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Presidio Bank Reports Results for the Third Quarter of 2017

SAN FRANCISCO--(BUSINESS WIRE)-- Presidio Bank (OTCBB: PDOB), a Bay Area business bank, today reported unaudited results for the third quarter ended September 30, 2017 with Net Income of $2.1 million, up 31% from the second quarter of 2017. Net Income for the nine months ended September 30, 2017 was up 49% from the same period a year ago. Total Assets were $786 million at September 30, 2017, up 5% from June 30, 2017.

“Aided by successful collection of our only non-performing loan, the Bank had another solid quarter of revenue and profitability growth,” said Presidio Bank President and CEO Steve Heitel. “We are continuing to execute our strategy of disciplined organic growth.”

Financial Highlights

  • Total Loans Outstanding were up $14 million from the quarter ending June 30, 2017 and up $74 million from September 30, 2016 or 14%. New Loan Originations however were soft for the quarter at $44 million, down from $76 million in the second quarter. The loan pipeline remains solid and continued loan growth is expected. Loan growth came as expected from funding of previously originated Land and Construction loans which grew $17 million in the quarter. Commercial and Industrial loans grew $7 million while Commercial Real Estate declined by $7 million. Unfunded Construction Loans declined $8 million during the quarter but still total $48 million which continues to exceed historical averages.
  • Total Deposits increased by $38 million from the quarter ended June 30, 2017. During the quarter, a $30 million escrow deposit was distributed out of the Bank as scheduled to its beneficiaries. On the last day of the quarter, another depositor brought in a $30 million deposit that was distributed out on the first business day of the fourth quarter, inflating the deposit total at the end of the third quarter.
  • Net Interest Income of $7.8 million in the third quarter of 2017 was up 14% from the second quarter of 2017 and up 29% from the third quarter of 2016. This increase is due to higher average loan balances and the impact of rate increases by the Federal Reserve. The increase was also augmented by the collection of the Bank’s only non-performing loan, which resulted in the recognition of $420 thousand in interest and fees. Without this one-time event, Net Interest Income would have increased 8%. Net Interest Margin increased during the quarter to 4.34% from 3.98% in the second quarter of 2017 due to higher Loan Yields and flat Cost of Funds. Excluding the interest related to the non-performing loan payoff, Net Interest Margin would have been 4.11%
  • Operating Expenses increased by 6% over the second quarter of 2017. This increase was largely due to an increase in the incentive compensation accrual due to above plan year-to-date performance and the commencement of lease expense on our newly relocated and expanded Walnut Creek Office. These increases were somewhat offset by reimbursement for previously expensed legal and foreclosure costs related to the collection of the non-performing loan. The Efficiency Ratio improved to 57% from 62% in the second quarter of 2017.
  • Year-to-date revenue growth is 18.6% while year-to-date expense growth is 8.2%.
  • Credit Quality remains stable and strong with a Classified to Capital Ratio of 3.6% at September 30, 2017. The Loan Loss Provision Expense for the second quarter was $100 thousand driven by growth in the loan portfolio, offset by the $51 thousand recovery of the previously charged off portion of the non-performing loan. Over the past two quarters, we have seen two commercial relationships downgraded to special mention. The Bank is well-secured in each of these relationships and feels that appropriate action plans are in place.
  • Diluted Earnings per Common Share were $0.32 for the quarter, up from $0.26 from the quarter ended June 30, 2017.
  • Book Value per Share increased to $12.15 per share at September 30, 2017 from $11.75 per share at June 30, 2017 and $11.04 per share at September 30, 2016.

“The Bank is also pleased to report that it successfully completed the relocation of its Walnut Creek Office to a larger and more visible location adjacent to the Walnut Creek BART station,” said Presidio Bank Chairman and Founder, Jim Woolwine. “The new office will also serve as the hub for the Bank’s Central and Loan Operations teams.”

3rd Quarter 2017 Financial Results

(Dollars in thousands, except per share amounts, unaudited)

