LAKEWOOD, Colo., April 23, 2015 (GLOBE NEWSWIRE) -- Solera National Bancorp, Inc. (OTCQB:SLRK), the holding company for Solera National Bank, today reported financial results for the three months ended March 31, 2015.
For the three months ended March 31, 2015, the Company reported net income of $475,000 or $0.17 per share compared to a net loss of $369,000 or $(0.14) per share for the three months ended March 31, 2014. First quarter 2015 was the second consecutive profitable quarter for Solera following initiatives in the second half of 2014 to focus on the Company's core commercial banking business and reduce overhead costs.
Robert J. Fenton, President and CEO, commented: "We believe our most recent results reflect the positive impact of operating with a leaner, more efficient infrastructure while maintaining a strong commitment to asset quality through disciplined credit and risk management practices.
"As further demonstration of our focus on maintaining a strong credit culture, we are pleased to announce the recent hiring of Vernon Hansen as our Chief Credit Officer. Vern brings years of experience in credit management from executive roles in regional bank management, commercial lending, and as a consultant to community banks on commercial and SBA lending analysis, structuring, and underwriting."
Operational Highlights
Total interest income was $1.33 million for the three months ended March 31, 2015, compared to $1.61 million for the three months ended March 31, 2014, primarily reflecting year-over-year declines in investment securities and loans held for sale. Total interest income was relatively stable compared with $1.38 million for the quarter ended December 31, 2014.
The Company's net interest margin was 3.14%, unchanged from fourth quarter 2014 and down from 3.37% in first quarter 2014, reflecting continuing pressure on margins in a low-interest rate environment and a competitive market for high-quality commercial loans.
Total interest expense declined to $271,000 in first quarter 2015 compared to $309,000 in first quarter 2014, which was primarily driven by fewer time deposits as the Company allowed certificates of deposit to run off, and reduced borrowings to manage the Bank's funding needs.
In first quarter 2015, the Company's net interest income was $1.06 million compared to $1.30 million in first quarter 2014. The Company recorded no provision for loan and lease losses in either quarter. Total noninterest income in first quarter 2015 was $163,000 compared with $1.00 million in first quarter 2014, reflecting the Bank's exit from the residential mortgage lending business, which generated an $890,000 gain on loans sold in the prior year's first quarter. The majority of the Bank's noninterest income generated during the first quarter 2015 came from the sale of investment securities, which resulted in $100,000 of net gain, an increase of $50,000 from the first quarter 2014.
The Company officially launched its Investment Services Division in first quarter 2015, and now offers securities through AOS, Inc., which does business as MoneyBlock, a member of FINRA and SIPC. Mr. Jackson Lounsberry, a registered representative of MoneyBlock with over 18 years experience and a member of the Company's board, heads the division. Fenton said, "We are excited about the benefits of teaming with an established advisor to extend investment management capabilities to clients, many of whom are business owners with personal and professional investment management needs. This also provides an opportunity for the Bank to increase noninterest income from other investment services offerings."
Total noninterest expense in first quarter 2015 was $751,000 compared to $2.67 million in first quarter 2014, with lower ongoing salary and compensation expenses following the wind-down of the Company's residential mortgage operations and a concerted effort to reduce overhead costs. Additionally, the Company recorded a $106,000 benefit in the first quarter 2015 from the reversal of a deferred rent obligation associated with the purchase of its main office, which had previously been on a long-term lease. The building is under contract and expected to close at the end of April. As a result, the Company had no occupancy expense in first quarter 2015.
"By purchasing our main banking facility, we expect to reduce noninterest expenses by approximately $130,000 annually," Melissa K. Larkin, Chief Financial Officer, explained. "This purchase also underscores the strength of our commitment to serving our diverse, local community as well as to serving small businesses in the greater Denver metro area."
