Solera National Bancorp Announces 2020 Fourth Quarter and Year-End Financial Results

LAKEWOOD, Colo., Jan. 27, 2021 (GLOBE NEWSWIRE) — Solera National Bancorp, Inc. (OTC: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 fourth quarter and twelve-months ended December 31, 2020.  Highlights for the quarter and twelve-months […]

LAKEWOOD, Colo., Jan. 27, 2021 (GLOBE NEWSWIRE) — Solera National Bancorp, Inc. (OTC: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 fourth quarter and twelve-months ended December 31, 2020. 

Highlights for the quarter and twelve-months ended December 31, 2020 include:

  • Pre-tax pre-provision income grew 91{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} year-over-year to $9.82 million for the twelve months ended December 31, 2020 compared to $5.13 million for the twelve months ended December 31, 2019.
  • Net income increased 67{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}, or $2.37 million, year-over-year, ending 2020 at $5.93 million compared to $3.56 million for the year ended December 31, 2019.
  • Cost of funds improved to 22 basis points for the fourth quarter; year-to-date costs of funds have improved over 50{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} from 2019 going from 72 basis points for the twelve-months ended December 31, 2019 to 32 basis points for the twelve-months ended December 31, 2020.
  • Robust quarterly growth in traditional gross loans, which rose $32.78 million during the fourth quarter to $271.18 million, as of December 31, 2020.
  • Noninterest-bearing deposits continued their steady ascent, growing $24.68 million during the fourth quarter to $235.17 million at December 31, 2020.
  • As of December 31, 2020 criticized assets represented 4.5{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} of total assets, compared to 5.4{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} as of September 30, 2020 and 4.0{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} at December 31, 2019.
  • The fourth quarter 2020 yielded an impressive efficiency ratio of 32.9{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}, an improvement from 39.7{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the third quarter of 2020 and remarkable progress from a year-ago – 50.6{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the fourth quarter of 2019.
  • Return on average assets was 1.63{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the year ended 2020 compared to 1.42{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for 2019.
  • Similarly, return on average equity improved for the twelve months ended December 31, 2020 to 13.5{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} compared to 9.4{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the same period in 2019.

For the three-months ended December 31, 2020, the Company reported net income of $1.85 million, or $0.43 per share, compared to net income of $2.12 million or $0.51 per share, for the three-months ended September 30, 2020, and net income of $872,000, or $0.21 per share, for the three-months ended December 31, 2019.  The fourth quarter 2020 results included $782,000, or $0.18 per share, in provision expense compared to $355,000, or $0.09 per share, for the linked-quarter and $378,000, or $0.09 per share, for the three-months ended December 31, 2019.

For the twelve-months ended December 31, 2020, the Company reported net income of $5.93 million, or $1.42 per share, compared to $3.56 million, or $0.87 per share, for the twelve-months ended December 31, 2019. The year-to-date 2020 results were hindered by $2.15 million, or $0.51 per share, in provision expense compared to $540,000, or $0.13 per share, for the twelve-months ended December 31, 2019. However, the year-to-date 2020 results were bolstered by $1.48 million, or $0.35 per share, in gains on the sale of investment securities compared to $278,000, or $0.07 per share, for the twelve-months ended December 31, 2019.

Martin P. May, President and CEO, commented: “2020 has been an unparalleled year. I am proud to announce the Company’s results to our shareholders, as our results clearly show how hard our team has worked this year despite the many challenges. We transitioned to remote working with only a few days’ notice and without any interruption in customer service. Then, we worked tirelessly to deliver emergency funding to over 660 small businesses through the Paycheck Protection Program (PPP) all while we continued to grow our core banking business. We continue to attract core banking relationships month after month and those relationships are bearing fruit in our noninterest-bearing deposit results. Noninterest-bearing deposits grew 53{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} in 2020 and are now well over $200 million.”

