Presidio Bank Reports Results for the First Quarter 2016

SAN FRANCISCO--(BUSINESS WIRE)--Presidio Bank (OTCBB: PDOB), a Bay Area business bank, today reported unaudited results for the first quarter ended March 31, 2016 with Net Income of $940 thousand, up 34% from the quarter ended December 31, 2015 and up 95% from the first quarter of 2015. Total Assets were down $1 million from the record level recorded in the fourth quarter of 2015 but up $105 million (19%) from the first quarter of 2015.

“We are beginning to realize the earnings benefit of the strong growth year in 2015,” said Presidio Bank President and CEO Steve Heitel. “Despite seasonally high personnel expenses, the first quarter of 2016 represents the second most profitable quarter in the Bank’s history.”

Financial Highlights

• Total Loans outstanding decreased by $1 million over the quarter ended December 31, 2015 and increased $106 million or 26.0% over the first quarter 2015. The first quarter is traditionally the slowest of the year but the loan pipeline remains solid.
• Total Deposits decreased by $2.5 million from the quarter ended December 31, 2015 and increased by $94 million or 19.5% from the first quarter of 2015. A larger decline was expected based upon a build-up of temporary deposits in the fourth quarter that ran-off in January. The Bank was able to replace the majority of those deposits with new money that came in during the first quarter. Demand Deposits were stable at 36% of total deposits.
• Net Interest Income of $6 million in the first quarter of 2016 was up 9% from the fourth quarter of 2015 and up 30% from the first quarter of 2015. The increase is the result of the significant loan growth that occurred in 2015. Net Interest Margin increased during the quarter to 3.86% from 3.48% in the fourth quarter of 2015 due to higher average loan balances, strong loan fees during the quarter and a small decrease in the cost of deposits. Yield on loans increased from 4.69% to 4.74% while cost of deposits declined from 0.16% to 0.14%.
• Operating Expenses increased 18% over the fourth quarter of 2015. This was primarily due to seasonally high compensation and benefits expense and a new five-year lease extension for the Bank’s San Francisco headquarters at a significantly increased rate.
• Net Income applicable to common shareholders was $940 thousand for the first quarter of 2016, up 34% from the fourth quarter of 2015 and up 139% from the first quarter of 2015. The disproportionate increase over the first quarter of 2015 is due to elimination of dividends on the Bank’s Perpetual Preferred Stock which was fully redeemed in the third quarter of 2015.
• Credit quality remains strong with a classified loan to capital ratio of 3.8%, down from 6.3% at December 31, 2015. The Allowance for Loans Losses remained at $6.3 million or 1.2% of total loans at March 31, 2016. The Allowance for Loan Losses covers Non-Performing Loans by over five times. One of the Bank’s two Non-Performing Loans paid off in full during the quarter. The remaining loan totals $1.1 million. It is current as to principal and interest payments but will likely be a protracted work out.
• Diluted earnings per common share were $0.16 for the quarter compared to $0.13 in the fourth quarter of 2015 and $0.08 in the first quarter of 2015.
• Book value per share increased to $10.75 per share as of March 31, 2016 from $10.51 per share at December 31, 2015 and $9.83 per share at March 31, 2015.

“The first ten years of Presidio Bank has been an exciting and rewarding experience for me,” said Presidio Bank Chairman and Founder, Jim Woolwine. “I am honored by the clients that have chosen to do business with Presidio Bank and am proud of what the Presidio team has accomplished.”