Balance Sheet Review, Credit Quality and Shareholder Value
Net loans, after allowance for loan and lease losses, were $80.28 million at March 31, 2015, compared to $80.93 million in the prior year first quarter, and up $1 million from December 31, 2014 totals. The Company's allowance for loan and lease losses was $1.61 million, or 1.97% of gross loans, at March 31, 2015 compared to $1.13 million or 1.37% of gross loans at March 31, 2014. The balance sheet included no loans held for sale as of March 31, 2015, compared to $8.27 million a year ago, reflecting the Company's exit from residential mortgage lending.
Total deposits at March 31, 2015 were $117.34 million compared to $132.03 million at March 31, 2014. The Company trimmed certificates of deposits by approximately $7.5 million from the year before. Transaction accounts comprised approximately 53% of the Company's total deposits at both March 31, 2015 and March 31, 2014.
Total assets were $143.52 million at March 31, 2015 compared to $144.67 million at December 31, 2014. First quarter 2015 asset totals reflected the sale of the Company's only property held in other real estate owned, reducing assets by $657,000, and a decrease in investment securities, which had the benefit of reducing the Company's interest rate risk profile. Larkin said: "We took advantage of bond market rallies during the first quarter 2015 to reduce the overall size of our investment portfolio accomplishing both a reduction in interest rate risk and generating cash to fund expected loan growth."
The Bank's asset and loan quality measurements continued to demonstrate soundness and stability. At March 31, 2015, the ratio of non-performing loans to gross loans was 0.19% and non-performing assets to total assets was 0.11%. The Company's allowance for loan losses to gross loans was 1.97% at March 31, 2015, and its allowance for loan losses to non-performing loans exceeded 1,000%.
The Bank continued to exceed accepted regulatory standards for a well-capitalized institution and improved all capital ratios as of March 31, 2015 compared to the prior year's first quarter. Tier 1 leverage ratio was 12.1%, a tier 1 risk-based capital ratio of 17.0%, and a total risk-based capital ratio of 18.2%.
Tangible book value per share, excluding accumulated other comprehensive income, was $6.86 at March 31, 2015 unchanged from March 31, 2014, and increased from $6.71 at December 31, 2014. Total stockholders' equity rose to $19.26 million at March 31, 2015 compared to $17.55 million at March 31, 2014 and $18.44 million at December 31, 2014. The year-over-year total stockholders' equity comparison included an improvement in accumulated other comprehensive gain (loss) as a result of an increase in the fair value of the Bank's available-for-sale investment portfolio.
Fenton concluded: "By focusing on strengthening the Solera franchise and concentrating on productivity and efficient operations, we have experienced a dramatic turnaround from losses to profitability. We believe our actions have positioned the Company to renew its focus on growth and earning new business.
"The vitality and overall economic health of the Denver metropolitan area, and the continued expansion of entrepreneurial, small- and midsize businesses, is a promising indicator. We look forward to continuing on a path that has led to improved value for 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.
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. and its wholly-owned subsidiary, Solera National 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) | 3/31/2015 | 12/31/2014 | 3/31/2014 |
| ASSETS | |||
| Cash and due from banks | $ 908 | $ 602 | $ 1,054 |
| Federal funds sold | 4,300 | 2,830 | — |
| Interest-bearing deposits with banks | 2,757 | 257 | 257 |
| Investment securities, available-for-sale | 47,806 | 52,900 | 66,341 |