Operational Highlights

Net interest income after provision for loan and lease losses was $3.26 million for the quarter ended December 31, 2020 compared to $3.02 million for the quarter ended September 30, 2020 and $2.14 million for the quarter ended December 31, 2019.  Net interest income after provision for loan and lease losses for the twelve-months ended December 31, 2020 of $11.02 million increased $2.28 million, or 26{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}, from the same prior year despite the $1.61 million increase in provision expense during this time. The increase in the provision for loan and lease losses during 2020 was primarily due to the growth in the loan portfolio, uncertainty in the market caused by COVID-19 and the downgrading of several credit relationships experiencing intense pressure from the government-mandated shut-downs.    

Despite declining interest rates, loan growth has led to a $1.13 million, or 12{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}, increase in interest and fees on traditional loans for the twelve-months of 2020 compared to the same period in 2019.   Additionally, interest income was aided by an influx of PPP loans during the second quarter that bolstered earnings $2.07 million during the twelve-months ended 2020. Further contributing to the growth in net interest income was the $473,000 decline in interest expense for the twelve months ended2020 compared to the same period in 2019 despite the $145.18 million increase in total deposits during that time.

Net interest margin fell to 3.74{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the twelve-months ended December 31, 2020, a 14 basis points decline from 3.88{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the twelve-months ended December 31, 2019. Chief Financial Officer, Melissa K. Larkin noted “Given that the Federal Reserve reduced interest rates 150 basis points early in 2020, the Bank’s 14 basis point decline in net interest margin year-over-year was relatively small. The Bank’s strong core deposit base enabled the Company to maintain a healthy net interest margin despite the declining yields on earning assets. Additionally, the Bank’s net interest margin began to increase again in fourth quarter 2020, primarily due to higher yields on PPP loans as those loans are being forgiven and the unearned fees are being realized in interest income.” For the fourth quarter 2020, net interest margin was 4.04{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}, up 49 basis points from 3.55{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the third quarter 2020.

Total noninterest income in fourth quarter 2020 was $650,000 compared to $1.09 million and $268,000 in third quarter 2020 and fourth quarter 2019, respectively. The decrease in fourth quarter 2020 was primarily due to gains on the sale of investment securities totaling $316,000 compared to $866,000 for third quarter 2020 and $113,000 for fourth quarter 2019. Total noninterest income for the twelve-months ended December 31, 2020 jumped 250{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} to $2.43 million compared to $694,000 for the twelve-months ended December 31, 2019. Customer service and other fees improved 62{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} year-over-year, from $261,000 for the twelve-months ended December 31, 2019 to $422,000 for the year-to-date 2020. Additionally, other income, consisting primarily of rental income, increased $293,000 year-over-year.

Total noninterest expense in fourth quarter 2020 was $1.41 million, compared with $1.43 million for third quarter 2020. For the twelve-months ended December 31, 2020, total noninterest expense was $5.78 million compared with $4.85 million for the same prior-year period. Compared to prior year, employee compensation and benefits increased $473,000 due to additional staffing to support franchise growth and occupancy expenses increased $197,000 due to the office building purchased in fourth quarter 2019. Other general and administrative expenses increased $277,000 as a result of higher data processing expenses due to the continued surge in new customer accounts. However, as a percentage of average assets, noninterest expenses have remained well managed throughout the Bank’s rapid growth, at 1.91{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the twelve-months ended December 31, 2020 compared to 1.93{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the twelve-months ended December 31, 2019.   [Note: the increase in total assets due to the PPP loans has been removed for purposes of this calculation.]

The Company’s fourth quarter 2020 efficiency ratio (noninterest expense divided by the sum of net interest income and noninterest income) reached an impressive 32.94{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}. The efficiency ratio for the twelve-months ended December 31, 2020 was 41.16{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} compared to 49.98{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} for the twelve-months ended December 31, 2019.

Income tax expense for the twelve months of 2020 remained essentially unchanged at 22.7{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} in 2020 from 22.4{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} in 2019.

