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Solera National Bancorp Announces Fourth Quarter, Full Year 2014 Financial Results

LAKEWOOD, Colo., Jan. 26, 2015 (GLOBE NEWSWIRE) -- Solera National Bancorp, Inc. (OTCQB:SLRK), the holding company for Solera National Bank, today reported financial results for the three and twelve months ended December 31, 2014.

For the three months ended December 31, 2014, the Company reported net income of $401,000 or $0.15 per share compared to a net loss of $638,000 or $(0.25) per share for the three months ended December 31, 2013, and compared to a net loss of $442,000, or $(0.17) per share for the three months ended September 30, 2014. For the twelve months ended December 31, 2014, the Company reported a net loss of $433,000 or $(0.16) per share compared to a net loss of $655,000 or $(0.25) per share for the twelve months ended December 31, 2013. The 2014 results were negatively impacted by approximately $370,000 in write downs and other charges related to two OREO properties, both of which have been sold as of early January 2015, in addition to approximately $290,000 of expenses associated with the Company's proxy contest.

Robert J. Fenton, President and CEO, commented: "The Company's return to profitability in the fourth quarter was an exciting accomplishment following our initiatives during the third quarter to eliminate inefficiencies in the core commercial banking business and to wind down the residential mortgage division. We were very encouraged by the positive results generated by our core commercial banking business, which included nearly $3 million in net loan growth in the fourth quarter of 2014. Inclusive of residential mortgage loan pay offs, net loan growth for the fourth quarter 2014 was $1.5 million.

"2014 was a challenging year for Solera but we ended the year on a firm foundation. As we enter 2015, the Company is a lean and efficient organization, supported by a strong balance sheet, solid asset quality, and the capital to fund loan growth."

Review of Operations

Interest and fees on loans were $1.08 million in fourth quarter 2014 compared to $970,000 in fourth quarter 2013, reflecting positive contributions from commercial lending. For the twelve months of 2014, interest and fees on loans was $4.34 million compared to $3.58 million for the twelve months of 2013. Total interest income was $1.38 million for the three months ended December 31, 2014 compared to $1.54 million for the three months ended December 31, 2013. For the twelve months of 2014, total interest income increased to $6.05 million compared to $5.82 million for the twelve months of 2013.

The Company's net interest margin in fourth quarter 2014 was 3.14%, up from 3.00% a year ago, and the net interest margin for the twelve months of 2014 rose to 3.20% compared to 2.88% for the twelve months of 2013.

Total interest expense was $287,000 in fourth quarter 2014 compared to $314,000 in fourth quarter 2013. For the twelve months ended December 31, 2014, total interest expense was $1.21 million compared to $1.22 million for the twelve months ended December 31, 2013.

In fourth quarter 2014, the Company's net interest income, including a $26,000 provision for loan and lease losses, was $1.07 million compared to $1.22 million in fourth quarter 2013, which had no recorded loss provision. For the twelve months ended December 31, 2014, net interest income after a $426,000 provision for loan and lease losses was $4.42 million compared to $4.60 million for the twelve months ended December 31, 2013 which had no recorded loss provision.

Total noninterest income in fourth quarter 2014 was $150,000 compared to $1.36 million in fourth quarter 2013, primarily reflecting no gain on sale of loans compared with a $1.17 million gain on loans sold in fourth quarter 2013. For the twelve months ended December 31, 2014, total noninterest income was $3.39 million compared with $7.40 million for the twelve months ended December 31, 2013, with the decline reflecting significantly lower gain on the sale of loans as the Company exited the residential mortgage lending business.

Total noninterest expense in fourth quarter 2014 declined sharply to $819,000 compared to $3.23 million in fourth quarter 2013, primarily reflecting lower ongoing salary and compensation expenses, including lower commission payments related to mortgage lending. Total noninterest expense in 2014, which included charges related to the mortgage division closure, was $8.24 million compared to $12.66 million in 2013.

Balance Sheet Review, Credit Quality and Shareholder Value

Net loans, after allowance for loan and lease losses, were $79.29 million at December 31, 2014 compared to $78.17 million at December 31, 2013. The Company's allowance for loan and lease losses was $1.60 million, or 1.98% of gross loans, at December 31, 2014 compared to $1.12 million, or 1.41% of gross loans, at December 31, 2013. The balance sheet reflected no loans held for sale as of December 31, 2014, compared to $7.95 million a year ago.

Total deposits at December 31, 2014 were $119.11 million compared to $132.84 million at December 31, 2013, with $10.53 million of the $13.73 million decline pertaining to certificates of deposits that were not renewed as the Company's funding needs declined with the exit of the residential mortgage division.

Total assets were $144.67 million at December 31, 2014 compared to $169.68 million at December 31, 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 December 31, 2014, the ratio of non-performing loans to gross loans was 0.19% and non-performing assets to total assets was 0.56%. At year-end, other real estate owned consisting of one asset was $657,000, which was sold in January 2015.

The Bank continued to exceed accepted regulatory standards for a well-capitalized institution and improved all capital ratios as of December 31, 2014 compared to both the prior quarter and the prior year. Tier 1 leverage ratio was 11.3%, a tier 1 risk-based capital ratio of 15.9%, and a total risk-based capital ratio of 17.1%.

