Solera National Bancorp, Inc. Reports 3Q 2010 Results

Oct 26, 2010, 09:00 ET from Solera National Bancorp, Inc.

LAKEWOOD, Colo., Oct. 26 /PRNewswire-FirstCall/ --

Performance Highlights

  • Net interest margin increased year-over-year and on consecutive-quarter basis.
  • Quarterly total interest income up 19% versus third quarter 2009.
  • Loan portfolio grew 25% to $60.4 million at September 30, 2010 compared to $48.5 million in third quarter 2009, and deposits rose 5% compared to a year ago.
  • Solera National Bank's Tier 1 Leverage Capital Ratio of 10.9% and Total Risk-Based Capital Ratio of 18.7% at September 30, 2010 exceeded the regulatory requirements of a well-capitalized bank.

Solera National Bancorp, Inc. (OTC Bulletin Board: SLRK), the parent company of Solera National Bank, reported a third quarter 2010 net loss of $493,000 or ($0.19) per share compared with a profit of $108,000 or $0.04 per share in second quarter 2010 and a net loss of $261,000 or ($0.10) per share in third quarter 2009. The net loss primarily reflected an increase in the Company's loan loss provision associated with net credit losses on two loan participations.

"Our operating performance, core loan portfolio and deposit activity were stable compared to second quarter 2010. However, our improving earnings performance was temporarily disrupted by the write-down of approximately $520,000 related to two real estate development participations from the Bank's early stages of operation," said Douglas Crichfield, President and CEO.  "We have no other purchased loan participations on our balance sheet and minimal remaining exposure to real estate construction or development."

Crichfield said the Bank focused in third quarter 2010 on trimming assets and preparing to accommodate a significant increase in deposits and loans that would result from an acquisition of the Lakewood, Colorado branch of Liberty Savings Bank, FSB. The transaction, announced in August, is subject to regulatory approvals and, if approved, is scheduled to close in the fourth quarter 2010.

"While the economy appears to have bottomed out in the Denver metropolitan area, it remains relatively soft," noted Crichfield. "Generating organic loan and deposit growth has remained challenging, so the opportunity to build our business through an acquisition early in our fourth year of operation is attractive."

Continuing Focus on Operating Performance

The Company generated total interest income of $1.63 million in third quarter 2010, which was consistent with second quarter 2010 and up 19% compared with $1.36 million in third quarter 2009. Interest expense in the quarter declined 12% compared with the prior year's third quarter, contributing to a 44% rise in net interest income before loan loss provision to $1.1 million at September 30, 2010 compared with $763,000 at September 30, 2009. Net interest income after the loan loss provision declined to $317,000 in third quarter 2010 compared with $583,000 in the prior year's third quarter.

Noninterest expense was $1.2 million in third quarter 2010 compared with $1.0 million in third quarter 2009, the increase primarily reflecting higher accounting and audit expenses, higher FDIC premiums, and expenses related to the pending acquisition. The Bank's trend of improving net interest margin continued, resulting in a 3.24% margin in third quarter 2010, compared with 3.07% in second quarter 2010 and 2.85% in third quarter 2009.

"Our focus on customer pricing enabled us to reduce cost of funds by 11 basis points during the quarter. We were able to retain customers without interest rate concessions or special offers," explained Robert J. Fenton, Executive Vice President and Chief Financial Officer.

Solera generated noninterest income of $377,000 in the third quarter, compared with $178,000 in third quarter 2009. As it has for the past several quarters, the Company capitalized on favorable market conditions, recognizing a $332,000 net gain on the sale of securities during the quarter compared to $98,000 a year ago. In addition to generating gains, the securities sale contributed to the Company's initiative to trim its balance sheet in preparation for the acquisition.

Total assets at September 30, 2010 were $136.2 million, higher than assets of $132.4 million at September 30, 2009, but lower than total assets of $140.3 million at the end of second quarter 2010. Customer deposits were $108.4 million at the end of third quarter 2010, up 5% from the prior year's third quarter. Core deposits, which exclude time deposits, comprised 62% of total deposits at September 30, 2010 compared with 57% of total deposits at September 30, 2009. The number of deposit accounts grew to 1,656 at the end of third quarter 2010, a 10% increase compared with the prior year.

Total loans of $60.4 million at September 30, 2010 represented a 25% increase compared with $48.5 million at the end of third quarter 2009.

As of September 30, 2010, the Company's loan loss allowance of $1.2 million was 1.99% of total loans and 189% of non-performing loans.

The Bank's Tier 1 Leverage Capital Ratio was 10.9% at quarter end, while its Total Risk-Based Capital was 18.7% — both in excess of commonly accepted regulatory standards for well-capitalized institutions.  At September 30, 2010, the Company's tangible book value per share was $6.91.

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 on September 10, 2007. Solera National Bank is a traditional, community, commercial bank with a specialized focus serving the Hispanic market. It prides itself in delivering personalized customer service — welcoming, inclusive and respectful — combined with leading-edge banking capabilities. The bank is also actively involved in the community in which it serves.

