Presidio Bank Reports Net Income Growth of 29% for 2014

Loans, Deposits and Total Assets end year at record levels

SAN FRANCISCO--()--Presidio Bank (OTCBB:PDOB), a Bay Area business bank, today reported unaudited results for the fourth quarter and full year ended December 31, 2014 with net income for the year of $3.1 million, up 29% from 2013. The fourth quarter was highlighted by $31 million in core deposit growth and $14 million in loan growth resulting in record levels in both categories. Total assets increased $32 million for the quarter and just under $100 million for the year.

“The addition of new capital, improvement in our already strong credit quality and successful opening of our San Mateo Office positions the Bank well for continued growth in 2015.”

“2014 was another solid year for the Bank,” said Presidio Bank President and CEO Steve Heitel. “The Bank continued to grow loans, deposits, net income and new relationships while successfully executing a shareholder-friendly capital raise and launching our fifth office.”

Financial Highlights

  • Total Loans outstanding increased by $14 million or 3.6% over the quarter ended September 30, 2014 and increased $42 million or 11.3% for the full year.
  • Total Deposits increased by $31 million or 6.9% from the quarter ended September 30, 2014 and increased by $85 million or 21% for 2014. A number of Bank depositors are holding balances that are temporarily inflated. We had anticipated that some of these balances would run-off in the fourth quarter of 2014. Instead these temporary balances increased during the quarter. We now expect these balances to decline to more normal levels in the first quarter of 2015.
  • Net interest income of $4.9 million in the fourth quarter was up 3% over the third quarter of 2014. This increase resulted from loan growth and the recognition of interest income on a classified loan which paid off during the quarter which more than offset $210 thousand in interest expense incurred during the quarter on the Bank’s newly issued subordinated notes. Net Interest Income was up 17% for the year.
  • Operating Expenses increased 6% from the third quarter primarily due to a full quarter’s lease expense on our new San Mateo Office, and higher professional fees due to recruitment expense for our new East Bay Market President. Operating Expenses were up 11% for the year.
  • Net Income was $3.1 million, up 29% in 2014. Net income applicable to common shareholders was $2.8 million for the year, an increase of 47.6% over 2013 as dividends on preferred stock declined; a result of the partial repurchase of preferred shares executed in 2013.
  • Credit quality remains strong with a classified loan to capital ratio of less than 5%. The Bank added $220 thousand to the Allowance For Loan Losses during the fourth quarter due to growth in the loan portfolio. No loan loss provision was recorded in 2013 or the third quarter of 2014. The Bank’s largest classified loan paid off in full during the quarter. Non-performing loans totaled $1.3 million at December 31, 2014 or 0.3% of total loans. The Allowance for Loan Losses of $5.2 million covers non-performing loans by almost four times.
  • Diluted earnings per common share were $0.14 for the quarter compared to $0.18 in the third quarter of 2014 and $0.19 in the fourth quarter of 2013. EPS for the fourth quarter of 2013 included a $152,000 gain on the retirement of preferred stock.
  • Book value per share increased to $9.74 per share as of December 31, 2014 from $9.53 per share at September 30, 2014 and $8.99 per share at December 31, 2013.

“The Bank continued to successfully execute its organic growth strategy in 2014,” said Presidio Bank Chairman and Founder, Jim Woolwine. “The addition of new capital, improvement in our already strong credit quality and successful opening of our San Mateo Office positions the Bank well for continued growth in 2015.”

4th Quarter 2014 Financial Results
(Dollars in thousands, except per share amounts, unaudited)

   

Condensed Balance Sheet

 

For the period ended

12/31/2014     9/30/2014   Change   12/31/2013   Change
   
Cash and due from banks 5,621   7,972 -29.5 %   5,694 -1.3 %
Interest bearing due from banks   104,642       84,612     23.7 %     49,545     111.2 %
Total cash and equivalents 110,263 92,584 19.1 % 55,239 99.6 %
Investment securities 14,392 14,419 -0.2 % 14,230 1.1 %
Loans, net of fees 415,741 401,421 3.6 % 373,421 11.3 %
Allowance for loan losses   (5,172 )     (4,952 )   4.4 %     (4,867 )   6.3 %
Net loans 410,569 396,469 3.6 % 368,554 11.4 %
Premises and equipment, net 1,477 1,090 35.5 % 932 58.5 %
Other assets and interest receivable   6,052       5,773     4.8 %     4,863     24.4 %
Total assets 542,753 510,335 6.4 % 443,818 22.3 %
 