Condensed Balance Sheet

9/30/2017 6/30/2017 Change 9/30/2016 Change 12/31/2016 Change
Cash and due from banks 10,677 9,789 9.1 % 6,743 58.3 % 6,035 76.9 %
Interest bearing due from banks 126,277 101,532 24.4 % 168,954 -25.3 % 150,159 -15.9 %
Total cash and equivalents 136,954 111,321 23.0 % 175,697 -22.1 % 156,194 -12.3 %
Investment securities 12,801 12,736 0.5 % 13,955 -8.3 % 13,249 -3.4 %
Loans, net of fees 617,269 603,689 2.2 % 542,867 13.7 % 572,780 7.8 %
Allowance for loan losses (7,166 ) (7,014 ) -2.2 % (6,642 ) -7.9 % (6,868 ) -4.3 %
Net loans 610,103 596,675 2.3 % 536,225 13.8 % 565,912 7.8 %
Premises and equipment, net 2,452 1,335 83.7 % 1,041 135.6 % 1,020 140.4 %
Other assets and interest receivable 23,312 24,159 -3.5 % 10,952 112.9 % 11,128 109.5 %
Total assets 785,622 746,226 5.3 % 737,870 6.5 % 747,503 5.1 %
Non-interest-bearing demand 304,726 250,344 21.7 % 222,877 36.7 % 257,757 18.2 %
Interest bearing transaction 98,019 103,727 -5.5 % 80,112 22.4 % 99,604 -1.6 %
Money market and savings accounts 247,857 258,564 -4.1 % 291,551 -15.0 % 259,711 -4.6 %
Time deposits 46,871 47,293 -0.9 % 61,404 -23.7 % 46,412 1.0 %
Total deposits 697,473 659,928 5.7 % 655,944 6.3 % 663,484 5.1 %
Borrowings 10,346 10,152 1.9 % 9,770 5.9 % 9,845 5.1 %
Other liabilities 4,001 4,837 -17.3 % 6,531 -38.7 % 6,812 -41.3 %
Total liabilities 711,820 674,917 5.5 % 672,245 5.9 % 680,140 4.7 %
Common stock 65,585 65,185 0.6 % 63,492 3.3 % 64,122 2.3 %
Retained earnings 8,252 6,173 33.7 % 2,174 279.6 % 3,377 144.3 %
Other comprehensive income (35 ) (49 ) 29.0 % (41 ) 15.1 % (137 ) 74.6 %
Total shareholder’s equity 73,802 71,309 3.5 % 65,625 12.5 % 67,362 9.6 %
Total liabilities and equity 785,622 746,226 5.3 % 737,870 6.5 % 747,503 5.1 %
Book value per share
Book value per share $ 12.15 $ 11.75 $ 11.04 $ 11.31
Total shares outstanding EOP 6,074 6,069 5,944 5,957
Capital Ratios
Tier 1 leverage ratio 9.9 % 10.0 % 9.5 % 9.1 %
Tier 1 risk-based capital ratio 9.8 % 9.6 % 10.3 % 10.1 %
Tangible common risk-based ratio 9.8 % 9.6 % 10.3 % 10.1 %
Total risk-based capital ratio 12.2 % 12.0 % 12.9 % 12.7 %
Condensed Statement of Income

(Dollars in thousands, except per share amounts, unaudited)

For the three months ended For the Nine months ended
9/30/2017 6/30/2017

Change
Fav./
(Unfav.)

9/30/2016

Change
Fav./
(Unfav.)

9/30/2017 9/30/2016

Change
Fav./
(Unfav.)

Interest income 8,362 7,349 13.8 % 6,575 27.2 % 22,563 19,257 17.2 %
Interest expense 472 442 (6.7 %) 471 (0.1 %) 1,336 1,320 (1.2 %)
Net interest income 7,890 6,907 14.2 % 6,104 29.3 % 21,227 17,937 18.3 %
Provision for loan loss 100 198 49.5 % 274 63.5 % 298 341 12.6 %
Net interest income after provision 7,790 6,709 16.1 % 5,830 33.6 % 20,929 17,596 18.9 %
Other income 268 191 40.1 % 177 51.2 % 660 510 29.5 %
Compensation and benefit expenses 3,036 2,736 (11.0 %) 2,546 (19.3 %) 8,711 8,014 (8.7 %)
Occupancy and equipment expenses 628 518 (21.2 %) 531 (18.3 %) 1,665 1,578 (5.5 %)
Data processing 346 326 (6.0 %) 320 (8.0 %) 977 947 (3.2 %)
Professional and legal 77 203 67.6 % 142 53.7 % 419 418 7.6 %
Other operating expenses 533 586 7.2 % 548 0.8 % 1,921 1,697 (15.1 %)
Total operating expenses 4,620 4,369 (5.7 %) 4,087 (13.0 %) 13,693 12,654 (8.2 %)
Net income before taxes 3,438 2,531 35.8 % 1,920 79.0 % 7,896 5,452 44.8 %
Income taxes 1,358 939 (44.6 %) 736 (84.5 %) 3,021 2,178 (38.7 %)
Net income 2,080 1,592 30.7 % 1,184 75.7 % 4,875 3,274 48.9 %
Earnings Per Share
Basic earnings per share $ 0.33 $ 0.27 $ 0.20 $ 0.81 $ 0.57
Diluted earnings per share $ 0.32 $ 0.26 $ 0.19 $ 0.77 $ 0.55
Average shares outstanding 6,001 5,899 5,886 5,968 5,697
Average diluted shares 6,277 6,157 6,146 6,232 5,903
Performance Ratios
Return on average assets 1.10 % 0.90 % 0.68 % 0.90 % 0.66 %
Return on average common equity 11.31 % 9.03 % 7.22 % 9.16 % 7.04 %
Net interest margin 4.34 % 3.98 % 3.59 % 4.03 % 3.71 %
Cost of funds 0.28 % 0.28 % 0.29 % 0.28 % 0.30 %
Efficiency ratio 57.0 % 61.6 % 65.1 % 63.1 % 68.6 %
Average Balances
Total assets 748,229 711,847 694,088 724,197 661,177
Earning assets 721,374 695,297 679,353 705,032 646,505
Total loans 612,493 588,980 547,748 589,918 534,020
Total deposits 660,790 627,004 603,428 638,390 576,746
Common equity 73,108 70,741 65,228 70,886 62,096