1^st Quarter 2016 Financial Results (Dollars in thousands, except per share amounts, unaudited)
Condensed Balance Sheet
	3/31/2016			12/31/2015			Change		3/31/2015			Change
Cash and due from banks		12,723			6,175		106.0	%		7,094		79.3	%
Interest bearing due from banks		96,867			103,211		-6.1	%		102,700		-5.7	%
Total cash and equivalents		109,590			109,386		0.2	%		109,794		-0.2	%
Investment securities		14,548			15,034		-3.2	%		14,235		2.2	%
Loans, net of fees		522,942			523,815		-0.2	%		416,492		25.6	%
Allowance for loan losses		(6,301	)		(6,301	)	0.0	%		(5,172	)	21.8	%
Net loans		516,641			517,514		-0.2	%		411,320		25.6	%
Premises and equipment, net		1,155			1,231		-6.2	%		1,433		-19.4	%
Other assets and interest receivable		11,274			11,102		1.5	%		11,339		-0.6	%
Total assets		653,208			654,267		-0.2	%		548,121		19.2	%
Non-interest-bearing demand		210,872			210,997		-0.1	%		162,424		29.8	%
Interest bearing transaction		104,147			78,359		32.9	%		80,246		29.8	%
Money market and savings accounts		220,936			249,876		-11.6	%		188,849		17.0	%
Time deposits		40,827			40,118		1.8	%		51,029		-20.0	%
Total deposits		576,782			579,350		-0.4	%		482,548		19.5	%
Borrowings		9,773			9,891		-1.2	%		9,911		NM
Other liabilities		6,629			7,472		-11.3	%		7,190		-7.8	%
Total liabilities		593,184			596,713		-0.6	%		500,064		18.6	%
Preferred stock		-			-		NM			6,869		-100.0	%
Common stock		60,248			58,796		2.5	%		44,466		35.5	%
Retained earnings		(160	)		(1,100	)	85.5	%		(2,806	)	94.3	%
Other comprehensive income		(64	)		(142	)	54.9	%		(57	)	-12.3	%
Total shareholder’s equity		60,024			57,554		4.3	%		48,472		23.8	%
Total liabilities and equity		653,208			654,267		-0.2	%		548,121		19.2	%
Book value per share
Book value per share	$	10.75		$	10.51				$	9.83
Total shares outstanding EOP		5,581			5,477					4,231
Capital Ratios
Tier 1 leverage ratio		9.5	%		9.0	%				9.3	%
Tier 1 risk-based capital ratio		9.8	%		9.4	%				10.0	%
Total risk-based capital ratio		12.5	%		12.2	%				13.2	%
Tangible common risk-based ratio		9.8	%		9.4	%				8.6	%

Condensed Statement of Income
	For the three months ended
	3/31/2016			12/31/2015			Change Fav./ (Unfav.)		3/31/2015			Change Fav./ (Unfav.)
Interest income		6,372			5,860		8.7	%		4,995		27.6	%
Interest expense		413			409		(1.0	%)		404		(2.2	%)
Net interest income		5,959			5,451		9.3	%		4,591		29.8	%
Provision for loan loss		-			707		NM			-		NM
Net interest income after provision		5,959			4,744		25.6	%		4,591		29.8	%
Other income		171			158		8.2	%		169		1.2	%
Compensation and benefit expenses		3,044			2,441		(24.7	%)		2,595		(17.3	%)
Occupancy and equipment expenses		516			441		(17.0	%)		446		(15.7	%)
Data processing		323			299		(8.0	%)		287		(12.5	%)
Professional and legal		136			114		(19.3	%)		110		(23.6	%)
Other operating expenses		553			575		3.9	%		511		(8.2	%)
Total operating expenses		4,572			3,870		(18.1	%)		3,949		(15.8	%)
Net income before taxes		1,558			1,032		51.0	%		811		92.1	%
Income taxes		618			329		(87.8	%)		328		(88.4	%)
Net income		940			703		33.7	%		483		94.6	%
Preferred dividends		-			-		NM			89		NM
Net income to common		940			703		33.7	%		394		138.6	%
Earnings Per Share
Basic earnings per share	$	0.17		$	0.13				$	0.09
Diluted earnings per share	$	0.16		$	0.13				$	0.09
Average shares outstanding		5,517			5,328					4,221
Average diluted shares		5,756			5,598					4,462
Performance Ratios
Return on average assets		0.59	%		0.41	%				0.38	%
Return on average common equity		6.38	%		4.62	%				3.52	%
Net interest margin		3.86	%		3.48	%				3.65	%
Cost of funds		0.29	%		0.29	%				0.35	%
Efficiency ratio		74.6	%		70.0	%				83.0	%
Average Balances
Total assets		636,043			638,463					519,565
Earning assets		621,240			624,057					509,764
Total loans		522,422			484,924					413,932
Total deposits		558,000			564,379					458,016
Common equity		59,117			56,197					41,603
NM = Not Meaningful

