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 | % | ||||||||||||||||||