Tangible book value per share, excluding accumulated other comprehensive income, was $6.71 at December 31, 2014, compared to $6.96 at December 31, 2013. Total stockholders' equity was $18.44 million at December 31, 2014 compared to $16.98 million at December 31, 2013. The year-over-year total stockholders' equity comparison included 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: "Returning the Bank to a profitable condition in fourth quarter 2014 was an important accomplishment. We have taken decisive actions to correct past management practices that will enable us to meet or exceed regulatory and operational standards.

"We plan to continue to maintain the focus on our commercial banking business, which has continued to demonstrate its value throughout a period of significant change. We have set a clear path for the coming year, with a continued emphasis on operational efficiency, growing loans and deposits, and generating new sources of noninterest income. We look forward to continuing to build a re-energized franchise with the ability to drive value for all 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. ("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) 12/31/2014 9/30/2014 12/31/2013
ASSETS
Cash and due from banks $ 602 $ 1,545 $ 742
Federal funds sold 2,830 1,055 1,600
Interest-bearing deposits with banks 257 257 257
Investment securities, available-for-sale 52,900 58,489 69,839
FHLB and Federal Reserve Bank stocks, at cost 780 849 2,346
Gross loans 80,864 79,290 79,240
Net deferred (fees)/expenses 24 53 46
Allowance for loan and lease losses (1,600) (1,563) (1,116)
Net loans 79,288 77,780 78,170
Loans held for sale 7,951
Premises and equipment, net 670 714 888
Other real estate owned 657 1,392 1,746
Accrued interest receivable 616 659 705
Bank-owned life insurance 4,462 4,425 4,316
Other assets 1,610 831 1,117
TOTAL ASSETS $ 144,672 $ 147,996 $ 169,677
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 5,853 $ 5,012 $ 6,362
Interest-bearing demand deposits 7,866 7,755 10,559
Savings and money market deposits 48,007 49,593 51,185
Time deposits 57,387 60,529 64,738
Total deposits 119,113 122,889 132,844
Accrued interest payable 62 78 63
Short-term FHLB borrowings 2,000 9,808
Long-term FHLB borrowings 4,500 6,500 8,500
Accounts payable and other liabilities 556 619 1,487
TOTAL LIABILITIES 126,231 130,086 152,702
Common stock 27 27 26
Additional paid-in capital 27,120 27,101 26,558
Accumulated deficit (8,448) (8,849) (8,015)
Accumulated other comprehensive loss (102) (213) (1,492)
Treasury stock, at cost, 25,776 shares (156) (156) (102)
TOTAL STOCKHOLDERS' EQUITY 18,441 17,910 16,975
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 144,672 $ 147,996 $ 169,677
SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Twelve Months Ended
($000s, except per share data) 12/31/2014 9/30/2014 12/31/2013 12/31/2014 12/31/2013
Interest and dividend income
Interest and fees on loans $ 1,079 $ 1,038 $ 970 $ 4,338 $ 3,577
Interest on loans held for sale 45 75 202 402
Investment securities 291 341 473 1,445 1,762
Dividends on bank stocks 10 13 16 54 67
Other 3 3 3 11 9
Total interest income 1,383 1,440 1,537 6,050 5,817
Interest expense
Deposits 259 263 273 1,065 1,058
FHLB borrowings 28 35 41 144 160
Total interest expense 287 298 314 1,209 1,218
Net interest income 1,096 1,142 1,223 4,841 4,599
Provision for loan and lease losses 26 250 426
Net interest income after provision for loan and lease losses 1,070 892 1,223 4,415 4,599
Noninterest income
Customer service and other fees 28 29 32 111 106
Other income 36 37 65 149 160
Gain on loans sold 446 1,174 2,878 6,750
Gain on sale of available-for-sale securities 86 59 93 254 387
Total noninterest income 150 571 1,364 3,392 7,403
Noninterest expense
Employee compensation and benefits 257 820 1,917 4,280 8,426
Occupancy 182 275 256 949 1,033
Professional fees 101 176 109 784 503
Other general and administrative 279 634 943 2,227 2,695
Total noninterest expense 819 1,905 3,225 8,240 12,657
Net income (loss) $ 401 $ (442) $ (638) $ (433) $ (655)
Income (loss) per share $ 0.15 $ (0.17) $ (0.25) $ (0.16) $ (0.25)
Tangible book value per share $ 6.71 $ 6.64 $ 6.96 $ 6.85 $ 6.96
Net interest margin 3.14% 3.08% 3.00% 3.20% 2.88%
Asset Quality:
Non-performing loans to gross loans 0.19% 0.20% —%
Non-performing assets to total assets 0.56% 1.05% 1.03%
Allowance for loan losses to gross loans 1.98% 1.97% 1.41%
Allowance for loan losses to non-performing loans 1,019.11% 976.88% NM*
Other real estate owned $ 657 $ 1,392 $ 1,746
* Not meaningful due to the insignificant amount of non-performing loans.
Selected Financial Ratios: (Solera National Bank Only)
Tier 1 leverage ratio 11.3% 10.3% 9.6%
Tier 1 risk-based capital ratio 15.9% 15.6% 14.4%
Total risk-based capital ratio 17.1% 16.9% 15.4%

CONTACT: Solera National Bancorp, Inc. Robert J. Fenton, President & CEO (303) 202-0933

Source:Solera National Bank