Presidio Bank Reports Results for the First Quarter of 2018

SAN FRANCISCO--()--Presidio Bank (OTCBB:PDOB), a Bay Area business bank, today reported unaudited results for the first quarter ended March 31, 2018 with Net Income of $2.2 million, up $1.6 million from the fourth quarter of 2017 and up $1 million (85%) from the first quarter of 2017. The fourth quarter of 2017 included a $1.5 million revaluation of Deferred Tax Assets and Low Income Housing Investments due to tax reform legislation. Net Income in the first quarter of 2018 benefited from a lower Federal Income Tax rate which resulted in a savings of approximately $330 thousand. Total Assets were $850 million at March 31, 2018, up 7% from December 31, 2017. Both Total Loans and Total Deposits grew to record high levels during the quarter.

“We were pleased to achieve such strong growth in the traditionally slow first quarter of the year,” said Presidio Bank President and CEO Steve Heitel. “In addition, our Net Interest Margin continues to expand resulting in a solid year over year increase in profitability.”

Financial Highlights

  • Total Loans Outstanding were up $24 million from the quarter ending December 31, 2017 and up $72 million from March 31, 2017 or 12%. New Loan Originations were strong at $80 million up from $69 million in the fourth quarter of 2017. Loan growth was centered in Commercial Real Estate, $12 million and Land and Construction, $9 million. Commercial and Industrial loans were also up modestly.
  • Total Deposits increased by $54 million from the quarter ended December 31, 2017 and increased by $150 million from March 31, 2017 or 25%. This type of deposit growth is unusual for the first quarter of the year when the Bank tends to see modest growth or even net outflows. While the Bank continues to add new deposit relationships, a significant portion of the growth in the first quarter was transactional in nature and will likely normalize during the next two quarters.
  • Net Interest Income of $8 million in the first quarter of 2018 was up 4% from the fourth quarter of 2017 and up 26% from the first quarter of 2017. This increase is due to higher average loan balances, increased loan yields, and increased interest rates on liquid assets invested by the Bank. Net Interest Margin increased during the quarter to 4.27% from 4.11% in the fourth quarter of 2017 due to higher Loan Yields and flat Cost of Funds.
  • Operating Expenses increased by 13% over the fourth quarter of 2017. This increase was largely due to the seasonal increase in Employer Paid Taxes and Employee Benefits Expense along with an increase in the Loan Loss Provision for Unfunded Loans as a result of growth in unfunded construction loans during the quarter. Operating Expenses increased 11% over the first quarter of 2017 due to growth related increases in Compensation and Benefits, higher occupancy costs due to the lease and leasehold improvements on our new Walnut Creek facility and higher data processing costs. The Bank’s efficiency ratio improved from 71% in the first quarter of 2017 to 62% in the first quarter of 2018.
  • Year-over-year revenue growth is 27% while year-over-year expense growth is 11%.
  • Credit Quality remains stable and strong with a Classified to Capital Ratio of 3.4% at March 31, 2018. The Loan Loss Provision Expense for the first quarter was $159 thousand driven by growth in the loan portfolio. Total Criticized and Classified Loans are flat from December 31, 2017 and represents only 3% of Loan Commitments and 4% of Loans Outstanding at March 31, 2018. The Bank has no Non-Performing Loans.
  • Diluted Earnings per Common Share were $0.34 for the quarter, up from $0.09 in the fourth quarter of 2017 and up from $0.19 in the first quarter of 2017.
  • Book Value per Share increased to $12.68 per share at March 31, 2018 from $12.29 per share at December 31, 2017 and $11.50 per share at March 31, 2017.

“While we are proud of our financial results, we are equally proud of our commitment to giving back to the communities we serve as evidenced by our Outstanding rating in Community Reinvestment and our perennial inclusion on the San Francisco Business Times list of top corporate philanthropists,” said Presidio Bank Chairman and Founder, Jim Woolwine.”