NM = Not Meaningful

Condensed Balance Sheet (5 Quarter Data)

(Dollars in thousands, except per share amounts, unaudited)

9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Cash and due from banks 10,677 9,789 6,239 6,035 6,743
Interest bearing due from banks 126,277 101,532 88,944 150,159 168,954
Total cash and equivalents 136,954 111,321 95,183 156,194 175,697
Investment securities 12,801 12,736 12,893 13,249 13,955
Loans, net of fees 617,269 603,689 578,033 572,780 542,867
Allowance for loan losses (7,166 ) (7,014 ) (6,868 ) (6,868 ) (6,642 )
Net loans 610,103 596,675 571,165 565,912 536,225
Premises and equipment, net 2,452 1,335 1,005 1,020 1,041
Other assets and interest receivable 23,312 24,159 11,610 11,128 10,952
Total assets 785,622 746,226 691,856 747,503 737,870
Non-interest-bearing demand 304,726 250,344 233,059 257,757 222,877
Interest bearing transaction 98,019 103,727 98,560 99,604 80,112
Money market and savings accounts 247,857 258,564 228,801 259,711 291,551
Time deposits 46,871 47,293 48,016 46,412 61,404
Total deposits 697,473 659,928 608,436 663,484 655,944
Borrowings 10,346 10,152 9,860 9,845 9,770
Other liabilities 4,001 4,837 4,233 6,812 6,531
Total liabilities 711,820 674,917 622,529 680,140 672,245
Common stock 65,585 65,185 64,801 64,122 63,492
Retained earnings 8,252 6,173 4,581 3,377 2,174
Other comprehensive income (35 ) (49 ) (55 ) (137 ) (41 )
Total shareholder’s equity 73,802 71,309 69,327 67,362 65,625
Total liabilities and equity 785,622 746,226 691,856 747,503 737,870
Book value per share
Book value per share $ 12.15 $ 11.75 $ 11.50 $ 11.31 $ 11.04
Total shares outstanding EOP 6,074 6,069 6,030 5,957 5,944
Capital Ratios
Tier 1 leverage ratio 9.9 % 10.0 % 9.7 % 9.1 % 9.5 %
Common equity tier 1 capital ratio 9.8 % 9.6 % 10.1 % 10.1 % 10.3 %
Tier 1 risk-based capital ratio 9.8 % 9.6 % 10.1 % 10.1 % 10.3 %
Total risk-based capital ratio 12.2 % 12.0 % 12.6 % 12.7 % 12.9 %
Condensed Statement of Income (5 Quarter Data)

(Dollars in thousands, except per share amounts, unaudited)

