Folsom Lake Bank Reports 2015 Third Quarter Results
FOLSOM, Calif., Oct. 15, 2015 (GLOBE NEWSWIRE) — Folsom Lake Bank (OTCQB:FOLB), announced pre-tax earnings of $361,980 for the third quarter of 2015, a 47.7% increase over third quarter 2014 earnings of $245,030, and the Bank’s 23rd consecutive quarter of profitability. Loans increased 19.0% compared to 2014 and an overall higher level of earning assets pushed net interest income up 15.6%. “The Bank is seeing increased demand for loan products from its small business clients and this has helped grow assets, loans and deposits to record levels,” said Robert J. Flautt, President and Chief Executive Officer. “We are pleased to see the strong growth in operating results for the quarter, based on strong growth in net interest income.”
Pre-tax earnings for the first nine months of 2015 were $1,002,453, up $320,637 or 47.0% compared to first nine months of 2014. Overall, the Bank’s pre-tax income was helped by strong growth in earning assets, a better asset mix and a reduction in non-performing loans. Net income for the third quarter of 2015 was $198,010 compared to $245,030 in the third quarter of 2014. This represents a decline of 19.2%, however the results are noteworthy in that the 2015 results include a $163,970 provision for taxes, compared to no provision in the third quarter of 2014. For the first nine months of 2015, net income was $605,771 compared to $721,816 in 2014, a decrease of $116,045 or 16.1%. During the first nine months of 2015, the Bank recorded $396,683 in tax provisions compared to a $40,000 tax benefit recorded in the first half of 2014. Earnings per share for the third quarter were $0.12 compared to $0.15 per share in the third quarter of 2014. Earnings per share for the first nine months of 2015 were $0.38 compared to $0.45 per share in the first half of 2014.
Total assets were $167.3 million at September 30, 2015, up 13.9% or $20.4 million compared $146.9 million at September 30, 2014. Assets increased $7.0 million or 4.4% from June 30, 2015. Total loans were $103.6 million at September 30, 2015, up $16.5 million or 19.0% from 2014. Total deposits were $139.7 million, up $18.8 million, or 15.6% from 2014. The Bank’s new branch in Rancho Cordova has reached $13 million in deposits after 11 months in operation. The Bank continues to show solid growth with a focus on local core deposit growth as a key to maintaining a lower cost of funds and maintaining an adequate net interest margin in the continuing low rate interest environment.
Net interest income for the third quarter of 2015 was $1,501,957 compared to $1,299,777 in the third quarter of 2014, an increase of $202,179 or 15.6% over last year. The Bank’s net interest margin was 3.86% in the third quarter of 2015, up from 3.72% during the third quarter of 2014. Net interest income for the nine month period ending September 30, 2015 was $4,233,435 up $573,824 or 15.7% over the same period in 2014. Overall, the Bank’s net interest income was helped by strong growth in earning assets, a better mix, and a reduction in non-performing assets. The Bank’s loan to deposit ratio improved from 72.1% at September 30 2014 to 74.2% at September 30, 2015. Non-interest income for the third quarter of 2015 was $75,507, an increase of $6,594 or 9.6% over the third quarter of 2014. On a year to date basis, the Bank earned $275,577 in non-interest income, up 40.0% from the same nine month period in 2014. The Bank had positive increases in all areas of non-interest income with significant increases in fee income.
Non-Interest expense for the first nine months of 2015 was $3,581,559, an increase of $406,875 or 12.8% over the first nine months of 2014, with the bulk of the increase due to operating costs for the new branch in Rancho Cordova. Non-Interest expense for the third quarter of 2015 was $1,215,484, an increase of $91,824 or 8.2% over the third quarter of 2014. The Bank’s efficiency ratio improved to 77.1% for the third quarter from 82.1% in 2014. As with the moderating increase in expenses for the third quarter, the efficiency ratio is expected to continue to improve in a quarterly basis into 2016, as the impact of the 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 2015, with the allowance adjusting from $1,640,611 at September 30, 2014 to $1,516,920 as of September 30, 2015, including a $75,000 reversal to the allowance in the first quarter of 2015, due to continually improving credit conditions. Non accrual loans declined from $1,815,639 at September 30, 2014 to none at September 30, 2015. OREO also declined from $334,000 to $293,000, a reduction of $41,000 or 12.3%. OREO consists of one remaining Bank owned property. The Bank’s Allowance for Loan & Lease Losses (ALLL) was 1.46% of loans as of September 30, 2015 compared to 1.88% as of September 30, 2014. The balance in the Bank’s loan loss reserve stands is considered adequate to absorb the inherent risk of credit loss in the Bank’s loan portfolio.
Return on average assets was 0.53% for 2015 compared to 0.67% in 2014, a decrease of 33% from one year ago. Return on average equity was 5.3% for the first half of 2015 and 6.7% for the first half of 2014. The lower levels in ROA and ROE were due to the tax provisions that began in 2015. The Bank also had higher expenses from the opening of our new branch in Rancho Cordova.
Tier 1 Capital at September 30, 2015 was $15,874,000, up from $14,730,000 at September 30, 2014, an increase of $1,144,000 or 7.77%. At September 30, 2015, the Bank’s Tier 1 Capital Ratio was 9.68% compared to 10.00% at September 30, 2014. Total Risk Based Capital to Risk Weighted Assets was 14.20% compared to 15.81% at quarter end 2015 and 2014, respectively. Both capital ratios are well above minimum regulatory standards to be considered a well-capitalized bank by the FDIC. Liquidity remains healthy at $57.3 million as of September 30, 2015, and the Bank maintained a moderate loan to deposit ratio of 77.3%. 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