11 per share.

The Company’s net income for the year ended December 31, 2015 was a record $1.78 million or $0.65 per share compared to a net loss of $433,000 or $(0.16) per share for the twelve months ended December 31, 2014.

Martin P. May, President and CEO, commented: “We continue to deliver consistent, high-quality core earnings recording our fifth consecutive quarterly profit.  For the full year, the Solera team, under the direction of the new board of directors appointed in mid-2014, executed extremely well resulting in record earnings of $1.78 million.  With the turnaround of the Company progressing, we have a strong balance sheet and ample liquidity to compete aggressively for high-quality customer relationships.” 

Operational Highlights

Net interest income after provision for loan and lease losses was $1.05 million for the quarter ended December 31, 2015, compared to $1.07 million for the quarter ended December 31, 2014.  For the twelve months of 2015, net interest income after provision for loan and lease losses was $4.26 million compared to $4.42 million for the twelve months of 2014.

The Company's net interest margin in fourth quarter 2015 was 3.10% compared to 3.14% a year ago, and the net interest margin for the twelve months of 2015 was 3.13% compared to 3.20% for the twelve months of 2014.  The Company’s balance sheet is positioned to benefit from rising interest rates; as such, net interest income is forecast to increase modestly during 2016. 

Total noninterest income in fourth quarter 2015 was $75,000 compared to $150,000 in fourth quarter 2014, primarily reflecting a decrease in gains on the sale of investment securities.  For the twelve months ended December 31, 2015, total noninterest income was $745,000 compared with $3.39 million for the twelve months ended December 31, 2014, 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.  This decline was partially offset by a one-time bank owned life insurance benefit of $293,000 recorded in the third quarter of 2015.

Total noninterest expense in fourth quarter 2015 of $808,000 declined slightly from fourth quarter 2014.  Higher employee compensation and benefits in the fourth quarter of 2015 were offset by lower occupancy expense as a result of the Company’s purchase of its main office, which had previously been on a long-term lease.  Total noninterest expense for the twelve months ended December 31, 2015 was $3.22 million compared to $8.24 million in 2014.  The significant decline reflects the Company’s exit from the residential mortgage business in the third quarter of 2014 along with decisive actions taken to right-size the organization and the implementation of on-going cost saving measures.

The Company continued to record no income tax expense due to the utilization of available net operating loss carryforwards.

Balance Sheet Review and Asset Quality Strength

Total assets of $146.07 million at December 31, 2015 increased marginally compared to $144.67 million at December 31, 2014.

Net loans, after allowance for loan and lease losses, were $80.59 million at December 31, 2015 compared to $79.29 million at December 31, 2014.  The allowance for loan and lease losses was $1.52 million, or 1.85% of gross loans, at December 31, 2015 compared to $1.60 million, or 1.98% of gross loans, at December 31, 2014.  Loans held for sale were $1.04 million at December 31, 2015 representing one lending relationship which the Company is actively marketing for sale. 

Total investment securities were $52.87 million at December 31, 2015 essentially unchanged compared to $52.90 million at December 31, 2014.  During 2015, the Company purchased $4.5 million of longer duration, higher yielding fixed-to-float investment securities for its held-to-maturity portfolio to protect stockholders’ equity from rising interest rates.

Total deposits at December 31, 2015 were $120.84 million compared to $119.11 million at December 31, 2014.  Time deposits increased $8.77 million versus the prior year as a result of the Company’s efforts to attract longer-term, relatively low cost deposits in advance of the expected action by the Federal Reserve to begin raising the federal funds rate.

Management continues to believe asset quality is a source of strength that differentiates the Company from many of its peers.  At December 31, 2015, the Company had only 0.16% non-performing loans to gross loans and 0.09% non-performing assets to total assets.  Total criticized assets declined significantly to $4.91 million at December 31, 2015 from $10.11 million at December 31, 2014.  The ratio of criticized assets to total assets declined to 3.36% compared to 6.99% a year ago.  The Company had no other real estate owned assets at December 31, 2015.