 

1st Quarter 2018 Financial Results

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

 

Condensed Balance Sheet

   
  3/31/2018     12/31/2017     Change     3/31/2017     Change
               
Cash and due from banks 14,682 7,613 92.9% 6,239 135.3%
Interest bearing due from banks   154,434       129,952 18.8%   88,944 73.6%
Total cash and equivalents 169,116 137,565 22.9% 95,183 77.7%
Investment securities 11,810 12,313 (4.1%) 12,893 (8.4%)
Loans, net of fees 649,994 626,282 3.8% 578,033 12.4%
Allowance for loan losses   (7,325)       (7,166) (2.2%)   (6,868) (6.7%)
Net loans 642,669 619,116 3.8% 571,165 12.5%
Premises and equipment, net 2,537 2,627 (3.5%) 1,005 152.4%
Other assets and interest receivable   23,796       22,237 7.0%   11,610 105.0%
Total assets 849,928 793,858 7.1% 691,856 22.8%
 
Non-interest-bearing demand 337,201 295,070 14.3% 233,059 44.7%
Interest bearing transaction 108,399 120,109 (9.7%) 98,560 10.0%
Money market and savings accounts 262,503 238,706 10.0% 228,801 14.7%
Time deposits   50,082       50,269 (0.4%)   48,016 4.3%
Total deposits 758,185 704,154 7.7% 608,436 24.6%
Borrowings 10,059 10,174 (1.1%) 9,860 2.0%
Other liabilities   4,466       4,767 (6.3%)   4,233 5.5%
Total liabilities 772,710 719,095 7.5% 622,529 24.1%
 
Common stock 66,241 65,960 0.4% 64,801 2.2%
Retained earnings 11,079 8,854 25.1% 4,581 141.8%
Other comprehensive income   (102)       (51) (98.3%)   (55) (85.4%)
Total shareholder’s equity   77,218       74,763 3.3%   69,327 11.4%
Total liabilities and equity   849,928       793,858 7.1%   691,856 22.8%
 
Book value per share
Book value per share $ 12.68 $ 12.29 $ 11.50
Total shares outstanding EOP 6,090 6,084 6,030
 
Capital Ratios
Tier 1 leverage ratio 9.7% 9.7% 9.7%
Tier 1 risk-based capital ratio 9.5% 9.8% 10.1%
Tangible common risk-based ratio 9.5% 9.8% 10.1%
Total risk-based capital ratio 11.7% 12.1% 12.6%
 
 
Condensed Statement of Income

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

 
    For the three months ended
        Change        

Change

3/31/2018

12/31/2017

Fav./

3/31/2017

Fav./

 

   

 

    (Unfav.)    

 

   

(Unfav.)

 
Interest income 8,570 8,236 4.1% 6,853 25.1%
Interest expense   487       483 (1.0%)   422 (15.5%)
Net interest income 8,083 7,753 4.2% 6,431 25.7%
Provision for loan loss   159       - NM   - NM
Net interest income after provision 7,924 7,753 2.2% 6,431 23.2%
 
Other income 320 287 11.3% 202 58.2%
 
Compensation and benefit expenses 3,283 2,814 (16.7%) 2,938 (11.8%)
Occupancy and equipment expenses 616 617 0.1% 520 (18.5%)
Data processing 385 388 0.9% 306 (25.7%)
Professional and legal 147 155 5.0% 139 (5.8%)
Other operating expenses   777       627 (23.9%)   801 3.0%
Total operating expenses   5,208       4,601 (13.2%)   4,704 (10.7%)
Net income before taxes 3,036 3,439 (11.7%) 1,929 57.4%
Income taxes   811       2,838 71.4%   725 (11.9%)
Net income   2,225       601 270.0%   1,204 84.8%
 
Earnings Per Share
Basic earnings per share $ 0.36 $ 0.10 $ 0.20
Diluted earnings per share $ 0.34 $ 0.09 $ 0.19
Average shares outstanding 6,025 6,009 5,932
Average diluted shares 6,398 6,328 6,185
 
