Presidio Bank Reports Results for the First Quarter of 2017

SAN FRANCISCO--()--Presidio Bank (OTCBB:PDOB), a Bay Area business bank, today reported unaudited results for the first quarter ended March 31, 2017 with Net Income of $1.2 million, up 28% from the first quarter of 2016. Total Assets were $692 million at March 31, 2017, up 6% from March 31, 2016, but down 7.4% from the record level achieved at December 31, 2016.

“Presidio Bank continues to show strong year over year income growth,” said Presidio Bank President and CEO Steve Heitel. “While the Bank showed only modest loan growth, which is traditional for the first quarter of the year, I am particularly encouraged by our loan originations, which were double the total recorded in the first quarter of 2016. This sets the Bank up well for loan growth in future quarters.”

Financial Highlights

  • Total Loans Outstanding were up $5 million from the quarter ending December 31, 2016 and up $55 million from March 31, 2016 or 10.5%. New Loan Originations were strong with New Loan Commitments of $70 million in the first quarter of 2017, almost matching the $73 million achieved in the fourth quarter of 2016 and up from $35 million in the first quarter of 2016.
  • Total Deposits decreased by $55 million from the quarter ended December 31, 2016. During the third and fourth quarters of 2016, the Bank experienced significant growth in temporary deposits, which ran off as expected in the first quarter of 2017. This combined with normal first quarter deposit attrition resulted in the decline in deposit balances. Deposits are up $32 million over the first quarter of 2016. Non-Interest Bearing Demand Deposits represent 38% of total deposits at March 31, 2017.
  • Net Interest Income of $6.4 million in the first quarter of 2017 was up 2.4% from the fourth quarter of 2016 and up 8% from the first quarter of 2016. This increase is due largely to higher average loan balances. The quarter over quarter increase would have been higher except for two fewer days in the first quarter of 2017 and a one-time special dividend on Federal Home Loan Bank Stock paid in the fourth quarter of 2016. Net Interest Margin increased during the quarter to 3.74% from 3.45% in the fourth quarter of 2016, due primarily to lower levels of lower yielding Liquid Assets carried during the quarter along with the impact of the two interest rate increases by the Federal Reserve, which increased yield on variable rate loans and on cash invested overnight with the Federal Reserve. The Bank’s balance sheet is asset sensitive and the Bank will continue to benefit if future rate increases occur.
  • Operating Expenses increased by 10% over the fourth quarter of 2016. In addition to the normal seasonal increase in Employer Paid Taxes and Employee Benefits expense, the Bank incurred $247 thousand in Loan Loss Provision Expense on Undisbursed Loans. This expense was due primarily to a $24 million increase in unfunded construction loans during the quarter. At March 31, 2017, the Bank had an unusually high $49 million in unfunded construction loans. It is anticipated that the majority of these loans will fund during 2017. Without the increase in provision expense, Operating Expenses increased a normalized 4% during the quarter. Despite the large increase in Loan Loss Provision Expense on Undisbursed Loans, Operating Expenses increased only 2.9% from the first quarter of 2016. Compensation and Benefit expense declined 3.5% from the first quarter of 2016 as that quarter contained some one-time, extraordinary compensation expenses. Net Income was flat as compared to the quarter ended December 31, 2016 but was up 28% from the first quarter of 2016.
  • Credit Quality is stable and strong with a Classified to Capital Ratio of 5.8% at March 31, 2017. The number of classified relationships remains at five. The Allowance for Loan Losses covers Non-Performing Loans by more than six times.
  • Diluted Earnings per Common Share were $0.19 for the quarter, unchanged from the quarter ended December 31, 2016 but increased $0.03 from the first quarter of 2016.
  • Book Value per Share increased to $11.50 per share at March 31, 2017 from $11.31 per share at December 31, 2016 and $10.75 per share at March 31, 2016.

“Presidio Bank continues to win business and expand its client base in an increasingly competitive environment,” said Presidio Bank Chairman and Founder, Jim Woolwine. “Our value proposition of customized solutions, access to decision makers and high touch personal service resonates with business owners, real estate professionals, not-for-profit organizations and financially sophisticated individuals.”