Condensed Balance Sheet (5 Quarter Data)
	3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Cash and due from banks		12,723			6,175			8,984			501			7,094
Interest bearing due from banks		96,867			103,211			108,898			126,275			102,700
Total cash and equivalents		109,590			109,386			117,882			126,776			109,794
Investment securities		14,548			15,034			14,203			14,191			14,235
Loans, net of fees		522,942			523,815			475,466			446,068			416,492
Allowance for loan losses		(6,301	)		(6,301	)		(5,594	)		(5,172	)		(5,172	)
Net loans		516,641			517,514			469,872			440,896			411,320
Premises and equipment, net		1,155			1,231			1,313			1,381			1,433
Other assets and interest receivable		11,274			11,102			10,829			10,660			11,339
Total assets		653,208			654,267			614,099			593,904			548,121
Non-interest-bearing demand		210,872			210,997			204,348			190,129			162,424
Interest bearing transaction		104,147			78,359			69,142			67,403			80,246
Money market and savings accounts		220,936			249,876			216,602			207,446			188,849
Time deposits		40,827			40,118			44,388			51,046			51,029
Total deposits		576,782			579,350			534,480			516,024			482,548
Borrowings		9,773			9,891			9,767			9,880			9,911
Other liabilities		6,629			7,472			15,020			7,079			7,190
Total liabilities		593,184			596,713			559,267			532,983			499,649
Preferred stock		-			-			-			6,869			6,869
Common stock		60,248			58,796			56,789			56,375			44,466
Retained earnings		(160	)		(1,100	)		(1,824	)		(2,264	)		(2,806	)
Other comprehensive income		(64	)		(142	)		(133	)		(59	)		(57	)
Total shareholder’s equity		60,024			57,554			54,832			60,921			48,472
Total liabilities and equity		653,208			654,267			614,099			593,904			548,121
Book value per share
Book value per share	$	10.75		$	10.51		$	10.37		$	10.27		$	9.83
Total shares outstanding EOP		5,581			5,477			5,288			5,261			4,231
Capital Ratios
Tier 1 leverage ratio		9.5	%		9.0	%		9.1	%		10.6	%		9.3	%
Tier 1 risk-based capital ratio		9.8	%		9.4	%		9.7	%		11.6	%		10.0	%
Total risk-based capital ratio		12.5	%		12.2	%		12.6	%		14.6	%		13.2	%
Tangible common risk-based ratio		9.8	%		9.4	%		9.7	%		10.3	%		8.6	%

Condensed Statement of Income (5 Quarter Data)
	For the three months ended
	3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Interest income		6,372			5,860			5,557			5,171			4,995
Interest expense		413			409			421			428			404
Net interest income		5,959			5,451			5,136			4,743			4,591
Provision for loan loss		-			707			422			-			-
Net interest income after provision		5,959			4,744			4,714			4,743			4,591
Other income		171			158			191			183			169
Compensation and benefit expenses		3,044			2,441			2,331			2,301			2,595
Occupancy and equipment expenses		516			441			445			432			446
Data processing		323			299			289			277			287
Professional and legal		136			114			116			191			110
Other operating expenses		553			575			584			542			511
Total operating expenses		4,572			3,870			3,765			3,743			3,949
Net income before taxes		1,558			1,032			1,140			1,183			811
Income taxes		618			329			480			487			328
Net income		940			703			660			696			483
Preferred dividends		-			-			231			155			89
Net income to common		940			703			429			541			394
Earnings Per Share
Basic earnings per share	$	0.17		$	0.13		$	0.04		$	0.13		$	0.09
Diluted earnings per share	$	0.16		$	0.13		$	0.08		$	0.12		$	0.09
Average shares outstanding		5,517			5,328			5,263			4,296			4,221
Average diluted shares		5,756			5,598			5,515			4,526			4,462
Performance Ratios
Return on average assets		0.59	%		0.41	%		0.45	%		0.48	%		0.38	%
Return on average common equity		6.38	%		4.62	%		3.84	%		5.00	%		3.52	%
Net interest margin		3.86	%		3.48	%		3.45	%		3.40	%		3.65	%
Cost of funds		0.29	%		0.29	%		0.30	%		0.32	%		0.35	%
Efficiency ratio		74.6	%		70.0	%		70.2	%		76.1	%		83.0	%
Average Balances
Total assets		636,043			638,463			606,634			576,058			519,565
Earning assets		621,240			624,057			592,748			561,247			509,764
Total loans		522,422			484,924			453,483			424,455			413,932
Total deposits		558,000			564,379			527,295			508,336			458,016
Common equity		59,117			56,197			54,963			43,205			41,603