Performance Ratios
Return on average assets 1.14% 0.32% 0.69%
Return on average common equity 11.78% 3.25% 7.09%
Net interest margin 4.27% 4.11% 3.74%
Cost of funds 0.28% 0.28% 0.27%
Efficiency ratio 62.1% 57.4% 71.0%
 
Average Balances
Total assets 794,442 774,015 712,119
Earning assets 768,150 747,679 698,171
Total loans 635,039 608,584 567,792
Total deposits 703,081 684,233 628,228
Common equity 76,591 75,531 68,760
 
NM = Not Meaningful
 
 
Condensed Balance Sheet (5 Quarter Data)

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

   
  3/31/2018     12/31/2017     9/30/2017     6/30/2017     3/31/2017
               
Cash and due from banks 14,682 7,613 10,677 9,789 6,239
Interest bearing due from banks   154,434       129,952       126,277       101,532       88,944
Total cash and equivalents 169,116 137,565 136,954 111,321 95,183
Investment securities 11,810 12,313 12,801 12,736 12,893
Loans, net of fees 649,994 626,282 617,269 603,689 578,033
Allowance for loan losses   (7,325)       (7,166)       (7,166)       (7,014)       (6,868)
Net loans 642,669 619,116 610,103 596,675 571,165
Premises and equipment, net 2,537 2,627 2,452 1,335 1,005
Other assets and interest receivable   23,796       22,237       23,312       24,159       11,610
Total assets 849,928 793,858 785,622 746,226 691,856
 
Non-interest-bearing demand 337,201 295,070 304,726 250,344 233,059
Interest bearing transaction 108,399 120,109 98,019 103,727 98,560
Money market and savings accounts 262,503 238,706 247,857 258,564 228,801
Time deposits   50,082       50,269       46,871       47,293       48,016
Total deposits 758,185 704,154 697,473 659,928 608,436
Borrowings 10,059 10,174 10,346 10,152 9,860
Other liabilities   4,466       4,767       4,001       4,837       4,233
Total liabilities 772,710 719,095 711,820 674,917 622,529
 
Common stock 66,241 65,960 65,585 65,185 64,801
Retained earnings 11,079 8,854 8,252 6,173 4,581
Other comprehensive income   (102)       (51)       (35)       (49)       (55)
Total shareholder’s equity   77,218       74,763       73,802       71,309       69,327
Total liabilities and equity   849,928       793,858       785,622       746,226       691,856
 
Book value per share
Book value per share $ 12.68 $ 12.29 $ 12.15 $ 11.75 $ 11.50
Total shares outstanding EOP 6,090 6,084 6,074 6,069 6,030
 
Capital Ratios
Tier 1 leverage ratio 9.7% 9.7% 9.9% 10.0% 9.7%
Common equity tier 1 capital ratio 9.5% 9.8% 9.8% 9.6% 10.1%
Tier 1 risk-based capital ratio 9.5% 9.8% 9.8% 9.6% 10.1%
Total risk-based capital ratio 11.7% 12.1% 12.2% 12.0% 12.6%
 
 
Condensed Statement of Income (5 Quarter Data)

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

 
    For the three months ended
3/31/2018     12/31/2017     9/30/2017     6/30/2017     3/31/2017
               
Interest income 8,570 8,236 8,362 7,349 6,853
Interest expense   487       483       472       442       422
Net interest income 8,083 7,753 7,890 6,907 6,431
Provision for loan loss   159       -       100       198       -
Net interest income after provision 7,924 7,753 7,790 6,709 6,431
 
Other income 320 287 268 191 202
 
Compensation and benefit expenses 3,283 2,814 3,036 2,736 2,938
Occupancy and equipment expenses 616 617 628 518 520
Data processing 385 388 346 326 306
Professional and legal 147 155 77 203 139
Other operating expenses   777       627       533       586       801
Total operating expenses   5,208       4,601       4,620       4,369       4,704
Net income before taxes 3,036 3,439 3,438 2,531 1,929
Income taxes   811       2,838       1,358       939       725
Net income   2,225       601       2,080       1,592       1,204
 