Balance Sheet Review and Asset Quality Strength

Total assets of $436.04 million at December 31, 2020 increased from $404.68 million at September 30, 2020 and $282.11 million at December 31, 2019.  The increase compared to the linked-quarter was primarily due to the $32.78 million growth in the Bank’s traditional loan portfolio, a $10.65 million growth in the available-for-sale investment portfolio, and a $4.87 million increase in premises and equipment for a corporate jet, partially offset by PPP loans granted forgiveness ($19.67 million). Total asset growth from December 31, 2019 to December 31, 2020 consisted of PPP loans ($73.71 million), a 26{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} expansion in traditional loans ($55.73 million) and additions to the investment portfolio ($23.78 million).

Net traditional loans, after allowance for loan and lease losses, were $265.50 million at December 31, 2020 compared to $233.51 million at September 30, 2020 and $212.02 million at December 31, 2019.  Net loan growth of $31.99 million during the fourth quarter of 2020 was driven by commercial loan originations of $54.54 million partly offset by payoffs, pay downs and an increase in the allowance for loan losses totaling $22.55 million.  For the twelve-months ended December 31, 2020, the $53.48 million expansion in net traditional loans consisted primarily of commercial loan originations totaling $99.80 million, a net decrease in student loans of $1.53 million and payoffs, pay downs and an increase in the allowance for loan losses totaling $44.79 million.   Additionally, the Company funded 665 PPP loans during 2020 totaling $93.72 million. These loans are fully guaranteed by the Small Business Administration and were issued to provide emergency relief to small businesses while businesses were closed due to the government’s stay-at-home order.

The allowance for loan and lease losses at December 31, 2020 was $4.90 million, or 1.81{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} of gross traditional loans, compared to $4.12 million, or 1.73{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} at September 30, 2020, and $2.77 million, or 1.29{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} of gross loans at December 31, 2019.  The 52 basis point increase in the allowance for loan and lease losses year-over-year was largely due to increased uncertainty surrounding loans that were granted payment deferrals at the height of the pandemic, in conjunction with an increase in criticized loans and overall growth in the loan portfolio. Total criticized assets of $19.41 million at December 31, 2020 decreased compared to the linked-quarter, down $2.37 million from $21.77 million at September 30, 2020 and increased $8.04 million from $11.37 million at December 31, 2019. Despite the increase, criticized assets to total assets remain manageable at 4.45{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} of total assets as of December 31, 2020.

Total investment securities available-for-sale increased $10.65 million at December 31, 2020 compared to $42.23 million at September 30, 2020 and $29.09 million at December 31, 2019. Held-to-maturity investment securities were essentially unchanged from the linked quarter at $10.42 million. The Company realized gains from the sales of securities of $316,000 during the three-months ended December 31, 2020, bringing the total gains on sales of securities for 2020 to $1.48 million.

Total deposits at December 31, 2020 were $382.15 million compared to $339.69 million at September 30, 2020 and $236.97 million at December 31, 2019.  Noninterest-bearing demand deposits of $235.17 million, which represent 62{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} of total deposits, at December 31, 2020 increased $24.68 million, or 12{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}, versus the linked-quarter, and increased $81.07 million from $154.11 million at December 31, 2019.

Commercial and residential loans past due have remained inconsequential for all periods presented, with the only notable past dues coming from the student loan participation pool. Approximately 5{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} of the Bank’s traditional loan portfolio remained on payment deferral as of December 31, 2020, down from the 29{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} originally granted payment deferral. These concessions were granted to provide some relief to borrowers during the COVID-19 lock-down. $3.50 million of the student loan participation pool were 30 days+ past due at December 31, 2020. This was up from $2.91 million 30 days+ past due at September 30, 2020. Of the $3.50 million past due, $2.11 million were 90 days+ past due as of December 31, 2020.  The student loans are backed by an approximately 97.5{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} 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{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}.     