For more information, 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 within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. These risks and uncertainties can include the risks associated with the ability to grow the Bank and the services it provides, the ability to successfully integrate new business lines and expand into new markets, competition in the marketplace, general economic conditions and many other risks described in the Company's Securities and Exchange Commission filings. The most significant of these uncertainties are described in our Annual Report on Form 10-K and Quarterly reports on Form 10-Q all of which any reader of this release is encouraged to study (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: the Company has a limited operating history upon which to base an estimate of its future financial performance; the Bank's failure to implement its business strategies may adversely affect the Company's financial performance; the continuation of the economic downturn may have an adverse effect on the Company's financial performance; and the Company is subject to extensive regulatory oversight. 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.

Contacts:

Douglas Crichfield, President & CEO, 303-937-6429

Robert J. Fenton, Executive Vice President and Chief Financial Officer, 303-202-0933

FINANCIAL TABLES FOLLOW

SOLERA NATIONAL BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

($000s)

9/30/10

6/30/10

3/31/10

12/31/09

9/30/09

ASSETS

Cash and due from banks

$

698

$

1,064

$

1,114

$

1,696

$

1,087

Federal funds sold

-

-

4,605

820

4,975

Interest-bearing deposits with banks

266

1,265

1,848

3,784

2,241

Investment securities, available-for-sale

72,876

74,974

71,302

73,441

73,026

FHLB and Federal Reserve Bank stocks, at cost

1,165

1,129

1,113

1,131

1,092

Gross loans

60,378

60,768

56,331

50,504

48,490

  Net deferred (fees)/expenses

(85)

(83)

(123)

(114)

(135)

  Allowance for loan losses

(1,200)

(940)

(945)

(830)

(700)

            Net loans

59,093

59,745

55,263

49,560

47,655

Premises and equipment, net

768

806

841

875

909

Accrued interest receivable

749

760

675

814

677

Other assets

598

581

772

719

752

TOTAL ASSETS

$

136,213

$

140,324

$

137,533

$

132,840

$

132,414

LIABILITIES AND STOCKHOLDERS' EQUITY

Noninterest-bearing demand deposits

$

1,894

$

1,712

$

2,640

$

2,624

$

4,346

Interest-bearing demand deposits

11,224

9,910

5,864

6,830

11,537

Savings and money market deposits

53,535

55,860

59,366

55,318

42,323

Time deposits

41,708

44,863

42,248

39,629

44,696

TOTAL DEPOSITS

108,361

112,345

110,118

104,401

102,902

Securities sold under agreements to repurchase

  and federal funds purchased

1,085

835

110

326

26

Accrued interest payable

99

91

83

82

139

Accounts payable and other liabilities

340

236

220

344

1,894

Federal Home Loan Bank borrowings

6,000

6,500

7,750

8,750

7,750

Deferred rent liability

95

93

90

85

80

Capital lease liability

87

97

107

118

128

TOTAL LIABILITIES

116,067

120,197

118,478

114,106

112,919

Common stock

26

26

26

26

26

Additional paid-in capital

25,916

25,860

25,814

25,768

25,713

Accumulated deficit

(8,298)

(7,805)

(7,913)

(8,016)

(8,007)

Accumulated other comprehensive income

2,502

2,046

1,128

956

1,763

TOTAL STOCKHOLDERS' EQUITY

20,146

20,127

19,055

18,734

19,495

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

136,213

$

140,324

$

137,533

$

132,840

$

132,414

SOLERA NATIONAL BANCORP, INC.

CONSOLIDATED INCOME STATEMENTS

(unaudited)

For the Three Months Ended:

($000s)

9/30/10

6/30/10

3/31/10

12/31/09

9/30/09

Interest and dividend income

Interest and fees on loans

$  901

$  876

$  726

$    713

$  598

Federal funds sold

-

1

1

2

2

Investment securities

713

719

829

896

752

Dividends on bank stocks

10

10

12

11

11

Other

1

1

5

8

-

Total interest income

1,625

1,607

1,573

1,630

1,363

Interest expense

Deposits

466

492

518

622

517

Securities sold under agreements to repurchase

  and federal funds purchased

2

1

2

2

2

FHLB borrowings

58

68

76

78

78

Capital leases

2

2

3

3

3

Total interest expense

528

563

599

705

600

Net interest income

1,097

1,044

974

925

763

Provision for loan losses

780

180

115

130

180

Net interest income after provision for loan losses

317

864

859

795

583

Noninterest income

Customer service and other fees

25

19

17

27

80

Gain on sale of loan

10

-

-

-

-

Gain on sale of other real estate owned

10

-

-

-

-

Gain on sale of securities

332

268

263

173

98

Total noninterest income

377

287

280

200

178

Noninterest expense

Salaries and employee benefits

619

593

544

548

591

Occupancy

137

142

139

141

142

Professional fees

134

55

130

80

53

Other general and administrative

297

253

223

235

236

Total noninterest expense

1,187

1,043

1,036

1,004

1,022

Net income (loss)

$ (493)

$  108

$  103

$       (9)

$ (261)

Number of deposit accounts

1,656

1,662

1,603

1,595

1,510

Number of loan accounts

181

184

173

150

141

Total accounts

1,837

1,846

1,776

1,745

1,651

SOURCE Solera National Bancorp, Inc.



RELATED LINKS

http://www.solerabank.com