Presidio Bank Reports Results for Third Quarter 2015

Total Assets Exceed $600 Million for the first time

SAN FRANCISCO--()--Presidio Bank (OTCBB:PDOB), a Bay Area business bank, today reported unaudited results for the third quarter ended September 30, 2015 with net income for the quarter of $687 thousand, essentially flat from the $696 thousand earned in the quarter ended June 30, 2015. In addition, Total Assets ended the quarter at $614 million, eclipsing the $600 Million total for the first time while Total Loans and Total Deposits also achieved record high levels.

“We are pleased to report another quarter of strong organic growth,” said Presidio Bank President and CEO Steve Heitel. “While a loan growth related increase in the loan loss reserve resulted in flat earnings, the increase in earning assets achieved during the quarter positions the Bank well for earnings growth in the fourth quarter of 2015 and beyond.”

Financial Highlights

  • Total Loans outstanding were up $29 million, 7% from the quarter ended June 30, 2015, and increased $74 million or 18% over the third quarter of 2014. Loans outstanding now total a record high of $475 million. The outlook for continued loan growth in the fourth quarter remains positive.
  • Total Deposits increased by $18 million or 4% from the quarter ended June 30, 2015 and increased by $84 million, 19% over the third quarter of 2014. Client deposits increased by $24 million during the quarter while the Bank chose not to renew $6 million in long-term wholesale deposits which matured in September. Non-Interest Bearing Demand Deposits were up 8% for the quarter and up 22% from the same quarter in 2014 and now account for 38% of Total Deposits.
  • Net Interest Income of $5.1 million in the third quarter was up 8.3% over the second quarter of 2015 and 7.8% over the quarter ended September 30, 2014. The third quarter of 2015 included $210 thousand in interest expense on subordinated debt that was not incurred in the third quarter of 2014.
  • Because of the substantial loan growth during the quarter, the Bank incurred $422 thousand in Provision For Loan Loss Expense versus zero in both the quarter ended June 30, 2015 and the quarter ended September 30, 2014. It is expected that future loan growth will require similar Provision For Loan Loss Expense.
  • Operating Expenses were flat from the quarter ended June 30, 2015 and were up 10% from the quarter ended September 30, 2014 primarily due to increased personnel and rent expense associated with the Bank’s San Mateo Office which opened in November 2014.
  • Net Income applicable to Common Shareholders was $532 thousand for the quarter, a decrease of $9 thousand, 1.7% over the second quarter 2015 due exclusively to the Provision For Loan Loss Expense incurred in the third quarter of 2015.
  • Net Interest Margin increased 5 basis points from the quarter ended June 30, 2015 due to a higher proportion of loans in earning assets. Deposits cost and loan yields were essentially flat. Net Interest Margin is down 50 basis points from the quarter ended September 30, 2014, due to interest expense on the Bank’s $10 million Subordinated Notes not incurred in 2014 and higher levels of lower yielding liquid assets maintained in 2015.
  • On September 29, 2015, the Bank redeemed the remaining $6.8 million outstanding of Perpetual Preferred Shares at par. This will result in an annual savings on dividends of $620 thousand.
  • Credit quality remains strong with a classified Loan to Capital Ratio less than 5%. Non-Performing Loans totaled $1.2 million at September 30, 2015 or 0.3% of total loans. The Allowance for Loan Losses of $5.6 million covers Non-Performing Loans by more than four times.
  • Diluted Earnings per Common Share were $0.09 for the quarter compared to $0.12 in the second quarter of 2015 and $0.18 in the third quarter of 2014. As previously reported, the Bank raised $12 million in a 1 million share rights offering which closed at the end of the second quarter of 2015.
  • Book Value per Share increased to $10.37 per share as of September 30, 2015 from $10.27 per share at June 30, 2015 and $9.53 per share at September 30, 2014.

“On the heels of our very successful stock offering, I am particularly pleased to see the Bank put the new capital to work by growing loans,” said Presidio Bank Chairman and Founder, Jim Woolwine.

