LAKEWOOD, Colo., Nov. 7, 2014 (GLOBE NEWSWIRE) -- Solera National Bancorp, Inc. (OTCQB:SLRK), the holding company for Solera National Bank, today reported financial results for the three and nine months ended September 30, 2014. For the three months ended September 30, 2014, the Company reported a net loss of $442,000 or $(0.17) per share compared to a net loss of $638,000 or $(0.25) per share for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the Company reported a net loss of $834,000 or $(0.32) per share compared to a net loss of $18,000 or $(0.01) per share for the nine months ended September 30, 2013.
Robert J. Fenton, President and CEO, commented: "The Company's new board and management team made substantial progress during the quarter to address legacy issues and deficiencies identified after taking control of the Company. The third quarter 2014 results included charges related to the wind-down of the residential mortgage operation totaling approximately $395,000. Additionally, we took aggressive actions resulting in annualized expense savings of approximately $1 million which has positioned the Company for a return to profitability in fourth quarter 2014.
"Solera continues to play an important role in the Colorado business community. As a small business-focused bank, we are able to provide customized financial solutions, ongoing support and rapid decision-making that our clients value. The Bank remains well capitalized, and able to support increased lending activity. The fourth quarter began well with $7.5 million of new, high-quality loans originated in October."
Review of Operations
Interest and fees on loans were $1.04 million in third quarter 2014 compared to $949,000 in third quarter 2013, reflecting stable revenue generated by the Bank's commercial loan portfolio and increased contribution from residential mortgage loans retained in the Bank's portfolio. For the nine months of 2014, interest and fees on loans was $3.26 million compared to $2.61 million for the nine months of 2013. Total interest income was $1.44 million for the three months ended September 30, 2014 compared to $1.51 million for the three months ended September 30, 2013. For the nine months of 2014, total interest income increased to $4.67 million compared to $4.28 million for the nine months of 2013.
Fenton continued: "Given the significant change in Solera's business model from a year ago, with a return to concentration on our core commercial banking strengths, we believe the Company's ability to maintain a steady interest income stream and continue to manage interest expense was a positive take-away." He noted the Company's net interest margin in third quarter 2014 was 3.08%, up from 2.92% a year ago, and net interest margin for the nine months of 2014 rose to 3.22% compared to 2.83% for the nine months of 2013.
Total interest expense was $298,000 in third quarter 2014 compared to $311,000 in third quarter 2013. For the nine months ended September 30, 2014, total interest expense was $921,000 compared to $904,000 for the nine months ended September 30, 2013.
In third quarter 2014, the Company's net interest income, including a $250,000 provision for loan and lease losses, was $892,000 compared to $1.20 million in third quarter 2013, which had no recorded loss provision. For the nine months ended September 30, 2014, net interest income after a $400,000 provision for loan and lease losses was $3.34 million compared to $3.38 million for the nine months ended September 30, 2013 which had no recorded loss provision.
Total noninterest income in third quarter 2014 was $571,000 compared to $1.68 million in third quarter 2013. For the nine months ended September 30, 2014, total noninterest income was $3.24 million compared with $6.04 million for the nine months ended September 30, 2013. Lower total noninterest income in both periods of 2014 reflected a sharp decline of income from the sale of residential mortgages and the wind-down of this line of business during the third quarter 2014.
Total noninterest expense in third quarter 2014 declined sharply to $1.91 million compared to $3.52 million in third quarter 2013, primarily reflecting lower ongoing salary and compensation expenses, including lower commission payments related to mortgage lending. This was partially offset by a number of charges related to the mortgage division closure, including abandoned lease reserves, office equipment write-downs, closing out vendor contracts and miscellaneous expenses totaling approximately $395,000 in third quarter 2014.
Balance Sheet Review, Credit Quality and Shareholder Value
Net loans, after allowance for loan and lease losses, were $77.78 million at September 30, 2014 compared to $71.54 million at September 30, 2013. The Company's allowance for loan and lease losses was $1.56 million, or 1.97% of gross loans, at September 30, 2014 compared to $1.10 million, or 1.52% of gross loans, at September 30, 2013. The balance sheet reflected no loans held for sale as of September 30, 2014, compared to $9.67 million a year ago as a result of exiting the residential mortgage lending business.
Fenton commented: "We increased our allowance for loan loss reserve by $400,000 over the past two quarters to account for an increase in criticized and classified loans stemming from weakened credit underwriting and monitoring practices. Fortunately, we have a low level of non-performing loans and have taken the necessary steps to improve underwriting and portfolio management on-going."
