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Solera National Bancorp Announces First Quarter 2018 Financial Results

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LAKEWOOD, Colo., April 19, 2018 (GLOBE NEWSWIRE) -- Solera National Bancorp, Inc. (OTC:SLRK) ("Company"), the holding company for Solera National Bank ("Bank"), a business-focused bank primarily serving the Denver metropolitan area, today reported financial results for the three months ended March 31, 2018. 

Highlights for the quarter ended March 31, 2018 include:

  • Gross loan growth of $21.7 million, or 17% versus linked-quarter
  • Noninterest-bearing deposit growth of $18.6 million, or 77% versus linked-quarter
  • Net interest margin of 3.36% increased 32 basis points from same period last year
  • Strong asset quality; no nonperforming assets and modest level of criticized assets
  • Return on Average Assets and Return on Average Equity of 0.86% and 6.30%, respectively
  • Commencement of rights offering; $3 million in capital raised through quarter-end
  • Ranked 11th Healthiest Bank out of 5,557 FDIC-insured banks in the United States(1)

For the three months ended March 31, 2018, the Company reported net income of $400,000, or $0.15 per share, compared to a net loss of $279,000, or $0.10 per share, for the three months ended December 31, 2017, and net income of $200,000, or $0.07 per share, for the three months ended March 31, 2017.  The fourth quarter of 2017 included a one-time income tax expense of approximately $610,000, or $0.22 per share, from revaluing the Company's net deferred tax asset position as a result of the Tax Cuts and Jobs Act enacted into law on December 22, 2017.

Martin P. May, President and CEO, commented: "The Company is off to a strong start this year.  We are particularly pleased with our solid loan and deposit growth.  Net interest margin and other key profitability measures improved markedly versus the same quarter last year.  The incremental capital from our rights offering will enable us to increase our legal lending limit, while exploring additional growth opportunities.  Our balance sheet strength and the vibrant market we operate in give us reasons to be confident about the future."

May continued, "We look forward to updating shareholders on our performance at the upcoming annual meeting which is scheduled for Wednesday, May 9th at 5:30 p.m. local time at the Company's Lakewood, Colorado location.  Shareholders of record as of March 26, 2018 will be entitled to attend and vote at the annual meeting."

Operational Highlights

Net interest income after provision for loan and lease losses was $1.38 million for the quarter ended March 31, 2018 compared to $1.35 million and $1.10 million in the quarters ended December 31, 2017 and March 31, 2017, respectively.  The Company recorded provision for loan and lease losses of $68,000 in the quarter ended March 31, 2018 compared to no provision for loan and lease losses throughout 2017.

The Company's net interest margin in first quarter 2018 of 3.36% compared to 3.33% in the linked-quarter and 3.04% in the first quarter 2017.  The increase in net interest margin compared to first quarter 2017 is attributed to higher loan portfolio yields, a shift in mix from lower yielding investment securities to higher yielding loans, along with significant growth in noninterest-bearing deposits.

Total noninterest income in first quarter 2018 was $62,000 compared to $58,000 in fourth quarter 2017 and $55,000 in first quarter 2017.  Customer service and other fees increased versus the fourth quarter 2017 and first quarter 2017.  The Company recorded no gains on loans sold or gains on sale of available-for-sale securities in first quarter 2018 or during 2017.

Total noninterest expense of $918,000 in first quarter 2018, essentially unchanged from $910,000 in the linked-quarter, increased $77,000, or 9%, from $841,000 in the first quarter of 2017.  The increase from the prior year is principally due to higher employee compensation and benefits to support franchise growth along with expenses associated with the Company's capital raise.  The Company's efficiency ratio (non-interest expense divided by the sum of net interest income FTE and non-interest income) for the first quarter of 2018 was 63.9% compared to 72.6% for the first quarter of 2017.

In first quarter 2018, the Company recorded income tax expense of $119,000 compared to income tax expense of $790,000 in the fourth quarter 2017 and income tax expense of $118,000 in the first quarter of 2017.  The fourth quarter of 2017 included a one-time income tax expense of approximately $610,000 from revaluing the Company's net deferred tax asset position as a result of the Tax Cuts and Jobs Act.

Balance Sheet Review and Asset Quality Strength

Total assets of $198.04 million at March 31, 2018 increased from $173.90 million at December 31, 2017 and $157.09 million at March 31, 2017.  The increase versus March 31, 2017 was due to significant growth in gross loans. 

Net loans, after allowance for loan and lease losses, were $146.57 million at March 31, 2018 compared to $125.14 million at December 31, 2017 and $103.51 million at March 31, 2017.  Net loan growth of $21.43 million during the first quarter of 2018 was driven by commercial loan originations of $13.18 million and a net increase of $9.28 million in student loans, partly offset by payoffs, pay downs and an increase in the allowance for loan losses totaling $1.03 million.  The Company leveraged a portion of its excess capital by increasing its interest in the rehabilitated student loan pool, originally purchased in 2016, by approximately $10 million.  Melissa K. Larkin, the Company's Chief Financial Officer stated:  "The student loan pool has performed as expected since our first purchase in the second quarter of 2016.  They provide interest rate risk protection given their variable rate structure and limited credit risk given their government guarantee."