The Bank also announced that it has engaged BDO as its independent auditor for 2015, replacing Crowe Horwath LLP (“Crowe”). Crowe and a related predecessor firm had served the Bank since inception but informed the Board of Directors earlier in the year that it would not be independent relative to Presidio Bank in 2015. Because the Bank exceeded $500 million in assets at the end of 2014, additional independence rules became applicable in 2015 related to the service of a retired Crowe partner on the Bank’s Board of Directors for a portion of 2015. Crowe continues to provide tax services to the Bank.

               

3rd Quarter 2015 Financial Results
(Dollars in thousands, except per share amounts, unaudited)

 

Condensed Balance Sheet

9/30/2015     6/30/2015     Change   9/30/2014     Change 12/31/2014     Change
 
Cash and due from banks 8,984 501 1693.2 % 7,972 12.7 % 5,621 59.8 %
Interest bearing due from banks 108,898     126,275     -13.8 %   84,612     28.7 % 104,642     4.1 %
Total cash and equivalents 117,882 126,776 -7.0 % 92,584 27.3 % 110,263 6.9 %
Investment securities 14,203 14,191 0.1 % 14,419 -1.5 % 14,392 -1.3 %
Loans, net of fees 475,466 446,068 6.6 % 401,421 18.4 % 415,741 14.4 %
Allowance for loan losses (5,594 )   (5,172 )   8.2 %   (4,952 )   13.0 % (5,172 )   8.2 %
Net loans 469,872 440,896 6.6 % 396,469 18.5 % 410,569 14.4 %
Premises and equipment, net 1,313 1,381 -4.9 % 1,090 20.5 % 1,477 -11.1 %
Other assets and interest receivable 11,222     11,064     1.4 %   5,773     94.4 % 6,052     85.4 %
Total assets 614,492 594,308 3.4 % 510,335 20.4 % 542,753 13.2 %
 
Non-interest-bearing demand 204,348 190,129 7.5 % 167,411 22.1 % 164,353 24.3 %
Interest bearing transaction 69,142 67,403 2.6 % 63,260 9.3 % 69,646 -0.7 %
Money market and savings accounts 216,602 207,446 4.4 % 166,866 29.8 % 196,050 10.5 %
Time deposits 44,388     51,046     -13.0 %   52,967     -16.2 % 51,643     -14.0 %
Total deposits 534,480 516,024 3.6 % 450,504 18.6 % 481,692 11.0 %
Borrowings 10,160 10,284 -1.2 % 10,048 NM 10,360 NM
Other liabilities 15,020     7,079     112.2 %   2,913     415.6 % 2,884     420.8 %
Total liabilities 559,660 533,387 4.9 % 463,465 20.8 % 494,936 13.1 %
 
Preferred stock - 6,869 -100.0 % 6,860 -100.0 % 6,869 -100.0 %
Common stock 56,789 56,375 0.7 % 43,949 29.2 % 44,207 28.5 %
Retained earnings (1,824 ) (2,264 ) 19.4 % (3,797 ) 52.0 % (3,167 ) 42.4 %
Other comprehensive income (133 )   (59 )   -125.4 %   (142 )   6.3 % (92 )   -44.6 %
Total shareholder’s equity 54,832     60,921     -10.0 %   46,870     17.0 % 47,817     14.7 %
Total liabilities and equity 614,492 594,308 3.4 % 510,335 20.4 % 542,753 13.2 %
 
Book value per share
Book value per share $ 10.37 $ 10.27 $ 9.53 $ 9.74
Total shares outstanding EOP 5,288 5,261 4,199 4,203
 
Capital Ratios
Tier 1 leverage ratio 9.1 % 10.6 % 9.7 % 8.8 %
Tier 1 risk-based capital ratio 9.7 % 11.6 % 10.1 % 10.0 %
Total risk-based capital ratio 12.5 % 14.6 % 13.5 % 13.3 %
Common equity tier 1 capital ratio 9.7 % 10.3 % 8.6 % 8.5 %
 
     

Condensed Statement of Income

For the three months ended For the nine months ended
9/30/2015     6/30/2015    

Change
Fav./
(Unfav.)