Capital Strength

Solera National Bank continued to exceed accepted regulatory standards for a well-capitalized institution and improved all capital ratios as of December 31, 2015 compared to both the prior quarter and the prior year.  As of December 31, 2015 the Bank’s Tier 1 leverage ratio was 13.2%, Tier 1 risk-based capital was 18.8%, and total risk-based capital was 20.0%.

Tangible book value per share, including accumulated other comprehensive income, was $7.18 at December 31, 2015, compared to $6.67 at December 31, 2014.  Total stockholders' equity was $19.84 million at December 31, 2015 compared to $18.44 million at December 31, 2014.  Total stockholders' equity at December 31, 2015 included an accumulated other comprehensive loss of $501,000 compared to a loss of $102,000 at December 31, 2014 as a result of a decrease in the fair value of the Bank's available-for-sale investment portfolio due to the increase in interest rates.

May concluded: "Generating record profitability and implementing best practices to meet or exceed regulatory and operational standards was a major accomplishment in 2015 that we are extremely proud of.  As we enter 2016, the Company remains focused on maintaining operational efficiency and growing the franchise in a controlled and disciplined manner.  We look forward to increasing franchise value for all of our stakeholders."

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.

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.

SOLERA NATIONAL BANCORP, INC. 
CONSOLIDATED BALANCE SHEETS 
(unaudited) 
($000s) 12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 
ASSETS           
Cash and due from banks $  749  $  644  $  562  $  908  $  602  
Federal funds sold   1,740    365       4,300    2,830  
Interest-bearing deposits with banks   750    750    750    2,757    257  
Investment securities, available-for-sale   48,374    42,733    47,326    47,806    52,900  
Investment securities, held-to-maturity   4,500    3,750    1,000        
FHLB and Federal Reserve Bank stocks, at cost   874    941    1,091    871    780  
Gross loans   82,124    83,768    83,178    81,886    80,864  
Net deferred (fees)/expenses   (15)   (6)   28    10    24  
Allowance for loan and lease losses   (1,518)   (1,609)   (1,626)   (1,613)   (1,600) 
Net loans   80,591    82,153    81,580    80,283    79,288  
Loans held for sale   1,039              
Premises and equipment, net   1,918    1,955    1,999    663    670  
Other real estate owned               657  
Accrued interest receivable   570    542    563    540    616  
Bank-owned life insurance   4,369    4,565    4,531    4,497    4,462  
Other assets   599    1,047    765    894    1,610  
TOTAL ASSETS $  146,073  $  139,445  $  140,167  $  143,519  $  144,672  
            
LIABILITIES AND STOCKHOLDERS' EQUITY         
Noninterest-bearing demand deposits   3,954    4,362    4,034    4,503    5,853  
Interest-bearing demand deposits   8,405    6,524    6,604    9,781    7,866  
Savings and money market deposits   42,320    42,706    43,405    47,722    48,007  
Time deposits   66,160    59,594    55,169    55,329    57,387  
Total deposits   120,839    113,186    109,212    117,335    119,113  
            
Accrued interest payable   88    102    79    72    62  
Short-term FHLB borrowings      450    5,846        
Long-term FHLB borrowings   5,000    5,500    5,500    6,500    6,500  
Accounts payable and other liabilities   309    370    449    352    556  
TOTAL LIABILITIES   126,236    119,608    121,086    124,259    126,231  
            
Common stock   27    27    27    27    27  
Additional paid-in capital   27,137    27,130    27,126    27,121    27,120  
Accumulated deficit   (6,670)   (6,989)   (7,638)   (7,973)   (8,448) 
Accumulated other comprehensive (loss) gain   (501)   (175)   (278)   241    (102) 
Treasury stock, at cost   (156)   (156)   (156)   (156)   (156) 
TOTAL STOCKHOLDERS' EQUITY   19,837    19,837    19,081    19,260    18,441  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $  146,073  $  139,445  $  140,167  $  143,519  $  144,672  
            

