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 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         (916) 235-4570