Solera National Bancorp Announces First Quarter 2016 Financial Results

Sixth Consecutive Quarterly Profit


LAKEWOOD, Colo., April 21, 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 months ended March 31, 2016.

Highlights for the quarter ended March 31, 2016 include:

  • Six consecutive profitable quarters
  • Net income of $454,000 or $0.17 per share
  • Return on average assets and return on average equity of 1.27% and 8.93%, respectively
  • Efficiency ratio of 67.4%
  • No non-performing assets

For the three months ended March 31, 2016, the Company reported net income of $454,000 compared to net income of $319,000 in the fourth quarter of 2015 and net income of $475,000 in the first quarter of 2015.  Earnings per common share were $0.17 for the first quarter of 2016, compared to $0.12 for the linked quarter and $0.17 for the prior year quarter.  First quarter 2016 results included a gain on loans sold of $125,000, or $0.05 per share.  First quarter 2015 results included a $106,000 benefit, or $0.04 per share, from the reversal of a deferred rent obligation associated with the purchase of the Company’s main office, which had previously been on a long-term lease.

Martin P. May, President and CEO, commented: “The Company began 2016 well, delivering our sixth consecutive quarterly profit.  We have a considerable amount of capital available to leverage and are competing aggressively for high-quality customer relationships.  Additionally, we are making investments in our leading edge technology platform to better serve our customers and become more efficient.” 

Operational Highlights

Net interest income after provision for loan and lease losses was $1.05 million for the quarter ended March 31, 2016, essentially unchanged compared to both the quarter ended December 31, 2015 and the quarter ended March 31, 2015.

The Company's net interest margin in first quarter 2016 was 3.09% compared to 3.10% in the linked quarter and 3.14% in the first quarter 2015.  The Company’s balance sheet continues to be positioned to benefit from rising interest rates. 

Total noninterest income in first quarter 2016 was $242,000 compared to $75,000 in fourth quarter 2015 and $163,000 in first quarter 2015.  The increase versus the linked quarter and first quarter 2015 is due to a $125,000 gain in first quarter 2016 on the sale of the guaranteed portion of an SBA 7(a) loan.  Additionally, the first quarter 2016 includes gains on sale of investment securities of $51,000 compared to $6,000 in fourth quarter 2015 and $100,000 in first quarter 2015.

Total noninterest expense in first quarter 2016 of $834,000 increased compared to fourth quarter 2015 primarily due to higher professional fees associated with the Company’s 2015 year-end audit.  The increase from first quarter 2015 was due largely to a $106,000 benefit recorded last year 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 Company’s efficiency ratio of 67.4% for the first quarter of 2016 reflects continued success in aligning non-interest expense growth with top line revenue growth.

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 $140.56 million at March 31, 2016 declined compared to $146.07 million at December 31, 2015.

Net loans, after allowance for loan and lease losses, were $78.42 million at March 31, 2016 compared to $80.59 million at December 31, 2015.  Lending activity in first quarter 2016 was strong with $8.4 million in new originations.  However, the sale of the guaranteed portion of an SBA loan, sales of properties by loan customers and intense competition for high-quality loans resulted in a net decrease in loans outstanding.  The allowance for loan and lease losses at March 31, 2016 was $1.56 million, or 1.95% of gross loans, compared to $1.52 million, or 1.85% of gross loans, at December 31, 2015.  The Company had no loans held for sale at March 31, 2016.

Total investment securities available-for-sale were $43.75 million at March 31, 2016 compared to $48.37 million at December 31, 2015.  The Company capitalized on the bond market rally in first quarter 2016 to reduce interest rate risk and sold longer-maturity investment securities resulting in a gain on sale of $51,000.  Investment securities held-to-maturity of $4.5 million remained unchanged compared to fourth quarter 2015.

Total deposits at March 31, 2016 were $114.30 million compared to $120.84 million at December 31, 2015.  The decline was due primarily to two larger institutional relationships and, to a lesser extent, balances associated with loan payoffs.  Time deposits increased $9.11 million versus the prior year as a result of the Company’s efforts to attract longer-term, relatively low cost deposits.