For the three months ended
9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Interest income 8,362 7,349 6,853 6,736 6,575
Interest expense 472 442 422 455 471
Net interest income 7,890 6,907 6,431 6,281 6,104
Provision for loan loss 100 198 - 226 274
Net interest income after provision 7,790 6,709 6,431 6,055 5,830
Other income 268 191 202 189 177
Compensation and benefit expenses 3,036 2,736 2,938 2,657 2,546
Occupancy and equipment expenses 628 518 520 547 531
Data processing 346 326 306 340 320
Professional and legal 77 203 139 121 142
Other operating expenses 533 586 801 612 548
Total operating expenses 4,620 4,369 4,704 4,277 4,087
Net income before taxes 3,438 2,531 1,929 1,967 1,920
Income taxes 1,358 939 725 763 736
Net income 2,080 1,592 1,204 1,204 1,184
Earnings Per Share
Basic earnings per share $ 0.33 $ 0.27 $ 0.20 $ 0.20 $ 0.20
Diluted earnings per share $ 0.32 $ 0.26 $ 0.19 $ 0.19 $ 0.19
Average shares outstanding 6,001 5,899 5,932 5,906 5,886
Average diluted shares 6,277 6,157 6,185 6,146 6,146
Performance Ratios
Return on average assets 1.10 % 0.90 % 0.69 % 0.65 % 0.68 %
Return on average common equity 11.31 % 9.03 % 7.09 % 7.15 % 7.22 %
Net interest margin 4.34 % 3.98 % 3.74 % 3.45 % 3.59 %
Cost of funds 0.28 % 0.28 % 0.27 % 0.27 % 0.29 %
Efficiency ratio 57.0 % 61.6 % 71.0 % 66.1 % 65.1 %
Average Balances
Total assets 748,229 711,847 712,119 738,307 694,088
Earning assets 721,374 695,297 698,171 725,247 679,353
Total loans 612,493 588,980 567,792 537,641 547,748
Total deposits 660,790 627,004 628,228 655,149 603,428
Common equity 73,108 70,741 68,760 66,788 65,228

Loans (5 Quarter Data)
(Dollars in Thousands, unaudited)

9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Commercial real estate 268,357 275,189 268,334 263,463 248,646
Land and construction 39,599 22,657 13,629 12,298 20,025
Commercial 194,884 187,537 176,073 180,412 161,783
Personal 21,292 23,008 30,992 31,352 31,411
Residential 34,389 33,671 27,077 30,510 30,977
Multifamily 59,764 62,634 62,898 55,593 50,832
Deferred loan fees (1,016 ) (1,007 ) (970 ) (848 ) (806 )
Loans 617,269 603,689 578,033 572,779 542,867
Allowance for loan losses (7,166 ) (7,015 ) (6,868 ) (6,868 ) (6,642 )
Net loans 610,103 596,675 571,165 565,912 536,225

Non-Performing Assets (5 Quarter Data)
(Dollars in Thousands, unaudited)

9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Non-Accrual Loans - 991 1,042 1,055 1,068
Non-Performing Loans (NPL) - 991 1,042 1,055 1,068
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) - 991 1,042 1,055 1,068
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent - 991 1,042 1,055 1,068
Quarterly Net Charge-off's (51 ) 51 - - -
NPAs / Assets % 0.00 % 0.13 % 0.15 % 0.14 % 0.14 %
NPAs & 90 Day / Assets % 0.00 % 0.13 % 0.15 % 0.14 % 0.14 %
NPAs / Actual Loans and OREO % 0.00 % 0.13 % 0.15 % 0.14 % 0.14 %
Loan Loss Reserves / Loans (%) 1.16 % 1.16 % 1.19 % 1.20 % 1.22 %

Net Interest Income (Quarter Data)
(Dollars in Thousands, unaudited)

For the Three Months Ended
9/30/2017 6/30/2017
Interest Interest
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 96,029 $ 324 1.34 % $ 93,405 $ 223 0.96 %
Federal Reserve and Federal Home Loan Bank stock 4,625 74 6.38 4,518 69 6.13
Investment Securities 8,227 32 1.56 8,395 31 1.49
Loans: (2)
Commercial 187,888 2,777 5.86 182,033 2,191 4.83
Land and Construction 32,792 524 6.33 17,072 269 6.33
Commercial Real Estate 274,847 3,278 4.73 267,931 3,183 4.77
Residential 33,997 420 4.90 31,139 366 4.71
Multifamily 60,424 690 4.53 63,085 718 4.56
Personal 22,545 243 4.28 27,720 298 4.31
Total Loans 612,493 7,932 5.14 588,980 7,025 4.78
Total Earning Assets 721,374 8,362 4.60 695,297 7,349 4.24
Allowance for loan losses (7,149 ) (6,900 )
Cash and cash equivalents 8,639 9,055
Other assets 25,365 14,395
Total Assets $ 748,229 $ 711,847
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 103,364 $ 47 0.18 % $ 104,413 $ 51 0.20 %
Money market deposits 248,786 137 0.22 234,203 120 0.21
Savings deposits 5,066 1 0.10 5,258 1 0.09
Certificates and other time deposits 47,612 76 0.64 47,988 59 0.49
Total Interest-bearing Deposits 404,828 261 0.26 391,862 231 0.24
Borrowings 10,327 211 8.11 9,981 211 8.48
Total Interest-bearing Liabilities 415,155 472 0.45 401,844 442 0.44
Noninterest-bearing deposits 255,962 235,141
Other liabilities 4,004 4,122
Total Liabilities 675,121 641,107
Stockholders' Equity 73,108 70,741
Total Liabilities and Stockholders' Equity $ 748,229 $ 711,847
Net Interest Income $ 7,890 $ 6,907
Net Interest Margin 4.34 % 3.98 %
Cost of funds 0.28 % 0.28 %