 

SOLERA NATIONAL BANCORP, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)  
                 
  Three Months Ended Twelve Months Ended  
($000s, except per share data) 12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014  
Interest and dividend income                
Interest and fees on loans $  1,060  $  1,106  $  1,042  $  1,029  $  1,079  $  4,237  $  4,338   
Interest on loans held for sale                     202   
Investment securities   278    231    242    293    291    1,044    1,445   
Dividends on bank stocks   11    12    12    11    10    46    54   
Other   8    3    3    1    3    15    11   
Total interest income   1,357    1,352    1,299    1,334    1,383    5,342    6,050   
Interest expense                
Deposits   284    263    246    246    259    1,039    1,065   
FHLB borrowings   21    23    27    25    28    96    144   
Total interest expense   305    286    273    271    287    1,135    1,209   
Net interest income   1,052    1,066    1,026    1,063    1,096    4,207    4,841   
Provision for loan and lease losses      (50)         26    (50)   426   
Net interest income after provision for loan and lease losses   1,052    1,116    1,026    1,063    1,070    4,257    4,415   
Noninterest income                
Customer service and other fees   25    28    30    27    28    110    111   
Other income   44    334    35    36    36    449    149   
Gain on loans sold                     2,878   
Gain on sale of available-for-sale securities   6    45    35    100    86    186    254   
Total noninterest income   75    407    100    163    150    745    3,392   
Noninterest expense                
Employee compensation and benefits   410    422    373    376    257    1,581    4,280   
Occupancy   52    82    69       182    203    949   
Professional fees   39    49    32    85    101    205    784   
Other general and administrative   307    321    317    290    279    1,235    2,227   
Total noninterest expense   808    874    791    751    819    3,224    8,240   
Net income (loss) $  319  $  649  $  335  $  475  $  401  $  1,778  $  (433)  
                 
Income (loss) per share $  0.12  $  0.24  $  0.12  $  0.17  $  0.15  $  0.65  $  (0.16)  
Tangible book value per share $  7.18  $  7.17  $  6.89  $  6.95  $  6.67  $  7.18  $  6.81   
Net interest margin  3.10%  3.19%  3.10%  3.14%  3.14%  3.13%  3.20%  
Efficiency Ratio  72.08%  59.13%  72.50%  66.70%  72.22%  66.94%  109.10%  
Return on Average Assets  0.89%  1.86%  0.94%  1.32%  1.10%  1.25%  (0.28)%  
Return on Average Equity  6.43%  13.34%  6.99%  10.08%  8.83%  9.12%  (2.40)%  
                 
Asset Quality:                
Non-performing loans to gross loans  0.16%  0.30%  0.18%  0.19%  0.19%      
Non-performing assets to total assets  0.09%  0.18%  0.10%  0.11%  0.56%      
Allowance for loan losses (ALLL) to gross loans  1.85%  1.92%  1.95%  1.97%  1.98%      
                 
Criticized loans/assets:                
Special mention $  1,242  $  638  $  3,544  $  5,260  $  5,448       
Substandard: Accruing   2,400    3,589    3,788    4,483    2,759       
Substandard: Nonaccrual   131    139    146    154    158       
Doubtful      116                
  Total criticized loans $  3,773  $  4,482  $  7,478  $  9,897  $  8,365       
Other real estate owned               657       
Investment securities   1,140    1,144    1,147    548    1,088       
Total criticized assets $  4,913  $  5,626  $  8,625  $  10,445  $  10,110       
Criticized assets to total assets  3.36%  4.03%  6.15%  7.28%  6.99%      
       
Selected Financial Ratios: (Solera National Bank Only)      
Tier 1 leverage ratio  13.2%  13.1%  12.6%  12.1%  11.3%      
Tier 1 risk-based capital ratio  18.8%  17.3%  17.3%  17.0%  15.9%      
Total risk-based capital ratio  20.0%  18.5%  18.6%  18.2%  17.1%      
                 

 


 


            

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