 
1st Quarter 2017 Financial Results

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

 
Condensed Balance Sheet
                 
3/31/2017   12/31/2016   Change   3/31/2016   Change
   
Cash and due from banks 6,239 6,035 3.4 % 12,723 -51.0 %
Interest bearing due from banks   88,944       150,159   -40.8 %   96,867   -8.2 %
Total cash and equivalents 95,183 156,194 -39.1 % 109,590 -13.1 %
Investment securities 12,893 13,249 -2.7 % 14,548 -11.4 %
Loans, net of fees 578,033 572,780 0.9 % 522,942 10.5 %
Allowance for loan losses   (6,868 )     (6,868 ) 0.0 %   (6,301 ) 9.0 %
Net loans 571,165 565,912 0.9 % 516,641 10.6 %
Premises and equipment, net 1,005 1,020 -1.5 % 1,155 -13.0 %
Other assets and interest receivable   11,610       11,128   4.3 %   11,274   3.0 %
Total assets 691,856 747,503 -7.4 % 653,208 5.9 %
 
Non-interest-bearing demand 233,059 257,757 -9.6 % 210,872 10.5 %
Interest bearing transaction 98,560 99,604 -1.0 % 104,147 -5.4 %
Money market and savings accounts 228,801 259,711 -11.9 % 220,936 3.6 %
Time deposits   48,016       46,412   3.5 %   40,827   17.6 %
Total deposits 608,436 663,484 -8.3 % 576,782 5.5 %
Borrowings 9,860 9,845 0.2 % 9,773

0.9

%

Other liabilities   4,233       6,812   -37.9 %   6,629   -36.1 %
Total liabilities 622,529 680,140 -8.5 % 593,184 4.9 %
 
Common stock 64,801 64,122 1.1 % 60,248 7.6 %
Retained earnings 4,581 3,377 35.7 % (160 ) 2963.1 %
Other comprehensive income   (55 )     (137 ) 59.9 %   (64 ) 14.1 %
Total shareholder’s equity   69,327       67,362   2.9 %   60,024   15.5 %
Total liabilities and equity   691,856       747,503   -7.4 %   653,208   5.9 %
 
Book value per share
Book value per share $ 11.50 $ 11.31 $ 10.75
Total shares outstanding EOP 6,030 5,957 5,581
 
Capital Ratios
Tier 1 leverage ratio 9.7 % 9.1 % 9.5 %
Tier 1 risk-based capital ratio 10.1 % 10.1 % 9.8 %
Tangible common risk-based ratio 10.1 % 10.1 % 9.8 %
Total risk-based capital ratio 12.6 % 12.7 % 12.5 %
 
 
Condensed Statement of Income

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

 
For the three months ended
3/31/2017   12/31/2016  

Change
Fav./
(Unfav.)

  3/31/2016  

Change
Fav./
(Unfav.)

       
Interest income 6,853 6,736 1.7 % 6,372 7.5 %
Interest expense   422       455   7.3 %   413   (2.2 %)
Net interest income 6,431 6,281 2.4 % 5,959 7.9 %
Provision for loan loss   -       226   NM   -   NM
Net interest income after provision 6,431 6,055 6.2 % 5,959 7.9 %
 
Other income 202 189 6.9 % 171 18.1 %
 
Compensation and benefit expenses 2,938 2,657 (10.6 %) 3,044 3.5 %
Occupancy and equipment expenses 520 547 4.9 % 516 (0.8 %)
Data processing 306 340 10.0 % 323 5.3 %
Professional and legal 139 121 (14.9 %) 136 (2.2 %)
Other operating expenses   801       612   (30.9 %)   553   (44.8 %)
Total operating expenses   4,704       4,277   (10.0 %)   4,572   (2.9 %)
Net income before taxes 1,929 1,967 (1.9 %) 1,558 23.8 %
Income taxes   725       763   5.0 %   618   (17.3 %)
Net income   1,204       1,204   0.0 %   940   28.1 %
 
Earnings Per Share
Basic earnings per share $ 0.20 $ 0.20 $ 0.17
Diluted earnings per share $ 0.19 $ 0.19 $ 0.16
Average shares outstanding 5,932 5,906 5,517
Average diluted shares 6,185 6,085 5,756
 
Performance Ratios
Return on average assets 0.69 % 0.65 % 0.59 %
Return on average common equity 7.09 % 7.15 % 6.38 %
Net interest margin 3.74 % 3.45 % 3.86 %
Cost of funds 0.27 % 0.27 % 0.29 %
Efficiency ratio 71.0 % 66.1 % 74.6 %
 
Average Balances
Total assets 712,119 738,307 636,043
Earning assets 698,171 725,247 621,240
Total loans 567,792 537,641 522,422
Total deposits 628,228 655,149 558,000
Common equity 68,760 66,788 59,113
 

NM = Not Meaningful

 
 
