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LAKEWOOD, Colo., July 23, 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 second quarter and first half of 2015.
For the three months ended June 30, 2015, the Company reported net income of $335,000 or $0.12 per share compared to a net loss of $23,000 or $(0.01) per share for the three months ended June 30, 2014. For the six months ended June 30, 2015, Solera reported net income of $810,000 or $0.30 per share compared with a net loss of $392,000 or $(0.15) per share for the six months ended June 30, 2014.
Robert J. Fenton, President and CEO, commented: “Recording the Company’s third consecutive profitable quarter was a rewarding accomplishment, reflecting steady contributions from interest income with sound asset quality and no provision for loan losses in the first half of the year. Following significant operational changes in 2014 and a re-focusing on our core capabilities as a business-oriented bank, our goal has been strong credit quality, stability and measurable profitability.
“It was gratifying that the actions taken last year to strengthen the Company have generated consistent growth of Solera’s tangible book value and tangible equity. Since becoming CEO in 2014, I have been proud to work with our entire Solera team to re-energize the Company and establish a strong foundation to continue to deliver solid results into the future.”
Total interest income was $1.30 million for the three months ended June 30, 2015, consistent on a consecutive quarter basis with $1.33 million in first quarter 2015 and $1.38 million in fourth quarter 2014. Total interest income for the six months of 2015 was $2.63 million, compared to $3.23 million in the six months of 2014. The decline in total interest income in 2015 was primarily due to a leaner investment securities portfolio and no loans held for sale compared to a $9.8 million average balance in loans held for sale during the first half of 2014.
The Company's net interest margin was 3.10%, relatively stable compared with the prior two quarters and down from 3.27% in second quarter 2014. The modest year-over-year decline continued to reflect ongoing margin pressure in a competitive, low-interest rate environment.
Total interest expense was $273,000 in second quarter 2015, consistent with $271,000 in first quarter 2015 and down from $314,000 in second quarter 2014. For the six months ended June 30, 2015, total interest expense was $544,000 compared to $623,000 for the six months ended June 30, 2014.
In second quarter 2015, the Company's net interest income was $1.03 million compared to $1.30 million in second quarter 2014. The Company recorded no provision for loan and lease losses during the first half of 2015 compared to $150,000 in the first half of 2014. For the six months ended June 30, 2015, Solera’s net interest income after provision for loan and lease losses was $2.09 million, compared to $2.45 million for the six months of 2014.
Total noninterest income in second quarter 2015 was $100,000, compared to $1.67 million in second quarter 2014, reflecting no gain on loans sold compared to $1.54 million in gains in second quarter 2014, as the Company’s business model no longer includes generating residential mortgages for sale on the secondary market. Noninterest income was $263,000 for the six months ended June 30, 2015, which included gains of $135,000 from the sale of investment securities as the Company trimmed its investment portfolio. Fenton noted the Company’s Investment Services Division, launched in first quarter 2015, is building momentum and is expected to bolster noninterest income in the coming quarters.
Total noninterest expense in second quarter 2015 was $791,000 compared with $2.84 million in second quarter 2014, reflecting 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.
In first half 2015, noninterest expense was $1.54 million, which 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. The transaction closed in second quarter 2015. “The purchase of our building will generate significant ongoing cost reductions," noted Melissa K. Larkin, CFO. "This, coupled with the substantial cost savings from having de-registered as a SEC reporting company will continue to be accretive to our bottom line.”
Balance Sheet Review, Credit Quality and Shareholder Value
Total assets were $140.17 million at June 30, 2015, compared to $167.97 million at June 30, 2014 and $143.52 million at March 31, 2015. The year-over-year decline was primarily driven by a decrease in loans held for sale due to the exit of the residential mortgage division, as well as the sale of two OREO properties and the sale of investment securities that had the benefit of reducing the Company's interest rate risk profile. Gross loans held for investment at June 30, 2015, were $83.18 million, nearly identical to gross loans a year earlier.
Net loans, after allowance for loan and lease losses, were $81.58 million at June 30, 2015 compared with $82.20 million at June 30, 2014. Lending activity in second quarter 2015 reflected double-digit growth, but the overall growth was impacted by payoffs.
Fenton commented: “Our continued focus on growing our C&I portfolio has generated positive results in recent months. We ended the quarter with a number of approved commercial and real estate loans closing in July. We were pleased that in the second quarter we were able to support our area’s Hispanic community by closing a significant multi-family real estate loan in Aurora, Colorado.”
The Company's allowance for loan and lease losses (ALLL) was $1.63 million, or 1.95% of gross loans, at June 30, 2015, compared to $1.30 million or 1.56% at June 30, 2014. The Company’s ALLL to non-performing loans exceeded 1,000%, while the ratio of non-performing loans to gross loans remained relatively unchanged at only 0.18% for the quarter ended June 30, 2015. Total non-performing loans were $146,000 and the Company had no OREO at June 30, 2015.
Total deposits at June 30, 2015 were $109.21 million, compared to $128.09 million at June 30, 2014. The Company trimmed certificates of deposits from the previous year. Transaction accounts continued to comprise approximately 49% of the Company's total deposits at both June 30, 2015 and 2014. Larkin noted that the improvement in the Colorado economy has led to increased loan demand but also to a decline in balances from larger deposit customers who have identified other investment opportunities.