  9/30/2014    

Change
Fav./
(Unfav.)

9/30/2015     9/30/2014    

Change
Fav./
(Unfav.)

           
Interest income 5,557 5,171 7.5 % 4,963 12.0 % 15,723 14,377 9.4 %
Interest expense 421     428     1.6 %   197     (113.7 %) 1,253     586     (113.8 %)
Net interest income 5,136 4,743 8.3 % 4,766 7.8 % 14,470 13,791 4.9 %
Provision for loan loss 422     -     NM     -     NM   422     81     421.0 %
Net interest income after provision 4,714 4,743 (0.6 %) 4,766 (1.1 %) 14,048 13,710 2.5 %
 
Other income 191 183 4.4 % 182 4.9 % 543 534 1.7 %
 
Compensation and benefit expenses 2,331 2,301 (1.3 %) 2,165 (7.7 %) 7,227 6,416 (12.6 %)
Occupancy and equipment expenses 445 432 (3.0 %) 393 (13.2 %) 1,324 1,139 (16.2 %)
Data processing 289 277 (4.3 %) 261 (10.7 %) 853 778 (9.6 %)
Professional and legal 116 191 39.3 % 88 (31.8 %) 417 302 (38.1 %)
Other operating expenses 557     542     (2.8 %)   498     (11.8 %) 1,610     1,486     (8.3 %)
Total operating expenses 3,738     3,743     0.1 %   3,405     (9.8 %) 11,431     10,121     (12.9 %)
Net income before taxes 1,167 1,183 (1.4 %) 1,543 (24.4 %) 3,160 4,123 (23.4 %)
Income taxes 480     487     1.4 %   648     25.9 % 1,294     1,706     24.2 %
Net income 687 696 (1.3 %) 895 (23.2 %) 1,866 2,417 (22.8 %)
Preferred dividends 155     155     0.0 %   89     (74.2 %) 431     267     (61.4 %)
Net income to common 532     541     (1.7 %)   806     (34.0 %) 1,435     2,150     (33.3 %)
 
Earnings Per Share
Basic earnings per share $ 0.10 $ 0.13 $ 0.19 $ 0.30 $ 0.50
Diluted earnings per share $ 0.09 $ 0.12 $ 0.18 $ 0.29 $ 0.48
Average shares outstanding 5,263 4,296 4,187 4,588 4,167
Average diluted shares 5,515 4,526 4,404 4,827 4,347
 
Performance Ratios
Return on average assets 0.45 % 0.48 % 0.73 % 0.44 % 0.68 %
Return on average common equity 3.84 % 5.00 % 8.02 % 4.11 % 7.37 %
Net interest margin 3.45 % 3.40 % 3.96 % 3.49 % 3.97 %
Cost of funds 0.30 % 0.32 % 0.18 % 0.32 % 0.19 %
Efficiency ratio 70.2 % 76.1 % 68.8 % 76.1 % 70.7 %
 
Average Balances
Total assets 606,634 576,058 484,699 567,737 471,881
Earning assets 592,748 561,247 476,849 554,891 464,504
Total loans 453,483 424,455 403,372 430,768 395,218
Total deposits 527,295 508,336 426,552 498,136 414,256
Common equity 54,963 43,205 39,892 46,638 38,991

NM = Not Meaningful

 

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.

Contacts

Presidio Bank
Steve Heitel, 415-229-8428
President & CEO
Ed Murphy, 415-229-8403
EVP/CFO
or
MEDIA:
Annette Gelinas, 415-229-8415 (o) / 925-787-2956 (c)
SVP/Marketing Director
agelinas@presidiobank.com

Contacts

Presidio Bank
Steve Heitel, 415-229-8428
President & CEO
Ed Murphy, 415-229-8403
EVP/CFO
or
MEDIA:
Annette Gelinas, 415-229-8415 (o) / 925-787-2956 (c)
SVP/Marketing Director
agelinas@presidiobank.com