Capital Strength

The Company’s capital ratios continue to be well in excess of the highest required regulatory benchmark levels.  The Bank elected to adopt the community bank leverage ratio (CBLR) as allowed by federal banking agencies for qualified institutions in first quarter 2020. The CBLR provides for a simple measure of capital adequacy and is calculated by taking Tier 1 capital divided by average total assets for the quarter. Solera calculates the CBLR using Bank-only financial statements. As of December 31, 2020, the Bank’s CBLR was 11.3{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}, well above the required 9{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} minimum to qualify for using this simplified method. The growth in total assets associated with the PPP loans originated during the second quarter 2020 was the primary driver of the 2.9{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} decline in the Bank’s CBLR year-over-year (down from 14.2{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0} at December 31, 2019). Excluding the PPP loans, the Bank’s fourth quarter 2020 CBLR would have remained 14.2{23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}. Chairman Michael Quagliano commented, “We were aiming to pay our first dividend in the fourth quarter of 2020, but decided it prudent to maintain all of our capital until the uncertainty of the pandemic is behind us. Once businesses are allowed to be fully opened without government intervention and our asset quality remains stable for consecutive quarters, we will pay a dividend. We are hopeful that will occur during the fourth quarter of 2021.”

Tangible book value per share, including accumulated other comprehensive income, was $11.23 at December 31, 2020 compared to $10.75 at September 30, 2020, and $9.77 at December 31, 2019.    Total stockholders’ equity was $48.03 million at December 31, 2020 compared to $45.98 million at September 30, 2020 and $40.53 million at December 31, 2019.    The $2.05 million increase in total equity is primarily due to retained earnings and secondarily due to the exercise of vested stock-options.

The fair value of the Bank’s available-for-sale investment portfolio has improved from a year ago due to a decline in longer-term interest rates. As of December 31, 2020, the available-for-sale investment portfolio had a gain of $751,000 compared to gains of $549,000 and $118,000 at September 30, 2020 and December 31, 2019, respectively.  

Finally, Mr. Quagliano stated, “I’m excited to announce that we have made two stellar additions to our Board of Directors, Jordan Wright and Kreighton Reed. We believe each of their talents will provide valuable support to the strategic initiatives of Solera National Bank.”

Mr. Wright currently serves as Co-founder and CEO at Atomic Financial ( https://atomic.financial/ ). Prior to starting Atomic Financial, Mr. Wright was the Co-founder and CEO at Unbill, a company he sold to online banking software provider Q2 (QTWO). Prior to starting Unbill, Mr. Wright helped start a cybersecurity company, NextPage, that was acquired by Proofpoint (PFPT) in December of 2011. Mr. Wright received a Bachelor’s Degree in Statistics from Brigham Young University. Mr. Wright loves the financial technology space and sits on several other boards / advisory boards of FinTech companies.

Mr. Reed is currently Executive Vice President of Business Development for Solera National Bank. Mr. Reed joined the Bank in May 2016 as Vice President, Branch Manager. In June 2018, Mr. Reed was promoted to Senior Vice President, as head of the retirement division. In April 2019, Mr. Reed’s role expanded to his current position where he is responsible for innovation. He is tasked with finding and developing strategic partnerships that will lead to long-term value-drivers for the Bank including new products, services, and technologies. Prior to joining the bank, Mr. Reed worked for Wells Fargo Bank for 9 years in various management positions in the retail banking sector. At Wells Fargo, Mr. Reed gained experience in diverse geographic markets including Alaska, Colorado, Nevada, Tennessee, Utah, and Wisconsin. He completed his B.A. in Latin American Studies at Brigham Young University. Mr. Reed has been active in volunteering with the Boy Scouts of America, and most recently was a Cubmaster in the Denver Area.

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 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.