The Company continues to experience sound asset quality metrics from improved underwriting and the success of certain exit strategies, including payoffs and pay downs.  At March 31, 2016, the Company had no non-performing loans, non-performing assets or other real estate owned.  However, total criticized assets increased to $7.25 million at March 31, 2016 from $4.91 million at December 31, 2015 but remains well below first quarter 2015 of $10.45 million. 

Capital Strength

The Company’s earnings continue to generate capital, and its capital ratios are in excess of the highest required regulatory benchmark levels.  As of March 31, 2016, the Bank’s Tier 1 leverage ratio was 13.5%, Tier 1 risk-based capital was 19.4%, and total risk-based capital was 20.7%.

Tangible book value per share, including accumulated other comprehensive income, was $7.54 at March 31, 2016, compared to $7.18 at December 31, 2015 and $6.95 at March 31, 2015.  Total stockholders' equity was $20.82 million at March 31, 2016 compared to $19.84 million at December 31, 2015 and $19.26 million at March 31, 2015.  Total stockholders' equity at March 31, 2016 included an accumulated other comprehensive gain of $17,000 compared to a loss of $501,000 at December 31, 2015 as a result of an increase in the fair value of the Bank's available-for-sale investment portfolio due to a decrease in longer-term interest rates.

May concluded: "Our focus continues to be on growing in a controlled and profitable manner.  In accordance with that objective, we invested $5 million this month in a pool of rehabilitated federal student loans which are guaranteed by the full faith and credit of the U.S. Treasury.  This initiative diversifies our loan portfolio and increases net interest income while adding an insignificant level of credit and interest rate risk to our balance sheet.  We continue to evaluate additional opportunities to leverage our capital and increase franchise 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.
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) 3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015 
ASSETS           
Cash and due from banks $  521  $  749  $  644  $  562  $  908  
Federal funds sold   3,130    1,740    365   —   4,300  
Interest-bearing deposits with banks   751    750    750    750    2,757  
Investment securities, available-for-sale   43,752    48,374    42,733    47,326    47,806  
Investment securities, held-to-maturity   4,500    4,500    3,750    1,000   — 
FHLB and Federal Reserve Bank stocks, at cost   860    874    941    1,091    871  
Gross loans   80,029    82,124    83,768    83,178    81,886  
Net deferred (fees)/expenses  -54    (15)   (6)   28    10  
Allowance for loan and lease losses   (1,557)   (1,518)   (1,609)   (1,626)   (1,613) 
Net loans   78,418    80,591    82,153    81,580    80,283  
Loans held for sale  —   1,039   —  —  — 
Premises and equipment, net   1,902    1,918    1,955    1,999    663  
Accrued interest receivable   531    570    542    563    540  
Bank-owned life insurance   4,401    4,369    4,565    4,531    4,497  
Other assets   1,793    599    1,047    765    894  
TOTAL ASSETS $  140,559  $  146,073  $  139,445  $  140,167  $  143,519  
            
LIABILITIES AND STOCKHOLDERS' EQUITY         
Noninterest-bearing demand deposits   4,069    3,954    4,362    4,034    4,503  
Interest-bearing demand deposits   7,644    8,405    6,524    6,604    9,781  
Savings and money market deposits   38,151    42,320    42,706    43,405    47,722  
Time deposits   64,435    66,160    59,594    55,169    55,329  
Total deposits   114,299    120,839    113,186    109,212    117,335  
            
Accrued interest payable   112    88    102    79    72  
Short-term FHLB borrowings  —  —   450    5,846   — 
Long-term FHLB borrowings   5,000    5,000    5,500    5,500    6,500  
Accounts payable and other liabilities   333    309    370    449    352  
TOTAL LIABILITIES   119,744    126,236    119,608    121,086    124,259  
            