Total deposits at September 30, 2014 were $122.89 million compared to $127.37 million at September 30, 2013. Total assets were $148.00 million at September 30, 2014 compared to $172.30 million at September 30, 2013, primarily reflecting an increase in net loans partially offset by a decrease in loans held for sale and a decrease in investment securities which had the benefit of reducing the Company's interest rate risk profile.
The Bank's asset and loan quality measurements continued to demonstrate soundness and stability. At September 30, 2014, the ratio of non-performing loans to gross loans was 0.20% and non-performing assets to total assets was 0.94%. The Bank sold one of its two OREO assets in October and the other property is under contact and scheduled to close in November. As a result, non-performing assets to total assets are expected to be negligible by year-end.
The Bank continued to exceed accepted regulatory standards for a well-capitalized institution and improved all capital ratios as of September 30, 2014 compared to both the prior quarter and the prior year, with a tier 1 leverage ratio of 10.3%, a tier 1 risk-based capital ratio of 15.6%, and a total risk-based capital ratio of 16.9%.
Tangible book value per share, excluding accumulated other comprehensive income, was $6.64 at September 30, 2014, compared to $7.21 at September 30, 2013. Total stockholders' equity was $17.91 million at September 30, 2014 compared to $18.26 million at September 30, 2013. The year-over-year total stockholders' equity comparison includes an improvement in accumulated other comprehensive loss as a result of an increase in the fair value of the Bank's available-for-sale investment portfolio.
Fenton concluded: "We have made significant progress toward our goal of returning Solera National Bank to profitability. Our Board of Directors and management team appreciate our customers and shareholders who have maintained their support of the Company during a period of considerable turmoil and change. With a strong balance sheet and a commitment to profitable growth, we look forward to resolving the remaining legacy issues and building a franchise able to drive shareholder value."
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 within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties can include the risks associated with the ability to grow the Bank and the services it provides, the ability to successfully integrate new business lines and expand into new markets, competition in the marketplace, general economic conditions and many other risks described in the Company's Securities and Exchange Commission filings. The most significant of these uncertainties are described in our Annual Report on Form 10-K and Quarterly reports on Form 10-Q all of which any reader of this release is encouraged to study (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: the Company has a limited operating history upon which to base an estimate of its future financial performance; general economic conditions may be less favorable than expected, causing an adverse impact on our financial performance; and the Company is subject to extensive regulatory oversight, which could restrain its growth and profitability. 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) | 9/30/2014 | 6/30/2014 | 9/30/2013 |
| ASSETS | |||
| Cash and due from banks | $ 1,545 | $ 868 | $ 1,432 |
| Federal funds sold | 1,055 | — | 390 |
| Interest-bearing deposits with banks | 257 | 257 | 257 |
| Investment securities, available-for-sale | 58,489 | 59,652 | 77,648 |
| FHLB and Federal Reserve Bank stocks, at cost | 849 | 1,403 | 2,395 |
| Gross loans | 79,290 | 83,423 | 72,595 |
| Net deferred (fees)/expenses | 53 | 73 | 47 |
| Allowance for loan and lease losses | (1,563) | (1,300) | (1,101) |
| Net loans | 77,780 | 82,196 | 71,541 |
| Loans held for sale | — | 14,383 | 9,672 |
| Premises and equipment, net | 714 | 798 | 937 |