Source: Solera National Bank







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


FINANCIAL TABLES FOLLOW













































SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
($000s)   12/31/2020   9/30/2020   6/30/2020   3/31/2020   12/31/2019
ASSETS                    
Cash and due from banks   $ 4,384     $ 2,339     $ 4,016     $ 1,708     $ 1,403  
Federal funds sold     6,200       6,000       1,100       7,500       300  
Interest-bearing deposits with banks     807       824       792       774       16,033  
Investment securities, available-for-sale     52,877       42,225       58,503       58,319       29,094  
Investment securities, held-to-maturity     10,418       10,416       6,414       6,413       6,411  
FHLB and Federal Reserve Bank stocks, at cost     1,322       1,256       1,256       1,250       1,247  
Paycheck Protection Program (PPP) loans, gross     73,705       93,372       93,682              
Net deferred (fees)/expenses, PPP loans     (1,520 )     (2,328 )     (2,707 )            
Net PPP loans     72,185       91,044       90,975              
Traditional loans, gross     271,184       238,400       219,818       211,703       215,459  
Net deferred (fees)/expenses, traditional loans     (782 )     (764 )     (619 )     (615 )     (665 )
Allowance for loan and lease losses     (4,900 )     (4,124 )     (3,773 )     (3,272 )     (2,770 )
Net traditional loans     265,502       233,512       215,426       207,816       212,024  
Premises and equipment, net     13,155       8,287       8,310       8,330       8,316  
Accrued interest receivable     1,886       1,855       1,450       1,522       1,076  
Bank-owned life insurance     4,937       4,910       4,883       4,857       4,830  
Other assets     2,370       2,010       2,073       1,769       1,379  
TOTAL ASSETS   $ 436,043     $ 404,678     $ 395,198     $ 300,258     $ 282,113  
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Noninterest-bearing demand deposits   $ 235,172     $ 210,496     $ 187,876     $ 169,726     $ 154,105  
Interest-bearing demand deposits     12,576       8,961       9,234       15,713       7,955  
Savings and money market deposits     83,399       61,143       65,460       35,150       39,624  
Time deposits     50,999       59,089       78,150       32,607       35,285  
Total deposits     382,146       339,689       340,720       253,196       236,969  
                     
Accrued interest payable     50       68       84       112       120  
Short-term borrowings           14,000       5,000              
Long-term FHLB borrowings     4,000       4,000       4,000       4,000       4,000  
Accounts payable and other liabilities     1,817       941       1,993       1,255       494  
TOTAL LIABILITIES     388,013       358,698       351,797       258,563       241,583  
                     
Common stock     43       43       41       41       41  
Additional paid-in capital     38,518       38,518       37,587       37,587       37,587  
Retained earnings     8,718       6,870       4,753       3,507       2,784  
Accumulated other comprehensive gain     751       549       1,020       560       118  
TOTAL STOCKHOLDERS’ EQUITY     48,030       45,980       43,401       41,695       40,530  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 436,043     $ 404,678     $ 395,198     $ 300,258     $ 282,113  
                     






























