The Bank continues to exceed accepted regulatory standards for a well-capitalized institution and improved all capital ratios as of June 30, 2015 compared to both March 31, 2015 and June 30, 2014 with a tier 1 leverage ratio of 12.6%, a tier 1 risk-based capital ratio of 17.3%, and a total risk-based capital ratio of 18.6%.
Tangible book value per share, excluding accumulated other comprehensive income, was $6.99 per share for the three months ended June 30, 2015, up from $6.86 at March 31, 2015 and $6.71 at December 31, 2014. Total stockholders' equity rose to $19.08 million at June 30, 2015, compared to $18.44 million at December 31, 2014 and $18.28 at June 30, 2014.
Fenton concluded: “With economic conditions continuing to trend positively in Colorado and the solid infrastructure we have established, we believe Solera National Bank is well-positioned to continue to build value for stakeholders.”
About Solera National Bancorp, Inc.
Solera National Bancorp, Inc. was incorporated in 2006 to organize and serve as the holding company for Solera National Bank, which opened for business in September 2007. Solera National Bank is a community bank serving emerging businesses primarily in the Front Range of Colorado. At the core of Solera National Bank is welcoming, inclusive and respectful customer service, a focus on supporting a growing and diverse Colorado economy, and a passion to serve our community through service, education and volunteerism. For more information, please visit http://www.SoleraBank.com.
Financial Tables Follow
|SOLERA NATIONAL BANCORP, INC.|
|CONSOLIDATED BALANCE SHEETS|
|Cash and due from banks||$||562||$||908||$||868|
|Federal funds sold||—||4,300||—|
|Interest-bearing deposits with banks||750||2,757||257|
|Investment securities, available-for-sale||48,326||47,806||59,652|
|FHLB and Federal Reserve Bank stocks, at cost||1,091||871||1,403|
|Net deferred (fees)/expenses||28||10||73|
|Allowance for loan and lease losses||(1,626||)||(1,613||)||(1,300||)|
|Loans held for sale||—||—||14,383|
|Premises and equipment, net||1,999||663||798|
|Other real estate owned||—||—||1,485|
|Accrued interest receivable||563||540||652|
|Bank-owned life insurance||4,531||4,497||4,389|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Noninterest-bearing demand deposits||$||4,034||$||4,503||$||4,747|
|Interest-bearing demand deposits||6,604||9,781||8,197|
|Savings and money market deposits||43,405||47,722||49,159|
|Accrued interest payable||79||72||74|
|Short-term FHLB borrowings||5,846||—||14,141|
|Long-term FHLB borrowings||5,500||6,500||6,500|
|Accounts payable and other liabilities||449||352||889|
|Additional paid-in capital||27,126||27,121||26,840|
|Accumulated other comprehensive (loss) gain||(278||)||241||(78||)|
|Treasury stock, at cost||(156||)||(156||)||(102||)|
|TOTAL STOCKHOLDERS' EQUITY||19,081||19,260||18,280|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||140,167||$||143,519||$||167,970|
|SOLERA NATIONAL BANCORP, INC.|
|CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)|
|Three Months Ended||Six Months Ended|
|($000s, except per share data)||6/30/2015||3/31/2015||6/30/2014||6/30/2015||6/30/2014|
|Interest and dividend income|
|Interest and fees on loans||$||1,042||$||1,029||$||1,098||$||2,071||$||2,220|
|Interest on loans held for sale||—||—||104||—||157|
|Dividends on bank stocks||12||11||16||23||31|
|Total interest income||1,299||1,334||1,618||2,633||3,226|
|Total interest expense||273||271||314||544||623|
|Net interest income||1,026||1,063||1,304||2,089||2,603|
|Provision for loan and lease losses||—||—||150||—||150|
|Net interest income after|
provision for loan and lease losses
|Customer service and other fees||30||27||30||57||57|
|Gain on loans sold||—||—||1,542||—||2,432|
|Gain on sale of available-for-sale securities||35||100||59||135||109|
|Total noninterest income||100||163||1,667||263||2,671|
|Employee compensation and benefits||373||376||1,520||749||3,203|
|Other general and administrative||317||290||811||607||1,314|
|Total noninterest expense||791||751||2,844||1,542||5,516|
|Net income (loss)||$||335||$||475||$||(23||)||$||810||$||(392||)|
|Income (loss) per share||$||0.12||$||0.17||$||(0.01||)||$||0.30||$||(0.15||)|
|Tangible book value per share||$||6.99||$||6.86||$||6.82||$||6.99||$||6.86|
|Net interest margin||3.10||%||3.14||%||3.27||%||3.12||%||3.29||%|
|Non-performing loans to gross loans||0.18||%||0.19||%||0.19||%|
|Non-performing assets to total assets||0.10||%||0.11||%||0.88||%|
|Allowance for loan losses to gross loans||1.95||%||1.97||%||1.56||%|
|Allowance for loan losses to non-performing loans||1,113.70||%||1,047.40||%||807.45||%|
|Other real estate owned||$ —||$ —||$||1,485|
|Selected Financial Ratios: (Solera National Bank Only)|
|Tier 1 leverage ratio||12.6||%||12.1||%||9.8||%|
|Tier 1 risk-based capital ratio||17.3||%||17.0||%||14.5||%|
|Total risk-based capital ratio||18.6||%||18.2||%||15.6||%|
Robert J. Fenton, President & CEO (303) 202-0933NEXT ARTICLE