Earnings Per Share
Basic earnings per share $ 0.36 $ 0.10 $ 0.33 $ 0.27 $ 0.20
Diluted earnings per share $ 0.34 $ 0.09 $ 0.32 $ 0.26 $ 0.19
Average shares outstanding 6,025 6,009 6,001 5,899 5,932
Average diluted shares 6,398 6,328 6,277 6,157 6,185
 
Performance Ratios
Return on average assets 1.14% 0.32% 1.10% 0.90% 0.69%
Return on average common equity 11.78% 3.25% 11.31% 9.03% 7.09%
Net interest margin 4.27% 4.11% 4.34% 3.98% 3.74%
Cost of funds 0.28% 0.28% 0.28% 0.28% 0.27%
Efficiency ratio 62.1% 57.4% 57.0% 61.6% 71.0%
 
Average Balances
Total assets 794,442 774,015 748,229 711,847 712,119
Earning assets 768,150 747,679 721,374 695,297 698,171
Total loans 635,039 608,584 612,493 588,980 567,792
Total deposits 703,081 684,233 660,790 627,004 628,228
Common equity 76,591 75,531 73,108 70,741 68,760
 
 

Loans (5 Quarter Data)

(Dollars in Thousands, unaudited)

   
  3/31/2018     12/31/2017     9/30/2017     6/30/2017     3/31/2017
               
Commercial real estate 283,238 271,346 268,357 275,189 268,334
Land and construction 54,088 44,714 39,599 22,657 13,629
Commercial 201,094 197,748 194,884 187,537 176,073
Personal 17,172 16,295 21,292 23,008 30,992
Residential 33,114 34,174 34,389 33,671 27,077
Multifamily 62,325 63,024 59,764 62,634 62,898
Deferred loan fees (1,037)     (1,019)     (1,016)     (1,007)     (970)
Loans 649,994 626,282 617,269 603,689 578,033
Allowance for loan losses (7,325)     (7,166)     (7,166)     (7,015)     (6,868)
Net loans 642,669 619,116 610,103 596,675 571,165
 
 
Non-Performing Assets (5 Quarter Data)

(Dollars in Thousands, unaudited)

   
  3/31/2018     12/31/2017     9/30/2017     6/30/2017     3/31/2017
               
Non-Accrual Loans - - - 991 1,042
Non-Performing Loans (NPL) - - - 991 1,042
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) - - - 991 1,042
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent - - - 991 1,042
Quarterly Net Charge-offs - - (51) 51 -
 
NPAs / Assets % 0.00% 0.00% 0.00% 0.13% 0.15%
NPAs & 90 Day / Assets % 0.00% 0.00% 0.00% 0.13% 0.15%
NPAs / Actual Loans and OREO % 0.00% 0.00% 0.00% 0.13% 0.15%
Loan Loss Reserves / Loans (%) 1.13% 1.14% 1.16% 1.16% 1.19%
 
 
Net Interest Income (Quarterly Data)

(Dollars in Thousands, unaudited)