Common stock   27    27    27    27    27  
Additional paid-in capital   27,143    27,137    27,130    27,126    27,121  
Accumulated deficit   (6,216)   (6,670)   (6,989)   (7,638)   (7,973) 
Accumulated other comprehensive gain (loss)    17    (501)   (175)   (278)   241  
Treasury stock, at cost   (156)   (156)   (156)   (156)   (156) 
TOTAL STOCKHOLDERS' EQUITY   20,815    19,837    19,837    19,081    19,260  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $  140,559  $  146,073  $  139,445  $  140,167  $  143,519  
            

 

SOLERA NATIONAL BANCORP, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)  
  Three Months Ended  
($000s, except per share data) 3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015  
Interest and dividend income            
Interest and fees on loans $  1,054  $  1,060  $  1,106  $  1,042  $  1,029   
Investment securities   292    278    231    242    293   
Dividends on bank stocks   10    11    12    12    11   
Other   4    8    3    3    1   
Total interest income   1,360    1,357    1,352    1,299    1,334   
Interest expense            
Deposits   294    284    263    246    246   
FHLB borrowings   20    21    23    27    25   
Total interest expense   314    305    286    273    271   
Net interest income   1,046    1,052    1,066    1,026    1,063   
Provision for loan and lease losses  —  —   (50)  —  —  
Net interest income after
provision for loan and lease losses
   1,046    1,052    1,116    1,026    1,063   
Noninterest income            
Customer service and other fees   24    25    28    30    27   
Other income   42    44    334    35    36   
Gain on loans sold   125   —  —  —  —  
Gain on sale of available-for-sale securities   51    6    45    35    100   
Total noninterest income   242    75    407    100    163   
Noninterest expense            
Employee compensation and benefits   406    410    422    373    376   
Occupancy   65    52    82    69   —  
Professional fees   71    39    49    32    85   
Other general and administrative   292    307    321    317    290   
Total noninterest expense   834    808    874    791    751   
Net income  $  454  $  319  $  649  $  335  $  475   
             
Income per share $  0.17   $  0.12   $  0.24   $  0.12   $  0.17    
Tangible book value per share $  7.54   $  7.18   $  7.17   $  6.89   $  6.95    
Net interest margin  3.09%  3.10%  3.19%  3.10%  3.14%  
Efficiency Ratio  67.42%  72.08%  59.13%  72.50%  66.70%  
Return on Average Assets  1.27%  0.89%  1.86%  0.94%  1.32%  
Return on Average Equity  8.93%  6.43%  13.34%  6.99%  10.08%  
             
Asset Quality:            
Non-performing loans to gross loans —%  0.16%  0.30%  0.18%  0.19%  
Non-performing assets to total assets —%  0.09%  0.18%  0.10%  0.11%  
Allowance for loan losses to gross loans  1.95%  1.85%  1.92%  1.95%  1.97%  
             
Criticized loans/assets:            
Special mention $  3,137  $  1,242  $  638  $  3,544  $  5,260   
Substandard: Accruing   2,975    2,400    3,589    3,788    4,483   
Substandard: Nonaccrual  —   131    139    146    154   
Doubtful  —  —   116   —  —  
Total criticized loans $  6,112  $  3,773  $  4,482  $  7,478  $  9,897   
Other real estate owned  —  —  —  —  —  
Investment securities   1,136    1,140    1,144    1,147    548   
Total criticized assets $  7,248  $  4,913  $  5,626  $  8,625  $  10,445   
Criticized assets to total assets  5.16%  3.36%  4.03%  6.15%  7.28%  
             
Selected Financial Ratios: (Solera National Bank Only)  
Tier 1 leverage ratio  13.5%  13.2%  13.1%  12.6%  12.1%  
Tier 1 risk-based capital ratio  19.4%  18.8%  17.3%  17.3%  17.0%  
Total risk-based capital ratio  20.7%  20.0%  18.5%  18.6%  18.2%  
             

            

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