| Other real estate owned | 1,392 | 1,485 | 1,776 |
| Accrued interest receivable | 659 | 652 | 679 |
| Bank-owned life insurance | 4,425 | 4,389 | 4,277 |
| Other assets | 831 | 1,887 | 1,293 |
| TOTAL ASSETS | $ 147,996 | $ 167,970 | $ 172,297 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| Noninterest-bearing demand deposits | $ 5,012 | $ 4,747 | $ 4,742 |
| Interest-bearing demand deposits | 7,755 | 8,197 | 9,562 |
| Savings and money market deposits | 49,593 | 49,159 | 52,429 |
| Time deposits | 60,529 | 65,983 | 60,639 |
| Total deposits | 122,889 | 128,086 | 127,372 |
| Accrued interest payable | 78 | 74 | 78 |
| Short-term FHLB borrowings | — | 14,141 | 17,947 |
| Long-term FHLB borrowings | 6,500 | 6,500 | 7,500 |
| Accounts payable and other liabilities | 619 | 889 | 1,143 |
| TOTAL LIABILITIES | 130,086 | 149,690 | 154,040 |
| Common stock | 27 | 27 | 26 |
| Additional paid-in capital | 27,101 | 26,840 | 26,493 |
| Accumulated deficit | (8,849) | (8,407) | (7,377) |
| Accumulated other comprehensive loss | (213) | (78) | (885) |
| Treasury stock, at cost, 14,208 shares | (156) | (102) | — |
| TOTAL STOCKHOLDERS' EQUITY | 17,910 | 18,280 | 18,257 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 147,996 | $ 167,970 | $ 172,297 |
| SOLERA NATIONAL BANCORP, INC. | |||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||||
| Three Months Ended | Nine Months Ended | ||||
| ($000s, except per share data) | 9/30/2014 | 6/30/2014 | 9/30/2013 | 9/30/2014 | 9/30/2013 |
| Interest and dividend income | |||||
| Interest and fees on loans | $ 1,038 | $ 1,098 | $ 949 | $ 3,259 | $ 2,607 |
| Interest on loans held for sale | 45 | 104 | 112 | 202 | 327 |
| Investment securities | 341 | 397 | 432 | 1,153 | 1,289 |
| Dividends on bank stocks | 13 | 16 | 17 | 44 | 51 |
| Other | 3 | 3 | 3 | 7 | 6 |
| Total interest income | 1,440 | 1,618 | 1,513 | 4,665 | 4,280 |
| Interest expense | |||||
| Deposits | 263 | 274 | 271 | 806 | 785 |
| FHLB borrowings | 35 | 40 | 40 | 115 | 119 |
| Total interest expense | 298 | 314 | 311 | 921 | 904 |
| Net interest income | 1,142 | 1,304 | 1,202 | 3,744 | 3,376 |
| Provision for loan and lease losses | 250 | 150 | — | 400 | — |
|
Net interest income after provision for loan and lease losses |
892 | 1,154 | 1,202 | 3,344 | 3,376 |
| Noninterest income | |||||
| Customer service and other fees | 29 | 30 | 31 | 83 | 73 |
| Other income | 37 | 36 | 39 | 113 | 94 |
| Gain on loans sold | 446 | 1,542 | 1,564 | 2,878 | 5,576 |
| Gain on sale of available-for-sale securities | 59 | 59 | 49 | 168 | 294 |
| Total noninterest income | 571 | 1,667 | 1,683 | 3,242 | 6,037 |
| Noninterest expense | |||||
| Employee compensation and benefits | 820 | 1,520 | 2,429 | 4,023 | 6,509 |
| Occupancy | 275 | 242 | 257 | 767 | 777 |
| Professional fees | 176 | 271 | 187 | 683 | 424 |
| Other general and administrative | 634 | 811 | 650 | 1,947 | 1,721 |
| Total noninterest expense | 1,905 | 2,844 | 3,523 | 7,420 | 9,431 |
| Net Loss | $ (442) | $ (23) | $ (638) | $ (834) | $ (18) |
| Loss per share | $ (0.17) | $ (0.01) | $ (0.25) | $ (0.32) | $ (0.01) |
| Tangible book value per share | $ 6.64 | $ 6.82 | $ 7.21 | $ 6.73 | $ 7.21 |
| Net interest margin | 3.08 % | 3.27 % | 2.92 % | 3.22 % | 2.83 % |
| Asset Quality: | |||||
| Non-performing loans to gross loans | 0.20 % | 0.19 % | —% | ||
| Non-performing assets to total assets | 0.94 % | 0.88 % | 1.03 % | ||
| Allowance for loan losses to gross loans | 1.97 % | 1.56 % | 1.52 % | ||
| Allowance for loan losses to non-performing loans | 976.88 % | 807.45 % | NM* | ||
| Other real estate owned | $ 1,392 | $ 1,485 | $ 1,776 | ||
| * Not meaningful due to the insignificant amount of non-performing loans. | |||||
| Selected Financial Ratios: (Solera National Bank Only) | |||||
| Tier 1 leverage ratio | 10.3 % | 9.8 % | 9.8 % | ||
| Tier 1 risk-based capital ratio | 15.6 % | 14.5 % | 15.0 % | ||
| Total risk-based capital ratio | 16.9 % | 15.6 % | 16.0 % | ||