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Solera National Bancorp Announces Fourth Quarter, Full Year 2015 Financial Results

LAKEWOOD, Colo., Jan. 26, 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 and twelve months ended December 31, 2015.

Highlights for the quarter and full year ended December 31, 2015 include:

  • Fifth consecutive quarter of profitability
  • Record net income of $1.78 million in 2015 compared to a net loss of $433,000 in 2014
  • Return on average assets and return on average equity of 1.25% and 9.12%, respectively, for full year 2015
  • Efficiency ratio of 66.9% for full year 2015 compared to 109.1% for full year 2014
  • Solid asset quality; minimal non-performing loans at December 31, 2015

For the three months ended December 31, 2015, the Company reported net income of $319,000 compared to net income of $649,000 in the third quarter of 2015 and net income of $401,000 in the fourth quarter of 2014. Earnings per common share were $0.12 for the fourth quarter of 2015, compared to $0.24 for the linked quarter and $0.15 for the prior year quarter. Third quarter 2015 results included a one-time bank owned life insurance benefit of $293,000, or $0.11 per share.

The Company’s net income for the year ended December 31, 2015 was a record $1.78 million or $0.65 per share compared to a net loss of $433,000 or $(0.16) per share for the twelve months ended December 31, 2014.

Martin P. May, President and CEO, commented: “We continue to deliver consistent, high-quality core earnings recording our fifth consecutive quarterly profit. For the full year, the Solera team, under the direction of the new board of directors appointed in mid-2014, executed extremely well resulting in record earnings of $1.78 million. With the turnaround of the Company progressing, we have a strong balance sheet and ample liquidity to compete aggressively for high-quality customer relationships.”

Operational Highlights

Net interest income after provision for loan and lease losses was $1.05 million for the quarter ended December 31, 2015, compared to $1.07 million for the quarter ended December 31, 2014. For the twelve months of 2015, net interest income after provision for loan and lease losses was $4.26 million compared to $4.42 million for the twelve months of 2014.

The Company's net interest margin in fourth quarter 2015 was 3.10% compared to 3.14% a year ago, and the net interest margin for the twelve months of 2015 was 3.13% compared to 3.20% for the twelve months of 2014. The Company’s balance sheet is positioned to benefit from rising interest rates; as such, net interest income is forecast to increase modestly during 2016.

Total noninterest income in fourth quarter 2015 was $75,000 compared to $150,000 in fourth quarter 2014, primarily reflecting a decrease in gains on the sale of investment securities. For the twelve months ended December 31, 2015, total noninterest income was $745,000 compared with $3.39 million for the twelve months ended December 31, 2014, 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. This decline was partially offset by a one-time bank owned life insurance benefit of $293,000 recorded in the third quarter of 2015.

Total noninterest expense in fourth quarter 2015 of $808,000 declined slightly from fourth quarter 2014. Higher employee compensation and benefits in the fourth quarter of 2015 were offset by lower occupancy expense as a result of the Company’s purchase of its main office, which had previously been on a long-term lease. Total noninterest expense for the twelve months ended December 31, 2015 was $3.22 million compared to $8.24 million in 2014. The significant decline reflects the Company’s exit from the residential mortgage business in the third quarter of 2014 along with decisive actions taken to right-size the organization and the implementation of on-going cost saving measures.

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 $146.07 million at December 31, 2015 increased marginally compared to $144.67 million at December 31, 2014.

Net loans, after allowance for loan and lease losses, were $80.59 million at December 31, 2015 compared to $79.29 million at December 31, 2014. The allowance for loan and lease losses was $1.52 million, or 1.85% of gross loans, at December 31, 2015 compared to $1.60 million, or 1.98% of gross loans, at December 31, 2014. Loans held for sale were $1.04 million at December 31, 2015 representing one lending relationship which the Company is actively marketing for sale.

Total investment securities were $52.87 million at December 31, 2015 essentially unchanged compared to $52.90 million at December 31, 2014. During 2015, the Company purchased $4.5 million of longer duration, higher yielding fixed-to-float investment securities for its held-to-maturity portfolio to protect stockholders’ equity from rising interest rates.