The allowance for loan and lease losses at March 31, 2018 of $1.80 million, or 1.21% of gross loans, compared to $1.75 million, or 1.37% at December 31, 2017, and $1.60 million, or 1.52% of gross loans at March 31, 2017.  The decline in the allowance for loan and lease losses as a percentage of gross loans is primarily due to the growth in the student loan portfolio which contains minimal risk of loss given a U.S. government guarantee of approximately 97.5%. 

Total investment securities available-for-sale were $31.71 million at March 31, 2018 compared to $31.95 million at December 31, 2017 and $34.65 million at March 31, 2017.  Investment securities held-to-maturity of $4.90 million at March 31, 2018 were unchanged compared to December 31, 2017 and March 31, 2017.

Total deposits at March 31, 2018 were $156.52 million compared to $137.51 million at December 31, 2017 and $128.04 million at March 31, 2017.  The Company continued to make significant progress growing its core deposit franchise.  Noninterest-bearing demand deposits of $42.68 million at March 31, 2018 increased $18.62 million, or 77%, versus the linked-quarter, and increased $34.0 million from $8.69 million at March 31, 2017.  Mr. May commented, "We established a goal last year to substantially increase noninterest-bearing deposits.  As a result of this focused effort, we identified a market opportunity which lead to a significant number of new relationships.  I'm proud of our team and the superior customer service they deliver day in and day out."

The Company continues to experience sound asset quality metrics.  At March 31, 2018, the Company had no non-performing loans, non-performing assets or other real estate owned.  Total criticized assets of $5.74 million at March 31, 2018, or 2.90% of total assets, increased slightly from the linked-quarter and has declined from $6.12 million, or 3.90% of total assets, at March 31, 2017.

The Company had no past due commercial loans as of March 31, 2018 and $133,000 from one past due residential mortgage loan. Additionally, $5.16 million of the student loan participation pool were 30 days+ past due at March 31, 2018, of which $3.01 million were 90 days+ past due.  The student loans are backed by an approximately 97.5% guarantee of the U.S. Treasury under the Higher Education Act of 1965.  This guarantee includes all principal and interest so net credit losses in this portfolio are expected to be minimal.  Additionally, the Bank purchased the pool at a discount resulting in the Bank's maximum exposure to credit losses slightly less than 1%.     

Capital Strength

The Company's capital ratios continue to be well in excess of the highest required regulatory benchmark levels.  As of March 31, 2018, the Bank's Tier 1 leverage ratio was 14.8%, Tier 1 risk-based capital was 18.1%, and total risk-based capital was 19.4%.

Tangible book value per share, including accumulated other comprehensive income, was $8.52 at March 31, 2018, compared to $8.67 at December 31, 2017 and $8.52 at March 31, 2017.  Total stockholders' equity was $26.98 million at March 31, 2018 compared to $23.83 million at December 31, 2017 and $23.40 million at March 31, 2017.  Total stockholders' equity at March 31, 2018 included an accumulated other comprehensive loss of $573,000 compared to a loss of $243,000 at December 31, 2017 and a loss of $308,000 at March 31, 2017.  The fair value of the Bank's available-for-sale investment portfolio has declined from a year ago due to an increase in interest rates. 

References

(1)  "How Healthy Is Your Bank?" DepositAccounts, by LendingTree LLC, 5 Apr. 2018, www.depositaccounts.com/banks/health.aspx.

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. and its wholly-owned subsidiary, Solera National 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.                   

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



 
 
 
SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
 
($000s)   3/31/2018     12/31/2017   9/30/2017   6/30/2017   3/31/2017
ASSETS                          
Cash and due from banks   $   2,435     $   1,017     $   1,383     $   1,097     $   2,126  
Federal funds sold      580        40        2,105        210        185  
Interest-bearing deposits with banks      494        493        261        1,261        261  
Investment securities, available-for-sale      31,708        31,954        33,396        35,222        34,645  
Investment securities, held-to-maturity      4,904        4,902        4,901        4,900        4,899  
FHLB and Federal Reserve Bank stocks, at cost      1,342        1,244        1,073        987        861  
Gross loans      148,839        127,174        116,498        111,990        105,363  
Net deferred (fees)/expenses      (471 )      (292 )      (241 )      (246 )      (249 )
Allowance for loan and lease losses      (1,800 )      (1,746 )      (1,586 )      (1,588 )      (1,601 )
Net loans      146,568        125,136        114,671        110,156        103,513  
Premises and equipment, net      1,744        1,765        1,781        1,783        1,803  
Accrued interest receivable      1,090        837        855        794        816  
Bank-owned life insurance      4,640        4,612        4,583        4,554        4,525  
Other assets                2,530        1,895        2,625        3,025        3,460  
TOTAL ASSETS   $   198,035     $   173,895     $   167,634     $   163,989     $   157,094  
                     