 
    For the Three Months Ended
3/31/2018     12/31/2017
    Interest         Interest    
Average Income / Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 121,072 $ 501 1.68 % $ 126,532 $ 375 1.18 %
Federal Reserve and Federal Home Loan Bank stock 4,655 77 6.70 4,644 77 6.56
Investment Securities 7,384 31 1.69 7,919 32 1.61
Loans: (2)
Commercial 199,340 2,579 5.25 185,629 2,448 5.23
Land and Construction 45,791 772 6.83 42,055 655 6.18
Commercial Real Estate 278,540 3,317 4.83 267,166 3,334 4.95
Residential 32,592 412 5.12 33,500 414 4.90
Multifamily 62,715 708 4.58 62,002 712 4.56
Personal   16,061     173 4.37   18,232     189 4.12
Total Loans   635,039     7,961 5.08   608,584     7,752 5.05
Total Earning Assets 768,150   8,570 4.52 747,679   8,236 4.37
Allowance for loan losses (7,219 ) (7,166 )
Cash and cash equivalents 9,543 8,441
Other assets   23,968     25,061  
Total Assets $ 794,442   $ 774,015  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 107,657 $ 41 0.15 % $ 107,767 $ 41 0.15 %
Money market deposits 236,876 138 0.24 241,802 143 0.23
Savings deposits 3,812 1 0.14 4,341 1 0.11
Certificates and other time deposits   50,230     96 0.78   49,965     87 0.69
Total Interest-bearing Deposits 398,575 276 0.28 403,875 272 0.27
Borrowings   10,088     211 8.48   10,161     211 8.24
Total Interest-bearing Liabilities 408,663 487 0.48 414,036 483 0.46
Noninterest-bearing deposits 304,506 280,358
Other liabilities   4,682     4,090  
Total Liabilities 717,851 698,484
Stockholders' Equity   76,591     75,531  
Total Liabilities and Stockholders' Equity $ 794,442   $ 774,015  
Net Interest Income $ 8,083 $ 7,753
Net Interest Margin 4.27 % 4.11 %
Cost of Funds 0.28 % 0.28 %
Cost of Deposits 0.16 % 0.16 %
 
 
Net Interest Income (Annual Data)

(Dollars in Thousands, unaudited)

 
    For the Three Months Ended
3/31/2018     3/31/2017
    Interest         Interest    
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 121,072 $ 501 1.68 % $ 117,365 $ 260 0.90 %
Federal Reserve and Federal Home Loan Bank stock 4,655 77 6.70 4,229 82 7.83
Investment Securities 7,384 31 1.69 8,785 33 1.50
Loans: (2)
Commercial 199,340 2,579 5.25 166,682 1,942 4.72
Land and Construction 45,791 772 6.83 13,628 199 5.94
Commercial Real Estate 278,540 3,317 4.83 268,000 3,043 4.61
Residential 32,592 412 5.12 27,735 301 4.40
Multifamily 62,715 708 4.58 59,453 675 4.60
Personal   16,061     173 4.37   32,294     318 4.00
Total Loans   635,039     7,961 5.08   567,792     6,478 4.63
Total Earning Assets 768,150   8,570 4.52 698,171   6,853 3.98
Allowance for loan losses (7,219 ) (6,868 )
Cash and cash equivalents 9,543 9,234
Other assets   23,968     11,582  
Total Assets $ 794,442   $ 712,119  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 107,657 $ 41 0.15 % $ 101,019 $ 44 0.18 %
Money market deposits 236,876 138 0.24 234,129 115 0.20
Savings deposits 3,812 1 0.14 3,519 1 0.09
Certificates and other time deposits   50,230     96 0.78   46,494     51 0.45
Total Interest-bearing Deposits 398,575 276 0.28 385,162 211 0.22
Borrowings   10,088     211 8.48   9,786     211 8.74
Total Interest-bearing Liabilities 408,663 487 0.48 394,948 422 0.43
Noninterest-bearing deposits 304,506 243,067
Other liabilities   4,682     5,344  
Total Liabilities 717,851 643,358
Stockholders' Equity   76,591     68,760  
Total Liabilities and Stockholders' Equity $ 794,442   $ 712,119  
Net Interest Income $ 8,083 $ 6,431
Net Interest Margin 4.27 % 3.74 %
Cost of Funds 0.28 % 0.27 %
Cost of Deposits 0.16 % 0.14 %
 

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
or
Ed Murphy, 415-229-8403
EVP/CFO
or
MEDIA:
Annette Gelinas, 925-287-7881 (o) / 925-787-2956 (c)
SVP/Marketing Director
agelinas@presidiobank.com

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Contacts

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