Total deposits at December 31, 2015 were $120.84 million compared to $119.11 million at December 31, 2014. Time deposits increased $8.77 million versus the prior year as a result of the Company’s efforts to attract longer-term, relatively low cost deposits in advance of the expected action by the Federal Reserve to begin raising the federal funds rate.

Management continues to believe asset quality is a source of strength that differentiates the Company from many of its peers. At December 31, 2015, the Company had only 0.16% non-performing loans to gross loans and 0.09% non-performing assets to total assets. Total criticized assets declined significantly to $4.91 million at December 31, 2015 from $10.11 million at December 31, 2014. The ratio of criticized assets to total assets declined to 3.36% compared to 6.99% a year ago. The Company had no other real estate owned assets at December 31, 2015.

Capital Strength

Solera National Bank continued to exceed accepted regulatory standards for a well-capitalized institution and improved all capital ratios as of December 31, 2015 compared to both the prior quarter and the prior year. As of December 31, 2015 the Bank’s Tier 1 leverage ratio was 13.2%, Tier 1 risk-based capital was 18.8%, and total risk-based capital was 20.0%.

Tangible book value per share, including accumulated other comprehensive income, was $7.18 at December 31, 2015, compared to $6.67 at December 31, 2014. Total stockholders' equity was $19.84 million at December 31, 2015 compared to $18.44 million at December 31, 2014. Total stockholders' equity at December 31, 2015 included an accumulated other comprehensive loss of $501,000 compared to a loss of $102,000 at December 31, 2014 as a result of a decrease in the fair value of the Bank's available-for-sale investment portfolio due to the increase in interest rates.

May concluded: "Generating record profitability and implementing best practices to meet or exceed regulatory and operational standards was a major accomplishment in 2015 that we are extremely proud of. As we enter 2016, the Company remains focused on maintaining operational efficiency and growing the franchise in a controlled and disciplined manner. We look forward to increasing franchise value for all of 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.

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) 12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
ASSETS
Cash and due from banks $ 749 $ 644 $ 562 $ 908 $ 602
Federal funds sold 1,740 365 4,300 2,830
Interest-bearing deposits with banks 750 750 750 2,757 257
Investment securities, available-for-sale 48,374 42,733 47,326 47,806 52,900
Investment securities, held-to-maturity 4,500 3,750 1,000
FHLB and Federal Reserve Bank stocks, at cost 874 941 1,091 871 780
Gross loans 82,124 83,768 83,178 81,886 80,864
Net deferred (fees)/expenses (15) (6) 28 10 24
Allowance for loan and lease losses (1,518) (1,609) (1,626) (1,613) (1,600)
Net loans 80,591 82,153 81,580 80,283 79,288
Loans held for sale 1,039
Premises and equipment, net 1,918 1,955 1,999 663 670
Other real estate owned 657
Accrued interest receivable 570 542 563 540 616
Bank-owned life insurance 4,369 4,565 4,531 4,497 4,462
Other assets 599 1,047 765 894 1,610
TOTAL ASSETS $ 146,073 $ 139,445 $ 140,167 $ 143,519 $ 144,672
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing demand deposits 3,954 4,362 4,034 4,503 5,853
Interest-bearing demand deposits 8,405 6,524 6,604 9,781 7,866
Savings and money market deposits 42,320 42,706 43,405 47,722 48,007
Time deposits 66,160 59,594 55,169 55,329 57,387
Total deposits 120,839 113,186 109,212 117,335 119,113
Accrued interest payable 88 102 79 72 62
Short-term FHLB borrowings 450 5,846
Long-term FHLB borrowings 5,000 5,500 5,500 6,500 6,500
Accounts payable and other liabilities 309 370 449 352 556
TOTAL LIABILITIES 126,236 119,608 121,086 124,259 126,231
Common stock 27 27 27 27 27
Additional paid-in capital 27,137 27,130 27,126 27,121 27,120
Accumulated deficit (6,670) (6,989) (7,638) (7,973) (8,448)
Accumulated other comprehensive (loss) gain (501) (175) (278) 241 (102)
Treasury stock, at cost (156) (156) (156) (156) (156)
TOTAL STOCKHOLDERS' EQUITY 19,837 19,837 19,081 19,260 18,441
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 146,073 $ 139,445 $ 140,167 $ 143,519 $ 144,672

SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Twelve Months Ended
($000s, except per share data) 12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014
Interest and dividend income
Interest and fees on loans $ 1,060 $ 1,106 $ 1,042 $ 1,029 $ 1,079 $ 4,237 $ 4,338
Interest on loans held for sale 202
Investment securities 278 231 242 293 291 1,044 1,445
Dividends on bank stocks 11 12 12 11 10 46 54
Other 8 3 3 1 3 15 11
Total interest income 1,357 1,352 1,299 1,334 1,383 5,342 6,050
Interest expense
Deposits 284 263 246 246 259 1,039 1,065
FHLB borrowings 21 23 27 25 28 96 144
Total interest expense 305 286 273 271 287 1,135 1,209
Net interest income 1,052 1,066 1,026 1,063 1,096 4,207 4,841
Provision for loan and lease losses (50) 26 (50) 426
Net interest income after provision for loan and lease losses 1,052 1,116 1,026 1,063 1,070 4,257 4,415
Noninterest income
Customer service and other fees 25 28 30 27 28 110 111
Other income 44 334 35 36 36 449 149
Gain on loans sold 2,878
Gain on sale of available-for-sale securities 6 45 35 100 86 186 254
Total noninterest income 75 407 100 163 150 745 3,392
Noninterest expense
Employee compensation and benefits 410 422 373 376 257 1,581 4,280
Occupancy 52 82 69 182 203 949
Professional fees 39 49 32 85 101 205 784
Other general and administrative 307 321 317 290 279 1,235 2,227
Total noninterest expense 808 874 791 751 819 3,224 8,240
Net income (loss) $ 319 $ 649 $ 335 $ 475 $ 401 $ 1,778 $ (433)
Income (loss) per share $ 0.12 $ 0.24 $ 0.12 $ 0.17 $ 0.15 $ 0.65 $ (0.16)
Tangible book value per share $ 7.18 $ 7.17 $ 6.89 $ 6.95 $ 6.67 $ 7.18 $ 6.81
Net interest margin 3.10% 3.19% 3.10% 3.14% 3.14% 3.13% 3.20%
Efficiency Ratio 72.08% 59.13% 72.50% 66.70% 72.22% 66.94% 109.10%
Return on Average Assets 0.89% 1.86% 0.94% 1.32% 1.10% 1.25% (0.28)%
Return on Average Equity 6.43% 13.34% 6.99% 10.08% 8.83% 9.12% (2.40)%
Asset Quality:
Non-performing loans to gross loans 0.16% 0.30% 0.18% 0.19% 0.19%
Non-performing assets to total assets 0.09% 0.18% 0.10% 0.11% 0.56%
Allowance for loan losses (ALLL) to gross loans 1.85% 1.92% 1.95% 1.97% 1.98%
Criticized loans/assets:
Special mention $ 1,242 $ 638 $ 3,544 $ 5,260 $ 5,448
Substandard: Accruing 2,400 3,589 3,788 4,483 2,759
Substandard: Nonaccrual 131 139 146 154 158
Doubtful 116
Total criticized loans $ 3,773 $ 4,482 $ 7,478 $ 9,897 $ 8,365
Other real estate owned 657
Investment securities 1,140 1,144 1,147 548 1,088
Total criticized assets $ 4,913 $ 5,626 $ 8,625 $ 10,445 $ 10,110
Criticized assets to total assets 3.36% 4.03% 6.15% 7.28% 6.99%
Selected Financial Ratios: (Solera National Bank Only)
Tier 1 leverage ratio 13.2% 13.1% 12.6% 12.1% 11.3%
Tier 1 risk-based capital ratio 18.8% 17.3% 17.3% 17.0% 15.9%
Total risk-based capital ratio 20.0% 18.5% 18.6% 18.2% 17.1%



Contact: Martin P. May, President & CEO (303) 937-6422 -or- Melissa K. Larkin, SVP & CFO (303) 937-6423

Source:Solera National Bank