| FHLB and Federal Reserve Bank stocks, at cost | 871 | 780 | 2,091 |
| Gross loans | 81,886 | 80,864 | 81,963 |
| Net deferred (fees)/expenses | 10 | 24 | 89 |
| Allowance for loan and lease losses | (1,613) | (1,600) | (1,126) |
| Net loans | 80,283 | 79,288 | 80,926 |
| Loans held for sale | — | — | 8,266 |
| Premises and equipment, net | 663 | 670 | 845 |
| Other real estate owned | — | 657 | 1,746 |
| Accrued interest receivable | 540 | 616 | 674 |
| Bank-owned life insurance | 4,497 | 4,462 | 4,353 |
| Other assets | 894 | 1,610 | 1,585 |
| TOTAL ASSETS | $ 143,519 | $ 144,672 | $ 168,138 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| Noninterest-bearing demand deposits | $ 4,503 | $ 5,853 | $ 6,118 |
| Interest-bearing demand deposits | 9,781 | 7,866 | 10,535 |
| Savings and money market deposits | 47,722 | 48,007 | 52,593 |
| Time deposits | 55,329 | 57,387 | 62,784 |
| Total deposits | 117,335 | 119,113 | 132,030 |
| Accrued interest payable | 72 | 62 | 71 |
| Short-term FHLB borrowings | — | — | 8,683 |
| Long-term FHLB borrowings | 6,500 | 6,500 | 8,500 |
| Accounts payable and other liabilities | 352 | 556 | 1,305 |
| TOTAL LIABILITIES | 124,259 | 126,231 | 150,589 |
| Common stock | 27 | 27 | 27 |
| Additional paid-in capital | 27,121 | 27,120 | 26,736 |
| Accumulated deficit | (7,973) | (8,448) | (8,384) |
| Accumulated other comprehensive gain (loss) | 241 | (102) | (728) |
| Treasury stock, at cost, 25,776 shares | (156) | (156) | (102) |
| TOTAL STOCKHOLDERS' EQUITY | 19,260 | 18,441 | 17,549 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 143,519 | $ 144,672 | $ 168,138 |
| SOLERA NATIONAL BANCORP, INC. | |||
| CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) | |||
| Three Months Ended | |||
| ($000s, except per share data) | 3/31/2015 | 12/31/2014 | 3/31/2014 |
| Interest and dividend income | |||
| Interest and fees on loans | $ 1,029 | $ 1,079 | $ 1,122 |
| Interest on loans held for sale | — | — | 53 |
| Investment securities | 293 | 291 | 416 |
| Dividends on bank stocks | 11 | 10 | 15 |
| Other | 1 | 3 | 2 |
| Total interest income | 1,334 | 1,383 | 1,608 |
| Interest expense | |||
| Deposits | 246 | 259 | 269 |
| FHLB borrowings | 25 | 28 | 40 |
| Total interest expense | 271 | 287 | 309 |
| Net interest income | 1,063 | 1,096 | 1,299 |
| Provision for loan and lease losses | — | 26 | — |
| Net interest income after provision for loan and lease losses | 1,063 | 1,070 | 1,299 |
| Noninterest income | |||
| Customer service and other fees | 27 | 28 | 27 |
| Other income | 36 | 36 | 37 |
| Gain on loans sold | — | — | 890 |
| Gain on sale of available-for-sale securities | 100 | 86 | 50 |
| Total noninterest income | 163 | 150 | 1,004 |
| Noninterest expense | |||
| Employee compensation and benefits | 376 | 257 | 1,683 |
| Occupancy | — | 182 | 250 |
| Professional fees | 85 | 101 | 236 |
| Other general and administrative | 290 | 279 | 503 |
| Total noninterest expense | 751 | 819 | 2,672 |
| Net income (loss) | $ 475 | $ 401 | $ (369) |
| Income (loss) per share | $ 0.17 | $ 0.15 | $ (0.14) |
| Tangible book value per share | $ 6.86 | $ 6.71 | $ 6.86 |
| Net interest margin | 3.14 % | 3.14 % | 3.37 % |
| Asset Quality: | |||
| Non-performing loans to gross loans | 0.19 % | 0.19 % | —% |
| Non-performing assets to total assets | 0.11 % | 0.56 % | 1.04 % |
| Allowance for loan losses to gross loans | 1.97 % | 1.98 % | 1.37 % |
| Allowance for loan losses to non-performing loans | 1,047.40 % | 1,019.11 % | NM* |
| Other real estate owned | $ — | $ 657 | $ 1,746 |
| * Not meaningful due to the insignificant amount of non-performing loans. | |||
| Selected Financial Ratios: (Solera National Bank Only) | |||
| Tier 1 leverage ratio | 12.1 % | 11.3 % | 9.7 % |
| Tier 1 risk-based capital ratio | 17.0 % | 15.9 % | 14.3 % |
| Total risk-based capital ratio | 18.2 % | 17.1 % | 15.3 % |