Condensed Balance Sheet (5 Quarter Data)

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

 
                   
3/31/2017   12/31/2016   9/30/2016   6/30/2016   3/31/2016
       
Cash and due from banks 6,239 6,035 6,743 9,430 12,723
Interest bearing due from banks   88,944       150,159       168,954       73,324       96,867  
Total cash and equivalents 95,183 156,194 175,697 82,754 109,590
Investment securities 12,893 13,249 13,955 14,456 14,548
Loans, net of fees 578,033 572,780 542,867 544,577 522,942
Allowance for loan losses   (6,868 )     (6,868 )     (6,642 )     (6,368 )     (6,301 )
Net loans 571,165 565,912 536,225 538,209 516,641
Premises and equipment, net 1,005 1,020 1,041 1,101 1,155
Other assets and interest receivable   11,610       11,128       10,952       11,264       11,274  
Total assets 691,856 747,503 737,870 647,784 653,208
 
Non-interest-bearing demand 233,059 257,757 222,877 201,121 210,872
Interest bearing transaction 98,560 99,604 80,112 83,121 104,147
Money market and savings accounts 228,801 259,711 291,551 213,227 220,936
Time deposits   48,016       46,412       61,404       42,755       40,827  
Total deposits 608,436 663,484 655,944 540,224 576,782
Borrowings 9,860 9,845 9,770 37,510 9,773
Other liabilities   4,233       6,812       6,531       6,272       6,629  
Total liabilities 622,529 680,140 672,245 584,006 593,184
 
Common stock 64,801 64,122 63,492 62,807 60,248
Retained earnings 4,581 3,377 2,174 989 (160 )
Other comprehensive income   (55 )     (137 )     (41 )     (18 )     (64 )
Total shareholder’s equity   69,327       67,362       65,625       63,778       60,024  
Total liabilities and equity   691,856       747,503       737,870       647,784       653,208  
- - - -
Book value per share
Book value per share $ 11.50 $ 11.31 $ 11.04 $ 10.82 $ 10.75
Total shares outstanding EOP 6,030 5,957 5,944 5,893 5,581
 
Capital Ratios
Tier 1 leverage ratio 9.7 % 9.1 % 9.5 % 9.8 % 9.5 %
Common equity tier 1 capital ratio 10.1 % 10.1 % 10.3 % 10.1 % 9.8 %
Tier 1 risk-based capital ratio 12.6 % 12.7 % 10.3 % 10.1 % 9.8 %
Total risk-based capital ratio 10.1 % 10.1 % 12.9 % 12.8 % 12.5 %
 
 
Condensed Statement of Income (5 Quarter Data)

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

 
For the three months ended
3/31/2017   12/31/2016   9/30/2016   6/30/2016   3/31/2016
       
Interest income 6,853 6,736 6,575 6,309 6,372
Interest expense   422       455       471       436       413  
Net interest income 6,431 6,281 6,104 5,873 5,959
Provision for loan loss   -       226       274       67       -  
Net interest income after provision 6,431 6,055 5,830 5,806 5,959
 
Other income 202 189 177 161 171
 
Compensation and benefit expenses 2,938 2,657 2,546 2,424 3,044
Occupancy and equipment expenses 520 547 531 531 516
Data processing 306 340 320 304 323
Professional and legal 139 121 142 141 136
Other operating expenses   801       612       548       593       553  
Total operating expenses   4,704       4,277       4,087       3,993       4,572  
Net income before taxes 1,929 1,967 1,920 1,974 1,558
Income taxes   725       763       736       825       618  
Net income   1,204       1,204       1,184       1,149       940  
 
Earnings Per Share
Basic earnings per share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.17
Diluted earnings per share $ 0.19 $ 0.19 $ 0.19 $ 0.19 $ 0.16
Average shares outstanding 5,932 5,906 5,906 5,673 5,517
Average diluted shares 6,185 6,085 6,076 5,882 5,756
 
Performance Ratios
Return on average assets 0.69 % 0.65 % 0.68 % 0.71 % 0.59 %
Return on average common equity 7.09 % 7.15 % 7.22 % 7.46 % 6.38 %
Net interest margin 3.74 % 3.45 % 3.59 % 3.70 % 3.86 %
Cost of funds 0.27 % 0.27 % 0.29 % 0.30 % 0.29 %
Efficiency ratio 71.0 % 66.1 % 65.1 % 66.2 % 74.6 %
 
