Folsom Lake Bank Reports 2016 Third Quarter Results

FOLSOM Calif., Oct. 19, 2016 (GLOBE NEWSWIRE) — Folsom Lake Bank (OTCQB:FOLB), announced unaudited financial results for quarter and year to date periods ending September 30, 2016. For the first nine months of 2016, the Bank reported net income of $667,075, a 10.1% increase over 2015.  Third quarter earnings were $202,018, up 2.0% from the third quarter of 2015 and the Bank’s 27th consecutive quarter of profitability. Total assets, total deposits and total loans all increased compared to the third quarter of 2015, up 16.3%, 20.5% and 5.7%, respectively. “We are very pleased with the continued strong growth of the Bank with total assets increasing $27 million over the past twelve months,” said Robert J. Flautt, President and Chief Executive Officer. “Especially noteworthy is the impressive growth in new business deposit relationships, with checking account balances up 32.9% compared to September 2015.    

Total assets were $194.6 million at September 30, 2016, up $27.3 million, or 16.3% compared to $167.3 million at September 30, 2015, and up $6.6 million, or 3.5% compared to the prior quarter ending June 30, 2016. Total deposits were $168.3 million, up $28.7 million, or 20.5% from 2015, and up $10.4 million, or 6.6% compared to the prior quarter. Total loans were $109.5 million at September 30, 2016, up $5.9 million or 5.7% from 2015, and up $7.6 million, or 7.5% over the prior quarter. Asset growth has been driven primarily by success in growing business deposit relationships enhanced, in part, by local banking relationships moving from financial institutions acquired by larger out of area banks.  

Net income for first nine months of 2016 was $667,075, up $61,304 or 10.1% compared to net income of $605,771 for the first nine months of 2015. For the quarter, net income of $202,018 was up $4,008, or 2.0% compared to the third quarter of 2015, but down $36,440, or 15.3% compared to the prior quarter. Earnings have been positively impacted primarily by substantially higher earning assets (up $20.0 million or 13.2% over the past twelve months), and expenses lower than 2015. Earnings have been impacted negatively by lower interest income on loans due to lower than expected loan yields.

Net interest income for the nine month period ending September 30, 2016 was $4,304,082 up $70,647 or 1.7% over the same period in 2015.  Net interest income for the third quarter of 2016 was $1,420,951, compared to $1,501,957 in the third quarter of 2015, a decrease of $81,006.  The Bank’s net interest margin was 3.37% in the third quarter of 2016, down from 3.99% during the third quarter of 2015.  Overall, the Bank’s net interest income suffered from declining loan rates in the Bank’s market area.  The Bank’s loan to deposit ratio declined from 74.2% at September 30 2015 to 65.1% at September 30, 2016. Non-interest income for the third quarter of 2016 was $87,594 an increase of $12,087 or 16.0% over the third quarter of 2015.  On a year to date basis, the Bank earned $287,701 in non-interest income, up 4.4% from the same nine month period in 2015.  The Bank had positive increases in all areas of non-interest income with significant increases in fee income.  

The Bank was able to contain non-Interest expense for the first nine months of 2016 to $3,571,018, a decrease of $10,541 over the first nine months of 2015.  Non-Interest expense for the third quarter of 2016 was $1,228,096, an increase of only $12,612 over the third quarter of 2015.  The Bank’s efficiency ratio rose to 81.4% for the third quarter from 77.1% in 2015. As with the moderating increase in expenses for the third quarter, the efficiency ratio is expected to improve in a quarterly basis into 2017, as the impact of our new branch expenses are absorbed.

The Bank had no provision to the allowance for loan and lease losses in the third quarter and has had no loan losses for the first nine months of 2016, with the allowance adjusting from $1,516,920 at September 30, 2015 to $1,466,920 as of September 30, 2016, including a $50,000 reversal to the allowance in the second quarter of 2016, due to continually improving credit conditions. There were no non-accrual loans at September 30, 2016 or September 30, 2015. OREO declined from $293,000 in 2015 to $0, at September 30, 2016. The Bank’s Allowance for Loan & Lease Losses (ALLL) was 1.34% of loans as of September 30, 2016 compared to 1.46% as of September 30, 2015. The balance in the Bank’s loan loss reserve is considered adequate to absorb the inherent risk of credit loss in the Bank’s loan portfolio.

Return on average assets was 0.55% for 2016 compared to 0.57% in 2015.  Return on average equity was 5.02% for the nine months of 2016 and 4.97% for the nine months of 2015.  The improved levels in ROA and ROE were due growth in the earning assets with virtually no growth in expenses.

Tier 1 Capital at September 30, 2016 was $16,834,000, up from $15,874,000 at September 30, 2015, an increase of $960,000 or 6.05%. At September 30, 2016, the Bank’s Tier 1 Capital Ratio was 8.79% compared to 9.68% at September 30, 2015. Total Risk Based Capital to Risk Weighted Assets was 14.18% compared to 14.14% at quarter end 2016 and 2015, respectively. Both capital ratios are well above minimum regulatory standards to be considered a well-capitalized bank by the FDIC.  Liquidity remains healthy at $62.3 million as of September 30, 2016, and the Bank maintained a moderate loan to deposit ratio of 65.1%. The Bank’s investment portfolio consists primarily of safe U.S. Government agency bonds and mortgage-backed securities. 

The Bank continues to be involved heavily in the community. Among the many organizations the Bank supports are: Mercy Hospital Foundation, Sutter Roseville Foundation, Folsom Lake College Foundation, Harris Center at Three Stages, Eureka Schools Foundation, Folsom Economic Development Corporation, Folsom, Roseville, Rancho Cordova & El Dorado Hills Chambers, Rotary International, Kiwanis, Placer County SPCA, Folsom Pro Rodeo & the Folsom Historical Society. Folsom Lake Bank has three locations, one in the heart of the Folsom’s historic district on Sutter Street, one in Roseville on Douglas Boulevard and our new branch in Rancho Cordova on Sunrise just south of Hwy 50. The Bank is a locally owned and locally operated full service commercial bank focused on small business owners, professionals and individuals in the communities surrounding Folsom Lake.

This correspondence may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act. All of the statements contained in this correspondence, other than statements of historical fact, should be considered forward-looking statements. Although the Bank believes the expectations reflected in those forward-looking statements are reasonable, it can give no assurance that those expectations will prove to have been correct. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are not intended to give any assurance as to future results.

CONTACT: Contact: 
Robert J. Flautt
President & CEO
(916) 235-4570
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