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing demand deposits   $   42,684     $   24,068     $   20,538     $   12,134     $   8,689  
Interest-bearing demand deposits      6,108        8,049        7,684        7,855        8,016  
Savings and money market deposits      46,278        45,649        48,938        49,434        43,473  
Time deposits      61,449        59,745        57,615        63,031        67,865  
Total deposits      156,519        137,511        134,775        132,454        128,043  
                     
Accrued interest payable      140        130        158        151        131  
Short-term FHLB borrowings      9,239        7,121        964        4,029        1,466  
Long-term FHLB borrowings      5,000        5,000        7,400        3,400        3,400  
Accounts payable and other liabilities      161        304        199        178        654  
TOTAL LIABILITIES      171,059        150,066        143,496        140,212        133,694  
                     
Common stock      31        27        27        27        27  
Additional paid-in capital      30,285        27,253        27,197        27,190        27,180  
Accumulated deficit      (2,611 )      (3,052 )      (2,755 )      (3,051 )      (3,343 )
Accumulated other comprehensive gain (loss)       (573 )      (243 )      (175 )      (233 )      (308 )
Treasury stock, at cost      (156 )      (156 )      (156 )      (156 )      (156 )
TOTAL STOCKHOLDERS' EQUITY      26,976        23,829        24,138        23,777        23,400  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $   198,035     $   173,895     $   167,634     $   163,989     $   157,094  
                     

 

 
SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 
                      Three Months Ended
($000s, except per share data)   3/31/2018   12/31/2017   9/30/2017   6/30/2017   3/31/2017
Interest and dividend income                    
Interest and fees on loans   $ 1,586     $ 1,473     $ 1,331     $ 1,239     $ 1,168  
Investment securities     256       250       255       249       256  
Dividends on bank stocks     17       15       14       11       11  
Other     6       5       5       7       3  
Total interest income     1,865       1,743       1,605       1,506       1,438  
Interest expense                    
Deposits     383       355       341       340       322  
FHLB borrowings     39       35       28       14       12  
Total interest expense     422       390       369       354       334  
Net interest income     1,443       1,353       1,236       1,152       1,104  
Provision for loan and lease losses     68                          
Net interest income after
provision for loan and lease losses
    1,375       1,353       1,236       1,152       1,104  
Noninterest income                    
Customer service and other fees     29       26       24       26       23  
Other income     33       32       31       32       32  
Total noninterest income     62       58       55       58       55  
Noninterest expense                    
Employee compensation and benefits     551       513       480       447       486  
Occupancy     48       49       52       42       49  
Professional fees     53       42       55       26       39  
Other general and administrative     266       296       252       265       267  
Total noninterest expense     918       900       839       780       841  
Net Income Before Taxes    $ 519     $ 511     $ 452     $ 430     $ 318  
Income Tax Expense     (119 )     (790 )     (156 )     (138 )     (118 )
Net Income (Loss)   $ 400     $ (279 )   $ 296     $ 292     $ 200  
                     
Income (Loss) Per Share   $ 0.15     $ (0.10 )   $ 0.11     $ 0.11     $ 0.07  
Tangible Book Value Per Share   $ 8.52     $ 8.67     $ 8.79     $ 8.66     $ 8.52  
Net Interest Margin     3.36 %     3.33 %     3.11 %     3.06 %     3.04 %
Efficiency Ratio     63.88 %     63.78 %     64.99 %     64.46 %     72.56 %
Return on Average Assets     0.86 %     (0.65 )%     0.71 %     0.73 %     0.51 %
Return on Average Equity     6.30 %     (4.65 )%     4.94 %     4.95 %     3.44 %
                     
Asset Quality:                    
Non-performing loans to gross loans     %     %     %     %     %
Non-performing assets to total assets     %     %     %     %     %
Allowance for loan losses to gross loans     1.21 %     1.37 %     1.36 %     1.42 %     1.52 %
                     
Criticized loans/assets:                    
Special mention   $ 2,709     $ 1,232     $ 486     $ 1,176     $ 1,210  
Substandard: Accruing     2,442       2,924       3,660       4,128       4,320  
Substandard: Nonaccrual                              
Doubtful                              
  Total criticized loans   $ 5,151     $ 4,156     $ 4,146     $ 5,304     $ 5,530  
Other real estate owned                              
Investment securities     589       590       591       593       594  
Total criticized assets   $ 5,740     $ 4,746     $ 4,737     $ 5,897     $ 6,124  
Criticized assets to total assets     2.90 %     2.73 %     2.83 %     3.60 %     3.90 %
                     
Selected Financial Ratios: (Solera National Bank Only)
Tier 1 leverage ratio     14.8 %     13.6 %     13.9 %     14.2 %     13.7 %
Tier 1 risk-based capital ratio     18.1 %     17.4 %     18.0 %     18.5 %     18.7 %
Total risk-based capital ratio     19.4 %     18.7 %     19.3 %     19.7 %     19.9 %
                     
                     

 


 

 

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