SOLERA NATIONAL BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
    Three Months Ended   Twelve Months Ended
($000s, except per share data)   12/31/2020   9/30/2020   6/30/2020   3/31/2020   12/31/2019   12/31/2020   12/31/2019
Interest and dividend income                            
Interest and fees on traditional loans   $ 2,792     $ 2,596     $ 2,485     $ 2,597     $ 2,486     $ 10,470     $ 9,342  
Interest and fees on PPP loans     1,027       616       426                   2,069        
Investment securities     411       388       414       289       226       1,502       1,031  
Dividends on bank stocks     15       15       15       17       17       62       67  
Other     3       3       4       98       118       108       357  
Total interest income     4,248       3,618       3,344       3,001       2,847       14,211       10,797  
Interest expense                            
Deposits     187       221       257       290       313       955       1,444  
FHLB & Fed borrowings     18       19       33       17       17       87       71  
Total interest expense     205       240       290       307       330       1,042       1,515  
Net interest income     4,043       3,378       3,054       2,694       2,517       13,169       9,282  
Provision for loan and lease losses     782       355       504       506       378       2,147       540  
Net interest income after provision for loan and lease losses     3,261       3,023       2,550       2,188       2,139       11,022       8,742  
Noninterest income                            
Customer service and other fees     135       103       104       80       81       422       261  
Other income     115       118       100       115       74       448       155  
Gain on sale of loan     84                               84        
Gain on sale of securities     316       866       279       15       113       1,476       278  
Total noninterest income     650       1,087       483       210       268       2,430       694  
Noninterest expense                            
Employee compensation and benefits     891       878       918       889       831       3,576       3,103  
Occupancy     106       109       104       101       80       420       223  
Professional fees     34       35       29       65       63       163       179  
Other general and administrative     383       407       422       407       377       1,619       1,342  
Total noninterest expense     1,414       1,429       1,473       1,462       1,351       5,778       4,847  
Net Income Before Taxes   $ 2,497     $ 2,681     $ 1,560     $ 936     $ 1,056     $ 7,674     $ 4,589  
Income Tax Expense     649       564       314       213       184       1,740       1,027  
Net Income   $ 1,848     $ 2,117     $ 1,246     $ 723     $ 872     $ 5,934     $ 3,562  
                             
Income Per Share   $ 0.43     $ 0.51     $ 0.30     $ 0.17     $ 0.21     $ 1.42     $ 0.87  
Tangible Book Value Per Share   $ 11.23     $ 10.75     $ 10.47     $ 10.06     $ 9.77     $ 11.23     $ 9.77  
WA Shares outstanding     4,276,953       4,175,504       4,143,620       4,143,620       4,123,620       4,184,786       4,078,743  
Pre-Tax Pre-Provision Income   $ 3,279     $ 3,036     $ 2,064     $ 1,442     $ 1,434     $ 9,821     $ 5,129  
Net Interest Margin     4.04 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     3.55 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     3.50 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     3.86 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     3.82 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     3.74 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     3.88 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}
Cost of Funds     0.22 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.27 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.35 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.48 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.56 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.32 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.72 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}
Efficiency Ratio     32.94 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     39.71 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     45.21 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     50.61 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     50.56 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     41.16 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     49.98 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}
Return on Average Assets     1.76 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     2.12 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.43 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.99 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.25 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.63 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.42 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}
Return on Average Equity     15.73 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     18.95 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     11.71 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     7.03 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     8.75 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     13.51 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     9.37 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}
Community Bank Leverage Ratio (CBLR)     11.3 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     11.4 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     11.0 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     13.4 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     14.2 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     11.3 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     14.2 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}
                             
Asset Quality:                            
Non-performing loans to gross loans     0.36 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.41 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.46 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.47 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.01 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}        
Non-performing assets to total assets     0.22 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.24 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.25 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.33 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     0.00 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}        
Allowance for loan losses to gross traditional loans     1.81 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.73 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.72 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.55 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     1.29 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}        
                             
Criticized loans/assets:                            
Special mention   $ 7,730     $ 13,300     $ 4,572     $ 4,640     $ 7,613          
Substandard: Accruing     10,709       6,911       7,570       2,421       3,170          
Substandard: Nonaccrual     970       987       1,002       1,002       11          
Doubtful                                      
   Total criticized loans   $ 19,409     $ 21,198     $ 13,144     $ 8,063     $ 10,794          
Other real estate owned                                      
Investment securities           576       577       579       580          
Total criticized assets   $ 19,409     $ 21,774     $ 13,721     $ 8,642     $ 11,374          
Criticized assets to total assets     4.45 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     5.38 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     3.47 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     2.88 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}     4.03 {23996c8f5258275f450f40d5a867c22ad72c04895f28059581bc525cc6cb4bd0}        
                             

Rachel C. Carpenter

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