Net Interest Income (Quarter Data)
(Dollars in Thousands, unaudited)

For the Nine Months Ended
9/30/2017 9/30/2016
Interest Interest
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 102,188 $ 807 1.06 % $ 97,970 $ 379 0.52 %
Federal Reserve and Federal Home Loan Bank stock 4,459 225 6.75 3,949 213 7.21
Investment Securities 8,467 96 1.52 10,566 109 1.38
Loans: (2)
Commercial 178,945 6,910 5.16 152,684 5,363 4.69
Land and Construction 21,234 992 6.25 39,519 1,524 5.15
Commercial Real Estate 270,284 9,505 4.70 234,298 8,185 4.67
Residential 30,980 1,086 4.69 27,536 866 4.20
Multifamily 60,991 2,083 4.57 47,752 1,657 4.64
Personal 27,484 859 4.18 32,231 960 3.98
Total Loans 589,918 21,435 4.86 534,020 18,556 4.64
Total Earning Assets 705,032 22,563 4.28 646,505 19,257 3.98
Allowance for loan losses (6,972 ) (6,306 )
Cash and cash equivalents 8,974 9,485
Other assets 17,163 11,493
Total Assets $ 724,197 $ 661,177
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 102,941 $ 142 0.18 % $ 86,479 $ 130 0.20 %
Money market deposits 239,093 372 0.21 228,441 395 0.23
Savings deposits 4,620 3 0.09 3,374 3 0.12
Certificates and other time deposits 46,965 186 0.53 45,874 141 0.41
Total Interest-bearing Deposits 393,619 703 0.24 364,167 668 0.25
Borrowings 10,033 633 8.44 15,499 652 5.62
Total Interest-bearing Liabilities 403,652 1,336 0.44 379,667 1,320 0.46
Noninterest-bearing deposits 244,771 212,579
Other liabilities 4,888 6,836
Total Liabilities 653,311 599,081
Stockholders' Equity 70,886 62,096
Total Liabilities and Stockholders' Equity $ 724,197 $ 661,177
Net Interest Income $ 21,227 $ 17,937
Net Interest Margin 4.03 % 3.71 %
Cost of funds 0.28 % 0.30 %

About Presidio Bank

Presidio Bank provides business banking services to small and mid-size businesses, including professional service firms, real estate developers and investors, and not-for-profit organizations, and to their owners who desire personalized, responsive service with access to local decision makers. Presidio Bank offers clients the resources of a large bank combined with the personalized services of a neighborhood bank. Presidio Bank is headquartered in San Francisco, California and currently operates five banking offices in San Francisco, Walnut Creek, San Rafael, San Mateo and Palo Alto. More information is available at www.presidiobank.com. Presidio Bank is a member of FDIC and an Equal Housing Lender.

This press release contains certain forward-looking statements that involve risk and uncertainties. These statements are identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “plan,” “estimate,” “project,” or similar expressions. The risks and uncertainties that may affect the operations, performance, development, growth projections and results of Presidio Bank’s business include, but are not limited to, the growth of the economy, interest rate movements, timely development by Presidio Bank of technology enhancements for its products and operating systems, the impact of competitive products, services and pricing, client-based requirements, Congressional legislation, changes in regulatory or generally accepted accounting principles and similar matters. Readers are cautioned not to place undue reliance on forward-looking statements which are subject to influence by the named risk factors and unanticipated future events. Actual results, accordingly, may differ materially from management expectations.

View source version on businesswire.com: http://www.businesswire.com/news/home/20171023005300/en/

Presidio Bank
Steve Heitel, 415-229-8428
President & CEO
Ed Murphy, 415-229-8403
EVP/CFO
or
MEDIA:
Annette Gelinas, 925-287-7881
SVP/Marketing Director
agelinas@presidiobank.com
cell: 925-787-2956

Source: Presidio Bank