Solera National Bancorp Announces Second Quarter 2023 Financial Results

PRESS RELEASE
Published July 28, 2023

American Banker ranks Solera number 5 for publicly traded banks under $2B.

LAKEWOOD, CO / ACCESSWIRE / July 28, 2023 / Solera National Bancorp, Inc. (OTC PINK:SLRK) ("Company"), the holding company for Solera National Bank ("Bank"), a business-focused bank located in the Denver metropolitan area, today reported financial results for the three months and six months ended June 30, 2023. For the second quarter of 2023, net income was $3.6 million ($0.84 per share) and $8.2 million year to date.

2Q23 Financial Highlights

(Comparison to 2Q22 unless otherwise noted)

  • The Company had pre-tax, pre-provision, and pre-one-time expense earnings of $6.1 million in the second quarter of 2023 compared to $6.3 million.
  • Return on equity was 21.96%.
  • Allowance for loan losses is now $9.4 million. Solera's allowance ratio is 1.24%. Q2 2023 provision was $559 thousand.
  • Efficiency ratio stayed low at 47.46%.
  • Net interest income increased by $855 thousand or 11%.

Michael Quagliano, Executive Chairman of the Board, commented: "We continue to take what the market will give us."

Steve Snailum, COO, commented: "Solera National Bank will complete a conversion of its core banking system during Q3 2023. The whole team has been hard at work making this transition possible, and we are very excited to continue providing outstanding service while upgrading our capabilities and functionality. Our people continue to represent a significant competitive advantage for the bank, and this quarter has been no exception. You can count on the Solera team to be a trusted and reliable resource now and for years to come."

Kreighton Reed, EVP, commented: "Our self-directed department continues to flourish. This quarter we continued to add to the bench strength of our staff by adding numerous team members with years of self-directing experience. Investing in certified and experienced staff will pay dividends with our customer experience as we continue to expand our offerings in this niche space. The summer months are typically a slower time for the self-directed sector. We were delighted that we saw an increase in account openings in the latter half of the quarter compared to the same period last year. A sign that investors are ready to get off the sidelines and invest in this "new normal" economy."

Tim Pester, the Controller, commented: "As Solera's prepares to transition to a new banking system in Q3 2023, increases in market rates and significant one-time costs associated with the conversion emerged in Q2 2023. Nevertheless, the bank is excited to see that earnings remained strong despite the rising rates and one-time expenses. As core earnings have continued to grow, we are eager to see how the remainder of the year plays out once these one-time conversion costs are behind Solera."

Jay Hansen, CFO, commented: "We are still growing as fast as our capital allows. We won't have these high rates forever, and we need to take advantage of them. Our future is looking great! Just compare our key ratios to most other banks, and you too will see the excitement."

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 the needs of emerging businesses and real estate investors. At the core of Solera National Bank is welcoming, attentive, and respectful customer service, a focus on supporting a growing and diverse 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.

Contacts: Jay Hansen, CFO (303) 209-8600

FINANCIAL TABLES FOLLOW

SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(unaudited)

($000s)
6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022
ASSETS






Cash and due from banks
$1,657 $1,957 $3,490 $2,683 $4,714 $4,025
Federal funds sold
- 5,300 - - - 31,000
Interest-bearing deposits with banks
1,528 2,214 1,499 2,379 1,788 2,459
Investment securities, available-for-sale
173,552 170,033 164,176 154,044 171,151 141,175
Investment securities, held-to-maturity
204,900 205,425 207,048 205,475 125,890 51,965
FHLB and Federal Reserve Bank stocks, at cost
9,043 7,103 3,954 3,843 5,400 1,626
Paycheck Protection Program (PPP) loans, gross
111 111 578 589 10,709 37,951
Net deferred (fees)/expenses, PPP loans
- - (6) (7) (271) (1,026)
Net PPP loans
111 111 572 582 10,438 36,925
Traditional loans, gross
745,666 717,943 578,584 539,568 461,447 433,506
Allowance for loan and lease losses
(9,404) (8,847) (8,005) (8,004) (7,153) (7,153)
Net traditional loans
736,262 709,096 570,188 531,147 453,861 425,909
Premises and equipment, net
27,625 26,816 25,266 25,040 14,104 14,195
Accrued interest receivable
6,557 7,044 5,825 5,833 4,352 3,689
Bank-owned life insurance
4,944 4,917 4,891 4,864 5,094 5,068
Other assets
8,952 10,291 8,408 11,003 19,410 3,910
TOTAL ASSETS
$1,175,131 $1,150,307 $995,317 $946,893 $816,202 $721,946

LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing demand deposits
$539,522 $536,880 $551,990 $543,260 $543,956 $515,929
Interest-bearing demand deposits
42,825 56,715 40,853 33,236 10,392 10,100
Savings and money market deposits
219,834 210,476 202,542 170,148 113,819 117,799
Time deposits
130,716 147,174 84,398 108,520 17,735 18,743
Total deposits
932,897 951,245 879,783 855,164 685,902 662,571

Accrued interest payable
150 70 438 238 124 33
Short-term borrowings
137,193 98,432 52,175 37,223 72,634 -
Long-term FHLB borrowings
34,000 34,000 4,000 4,000 4,000 4,000
Accounts payable and other liabilities
2,786 2,489 1,192 628 1,166 1,102
TOTAL LIABILITIES
1,107,026 1,086,236 937,588 897,253 763,826 667,706

Common stock
43 43 43 43 43 43
Additional paid-in capital
38,748 38,748 38,748 38,748 38,748 38,748
Retained earnings
46,240 42,562 37,978 32,994 28,094 23,008
Accumulated other comprehensive (loss) gain
(16,926) (17,282) (19,040) (22,145) (14,509) (7,559)
TOTAL STOCKHOLDERS' EQUITY
68,105 64,071 57,729 49,640 52,376 54,240
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$1,175,131 $1,150,307 $995,317 $946,893 $816,202 $721,946

SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended

($000s, except per share data)
6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022
Interest and dividend income
Interest and fees on traditional loans
$10,684 $9,691 $7,678 $6,140 $4,935
Interest and fees on PPP loans
- 11 2 277 824
Investment securities
3,679 3,549 3,500 3,130 2,215
Dividends on bank stocks
163 120 64 68 51
Other
23 17 18 18 2
Total interest income
$14,549 $13,388 $11,262 9,633 8,027
Interest expense
Deposits
4,307 3,947 2,322 1,062 300
FHLB & Fed borrowings
1,819 1,281 480 327 159
Total interest expense
6,126 5,228 2,802 1,389 459
Net interest income
8,423 8,160 8,460 8,244 7,568
Provision for loan and lease losses
559 759 5 859 10
Net interest income after
provision for loan and lease losses
7,864 7,401 8,455 7,385 7,558
Noninterest income
Customer service and other fees
417 405 303 257 321
Other income
972 747 726 551 183
Gain on sale of loan
- - - - -
Gain on sale of securities
- 242 96 478 1,179
Total noninterest income
1,389 1,394 1,125 1,286 1,683
Noninterest expense
Employee compensation and benefits
2,101 2,015 1,949 1,690 1,800
Occupancy
336 292 310 198 177
Professional fees
96 112 110 65 119
Other general and administrative
2,124 1,104 1,406 974 825
Total noninterest expense
4,657 3,523 3,775 2,927 2,921
Net Income Before Taxes
$4,596 $5,273 $5,805 $5,744 $6,320
Income Tax Expense
968 689 821 843 1,235
Net Income
$3,628 $4,584 $4,984 $4,901 $5,085

Income Per Share
$0.84 $1.03 $1.16 $1.14 $1.18
Tangible Book Value Per Share
$15.84 $14.45 $13.43 $11.54 $12.18
WA Shares outstanding
4,299,953 4,433,286 4,299,953 4,299,953 4,299,953
Pre-Tax Pre-Provision Income
$5,155 $6,032 $5,810 $6,603 $6,330
Net Interest Margin
3.37% 3.36% 3.97% 4.18% 3.81%
Cost of Funds
2.24% 1.98% 1.21% 0.66% 0.25%
Efficiency Ratio
47.46% 37.83% 39.78% 32.34% 36.19%
Return on Average Assets
1.25% 1.71% 2.05% 2.22% 2.64%
Return on Average Equity
21.96% 30.11% 37.14% 38.43% 38.16%
Leverage Ratio
7.2% 7.2% 7.9% 8.1% 8.4%

Asset Quality:
Non-performing loans to gross loans
1.07% 0.74% 0.93% 1.01% 1.20%
Non-performing assets to total assets
0.68% 0.46% 0.54% 0.57% 0.68%
Allowance for loan losses to gross traditional loans
1.24% 1.23% 1.38% 1.48% 1.55%

Criticized loans/assets:
Special mention
$29,164 $23,951 $23,566 $19,385 $11,661
Substandard: Accruing
1,720 2,195 1,739 1,911 1,931
Substandard: Nonaccrual
8,005 5,300 5,364 5,431 5,530
Doubtful
- - - - -
Total criticized loans
$38,889 $31,446 $30,669 $26,727 $19,122
Other real estate owned
- - - - -
Investment securities
- - - - -
Total criticized assets
$38,889 $31,446 $30,669 $26,727 $19,122
Criticized assets to total assets
3.31% 2.73% 3.08% 2.82% 2.34%

SOURCE: Solera National Bancorp, Inc.



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