Average Balances
Total assets 712,119 738,307 694,088 653,042 636,043
Earning assets 698,171 725,247 679,353 638,560 621,240
Total loans 567,792 537,641 547,748 531,739 522,422
Total deposits 628,228 655,149 603,428 568,518 558,000
Common equity 68,760 66,788 65,228 61,945 59,117
 
 
Loans (5 Quarter Data)

(Dollars in Thousands, unaudited)

                           
3/31/2017     12/31/2016     9/30/2016     6/30/2016     3/31/2016
               
Commercial real estate 268,334 263,463 248,646 244,457 226,555
Land and construction 13,629 12,298 20,025 38,714 47,960
Commercial 176,073 180,412 161,783 150,613 145,127
Personal 30,992 31,352 31,411 35,376 30,465
Residential 27,077 30,510 30,977 26,852 25,013
Multifamily 62,898 55,593 50,832 49,379 48,659
Deferred loan fees (970 )     (848 )     (806 )     (813 )     (837 )
Loans 578,033 572,779 542,867 544,577 522,942
Allowance for loan losses (6,868 )     (6,868 )     (6,642 )     (6,368 )     (6,301 )
Net loans 571,165 565,912 536,225 538,209 516,641
 
 
Non-Performing Assets (5 Quarter Data)

(Dollars in Thousands, unaudited)

         
Non-Accrual Loans 1,042 1,055 1,068 1,074 1,094
Non-Performing Loans (NPL) 1,042 1,055 1,068 1,074 1,094
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) 1,042 1,055 1,068 1,074 1,094
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent 1,042 1,055 1,068 1,074 1,094
 
Quarterly Net Charge-offs - - - - -
NPAs / Assets % 0.15 % 0.14 % 0.14 % 0.17 % 0.17 %
NPAs & 90 Day / Assets % 0.15 % 0.14 % 0.14 % 0.17 % 0.17 %
NPAs / Actual Loans and OREO % 0.15 % 0.14 % 0.14 % 0.17 % 0.17 %
Loan Loss Reserves / Loans (%) 1.19 % 1.20 % 1.22 % 1.17 % 1.17 %
 
 
Net Interest Income (Quarter Data)

(Dollars in Thousands, unaudited)

 
For the Three Months Ended
3/31/2017 3/31/2016
  Interest         Interest    
Average Income / Average Average Income / Average
Balance Expense Rate Balance Expense Rate  
Assets:
Interest-bearing deposits $ 117,365 $ 260 0.90 % $ 83,993 $ 116 0.56 %
Federal Reserve and Federal Home Loan Bank stock 4,229 82 7.83 3,760 66 7.07
Investment Securities 8,785 33 1.50 11,065 38 1.39
Loans: (2)
Commercial 166,682 1,942 4.72 150,622 1,845 4.93
Land and Construction 13,628 199 5.94 44,929 583 5.21
Commercial Real Estate 268,000 3,043 4.61 224,565 2,620 4.69
Residential 27,735 301 4.40 27,707 289 4.20
Multifamily 59,453 675 4.60 44,933 520 4.65
Personal 32,294   318 4.00 29,667   295 4.00
Total Loans 567,792   6,478 4.63 522,422   6,152 4.74
Total Earning Assets 698,171 6,853 3.98 621,240 6,372 4.13
Allowance for loan losses (6,868 ) (6,305 )
Cash and cash equivalents 9,234 9,328
Other assets 11,582   11,397  
Total Assets $ 712,119   $ 635,661  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 101,019 $ 44 0.18 % $ 82,817 $ 42 0.21 %
Money market deposits 234,129 115 0.20 218,945 123 0.23
Savings deposits 3,519 1 0.09 3,149 1 0.13
Certificates and other time deposits 46,494   51 0.45 40,231   34 0.34
Total Interest-bearing Deposits 385,162 211 0.22 345,142 200 0.23
Borrowings 9,786   211 8.74 11,018   212 7.75
Total Interest-bearing Liabilities 394,948 422 0.43 356,161 413 0.47
Noninterest-bearing deposits 243,067 212,857
Other liabilities 5,344   7,530  
Total Liabilities 643,358 576,548
Stockholders' Equity 68,760   59,113  
Total Liabilities and Stockholders' Equity $ 712,119   $ 635,661  
Net Interest Income $ 6,431 $ 5,959
Net Interest Margin 3.74 % 3.86 %
Cost of funds 0.27 % 0.29 %
 

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, 925-287-7881
Cell: 925-787-2956
SVP/Marketing Director
agelinas@presidiobank.com

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Contacts

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