Loans (5 Quarter Data)
	3/31/2016		12/31/2015		9/30/2015		6/30/2015		3/31/2015
Commercial real estate	226,555		224,220		207,595		205,796		191,291
Land and construction	47,960		42,493		35,109		29,380		11,078
Commercial	145,127		153,853		142,134		131,263		138,255
Personal	30,465		27,103		23,367		17,214		17,943
Residential	25,013		30,212		26,077		27,589		23,784
Multifamily	48,659		46,827		41,998		35,584		34,752
Deferred loan fees	(837	)	(893	)	(813	)	(758	)	(610	)
Loans	522,942		523,814		475,466		446,068		416,492
Allowance for loan losses	(6,301	)	(6,301	)	(5,594	)	(5,172	)	(5,172	)
Net loans	516,641		517,514		469,872		440,896		411,320

Non-Performing Assets (5 Quarter Data)
	3/31/2016		12/31/2015		9/30/2015		6/30/2015		3/31/2015
Non-Accrual Loans	1,094		1,213		1,232		1,252		1,272
Non-Performing Loans (NPL)	1,094		1,213		1,232		1,252		1,272
Other Real Estate Owned	-		-		-		-		-
Non-Performing Assets (NPA)	1,094		1,213		1,232		1,252		1,272
90+ Days Delinquent	-		-		-		-		-
NPAs & 90 Day Delinquent	1,094		1,213		1,232		1,252		1,272
Quarterly Net Charge-offs	-		-		-		-		-
NPAs / Assets %	0.17	%	0.19	%	0.20	%	0.21	%	0.23	%
NPAs & 90 Day / Assets %	0.17	%	0.19	%	0.20	%	0.21	%	0.23	%
NPAs / Actual Loans and OREO %	0.17	%	0.19	%	0.20	%	0.21	%	0.23	%
Loan Loss Reserves / Loans (%)	1.20	%	1.20	%	1.18	%	1.16	%	1.24	%

Net Interest Income
	For the Three Months Ended
	3/31/2016							3/31/2015
				Interest							Interest
	Average			Income/		Average		Average			Income/		Average
	Balance			Expense		Rate		Balance			Expense		Rate
Assets:
Interest-bearing deposits	$	83,993		$	116	0.56	%	$	81,554		$	48	0.24	%
Federal Reserve and Federal Home Loan Bank stock		3,760			66	7.07			3,092			51	6.73
Investment Securities		11,065			38	1.39			11,186			36	1.29
Loans: (2)
Commercial Real Estate		150,622			1,845	4.93			130,666			1,513	4.69
Land and Construction		44,929			583	5.21			14,613			210	5.84
Commercial Real Estate		224,565			2,620	4.69			193,478			2,319	4.86
Residential		27,707			289	4.20			23,945			246	4.17
Multifamily		44,933			520	4.65			34,546			398	4.68
Personal		29,667			295	4.00			16,684			173	4.21
Total Loans		522,422			6,152	4.74			413,932			4,860	4.76
Total Earning Assets		621,240			6,372	4.13			509,764			4,995	3.97
Allowance for loan losses		(6,306	)						(6,306	)
Cash and cash equivalents		9,328							8,002
Premises and equipment		1,202							1,202
Other assets		10,196							6,478
Total Assets	$	635,661						$	519,140
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	82,817		$	42	0.21	%	$	68,877		$	38	0.22	%
Money market deposits		218,945			123	0.23			180,810			96	0.22
Savings deposits		3,149			1	0.13			2,541			1	0.13
Certificates and other time deposits		40,231			34	0.34			50,903			58	0.47
Total Interest-bearing Deposits		345,142			200	0.23			303,130			193	0.26
Borrowings		11,018			212	7.75			9,898			211	8.65
Total Interest-bearing Liabilities		356,161			413	0.47			313,029			404	0.52
Noninterest-bearing deposits		212,857							154,886
Other liabilities		7,530							2,755
Total Liabilities		576,548							470,670
Stockholders' Equity		59,113							48,470
Total Liabilities and Stockholders' Equity	$	635,661			413	0.26		$	519,140			404	0.32
Net Interest Income				$	5,959						$	4,591
Net Interest Margin						3.86	%						3.65	%

About Presidio Bank

Presidio Bank celebrates ten years of providing 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.