Folsom Lake Bank Reports Increased 2012 Earnings
February 01, 2013 --
FOLSOM, Calif., Feb. 1, 2013 (GLOBE NEWSWIRE) -- Folsom Lake Bank (OTCBB:FOLB) announced financial results for the fourth quarter and the year ending December 31, 2012. The Bank reported net income of $603,002 for the twelve months ending December 31, 2012, an increase of 22.3% compared to 2011. The Bank completed its 12th consecutive profitable quarter with earnings of $212,213 for the three month period ending December 31, 2012. Earnings per share increased to $0.38 for 2012 from $0.31 in 2011.
Total assets were $130.9 million at December 31, 2012, up 12.3% or $14.4 million compared to year end totals of $116.5 million for 2011. Assets also increased 2.8% during the quarter, growing $3.5 million. Total loans were $74.9, at December 31, up $1.4 million or 1.9% from the year end 2011 totals. Total deposits were $110.1 million, up $12.6 million or 13.0% from the previous year end total of $97.1 million. Checking, savings and money market balances increased by $14.5 million or 24.5% for the year as the Bank has focused its efforts on increasing core deposit account relationships and maintaining a lower cost of funds to help support the Bank's net interest margin.
Net interest income for the fourth quarter and for the 12 months ending December 31, 2012, were $1,067,571 and $4,412,730, respectively. For the year ending 2012, net interest income was down $74,353, or 1.7% compared to 2011. Fourth quarter net interest income declined $88,467 or 7.7% compared to 2011. The Bank's net interest margin declined from 4.12% in 2011 to 3.89% in 2012. The Bank was challenged in 2012 with declining yields in both the loan and investment securities and was successful in offsetting this squeeze in margin by both growing earning assets as well as reducing interest costs.
Non-interest income for the fourth quarter and the twelve months ending December 31, 2012 were $140,264 and $389,335, respectively. For the fourth quarter, non-interest income was up $97,533 or 228.2% compared to non-interest income of $42,732 for the fourth quarter of 2011. For the year 2012, non-interest income was up $114,484 or 41.7% compared to non-interest income of $274,851 for 2011. The Bank had a substantial increase in gain on sale of investment securities, increasing from $147,653 in 2011 to $239,189 in 2012. The Bank also realized $51,725 in earnings on bank owned life insurance, and had higher fees on deposit accounts and dividend income.
For the fourth quarter and the full year 2012 interest expense was $170,461 and $698,016, respectively, a decrease of $25,265 or 12.9% over the fourth quarter of 2011 and a decrease of $137,937 or 16.5% for the year 2012 over 2011. As interest rates have continued at historically low levels, the Bank has been able to reduce interest expense by focusing on increasing low cost core deposits and lowering deposit rates. Especially noteworthy is that the decrease in interest expense is coupled with an increase in the Bank's deposit base of $12.6 million.
Non-Interest expense for the fourth quarter and year ending December 31, 2012 was $919,144 and $3,734,063 respectively, a decrease of $28,592 or 3.0% over the fourth quarter of 2011 and a decrease of $225,906 or 5.7% over 2011 expenses of $3,959,969. Over the past three years the Bank has focused on expense control, reducing non-interest expense by 5.1%, while growing revenue $1.3 million or 40.3%. Assets-per-employee has improved, from $4.3 million at the end of 2009 to $6.2 million as of year end 2012. The Bank's efficiency ratio also improved from 83% for 2011 to 78% for 2012.
The Bank provided $465,000 for credit losses in 2012 compared to $560,000 in 2011. Net credit losses were $524,673 and $343,931 for 2012 and 2011, respectively, representing 0.70% and 0.47% of gross year end loans, respectively. The Bank's Allowance for Loan & Lease Losses (ALLL) was 2.18% of loans as of December 31, 2012 compared to 2.30% as of December 31, 2011. The December 31, 2012 balance in the Bank's loan loss reserve stands at $1,631,083 and is considered adequate to absorb the inherent risk of credit loss in the Bank's loan portfolio.
Earnings per share for the fourth quarter and twelve months ending December 31, 2012 were $0.13 and $0.38, respectively, compared to $0.16 and $0.31 for the same periods in 2011, which represents a 22.3% increase for 2012. Return on average assets was 0.50% for 2012 compared to 0.43% in 2011, an improvement of 16.4% for the year. Return on average equity was 6.7% on an annualized basis for the fourth quarter and 4.8% for the twelve months ending December 31, 2012. Earnings increases were primarily due to lower interest expense, a lower provision for loan losses, higher fee income and lower non-interest expenses.
For the years ending 2012 and 2011, the Bank recorded a net deferred tax asset of $425,404. The Bank reported a valuation allowance of $1,179,696 at the end of 2012 which is available to offset future earnings of the Bank. The deferred tax asset peaked in 2009 at $2,052,887, 33 months after opening, and was initially offset with a full valuation allowance. As the Bank has generated a profitable operation over the past 12 quarters, both the net deferred tax asset and the valuation allowance have steadily declined as a result of improved earnings. As of December 31, 2012, the Bank carried a remaining deferred tax valuation allowance of $859,451 which is available to be recognized and offsets future earnings.
At December 31, 2012 shareholder's equity totaled $13,353,813, an increase of $726,154 or 5.7% compared to $12,627,659 as of year end 2011. The Bank's Tier 1 Capital Ratio was 9.79% compared to 10.25% at December 31, 2011. Total Risk Based Capital to Risk Weighted Assets was 15.33% for the current quarter compared to 15.65% for year ending December 31, 2011. Both capital ratios are well above minimum regulatory standards to be considered a well-capitalized bank by the FDIC. Liquidity remains healthy at $51.2 million as of December 31, 2012 and the Bank maintained a moderate loan to deposit ratio of 68.1%. The Bank's investment portfolio consists primarily of safe U.S. Government agency bonds, mortgage-backed securities and high grade corporate bonds.
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 and 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 two locations, one in the heart of the Folsom's historic district on Sutter Street, and one in Roseville on Douglas Boulevard. 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. If you would like to receive periodic updates via e-mail, please e-mail RFlautt@FolsomLakeBank.com and we will add you to our e-mail list or call Robert Flautt direct at 916-235-4570
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: Robert J. Flautt
President & CEO