Non-interest-bearing demand 164,353 167,411 -1.8 % 132,546 24.0 %
Interest bearing transaction 69,646 63,260 10.1 % 71,760 -2.9 %
Money market and savings accounts 196,050 166,866 17.5 % 153,180 28.0 %
Time deposits   51,643       52,967     -2.5 %     39,672     30.2 %
Total deposits 481,692 450,504 6.9 % 397,158 21.3 %
Borrowings 10,360 10,048 3.1 % -
Other liabilities   2,884       2,913     -1.0 %     2,376     21.4 %
Total liabilities 494,936 463,465 6.8 % 399,534 23.9 %
 
Preferred stock 6,869 6,860 0.1 % 6,811 0.9 %
Common stock 44,207 43,949 0.6 % 43,540 1.5 %
Retained earnings (3,167 ) (3,797 ) 16.6 % (5,898 ) 46.3 %
Other comprehensive income   (92 )     (142 )   35.2 %     (169 )    
Total shareholder’s equity   47,817       46,870     2.0 %     44,284     8.0 %
Total liabilities and equity 542,753 510,335 6.4 % 443,818 22.3 %
 

Book value per share

Book value per share $ 9.74 $ 9.53 $ 8.99
Total shares outstanding EOP 4,203 4,199 4,170
 

Capital Ratios

Tier 1 leverage ratio 8.8 % 9.7 % 9.9 %
Tier 1 risk-based capital ratio 10.0 % 10.1 % 10.3 %
Total risk-based capital ratio 13.3 % 13.5 % 11.6 %
Tangible common risk-based ratio 8.5 % 8.6 % 8.8 %
 
 

Condensed Statement of Income

       
For the three months ended For the twelve months ended
    Change     Change     Change
Fav./ Fav./ Fav./
  12/31/2014       9/30/2014     (Unfav.)     12/31/2013     (Unfav.)   12/31/2014       12/31/2013     (Unfav.)
 
Interest income 5,342 4,963 7.6 % 4,388 21.7 % 19,719 16,753 17.7 %
Interest expense   424       197     (115.2 %)     200     (112.0 %)   1,010       807     (25.2 %)
Net interest income 4,918 4,766 3.2 % 4,188 17.4 % 18,709 15,946 17.3 %
Provision for loan loss   220       -     NM       -     NM     301       -     NM  
Net interest income after provision 4,698 4,766 (1.4 %) 4,188 12.2 % 18,408 15,946 15.4 %
Other income 167 182 (8.2 %) 151 10.6 % 701 571 22.8 %
Compensation and benefit expenses 2,134 2,165 1.4 % 1,887 (13.1 %) 8,550 7,349 (16.3 %)
Occupancy and equipment expenses 447 393 (13.7 %) 382 (17.0 %) 1,586 1,535 (3.3 %)
Data processing 286 261 (9.6 %) 258 (10.9 %) 1,064 1,006 (5.8 %)
Professional and legal 123 88 (39.8 %) 107 (15.0 %) 429 556 22.8 %
Other operating expenses   618       498     (24.1 %)     452     (36.7 %)   2,100       1,941     (8.2 %)
Total operating expenses   3,608       3,405     (6.0 %)     3,086     (16.9 %)   13,729       12,387     (10.8 %)
Net income before taxes 1,257 1,543 (18.5 %) 1,253 0.3 % 5,380 4,130 30.3 %
Income taxes   528       648     18.5 %     514     (2.7 %)   2,234       1,693     (32.0 %)
Net income 729 895 (18.5 %) 739 1.4 % 3,146 2,437 29.1 %
Preferred dividends   89       89     0.0 %     117     23.9 %   356       547     34.9 %
Net income to common   640       806     (20.6 %)     622     2.9 %   2,790       1,890     47.6 %
 
Basic earnings per share $ 0.15 $ 0.19 $ 0.19 $ 0.65 $ 0.49
Diluted earnings per share $ 0.14 $ 0.18 $ 0.19 $ 0.62 $ 0.48
Average shares outstanding 4,194 4,187 4,137 4,178 4,119
Average diluted shares 4,412 4,390 4,208 4,365 4,156
 
Performance Ratios
Return on average assets 0.53 % 0.73 % 0.66 % 0.64 % 0.58 %
Return on average common equity 6.20 % 8.02 % 6.63 % 7.07 % 5.22 %
Net interest margin 3.67 % 3.96 % 3.80 % 3.88 % 3.86 %
Cost of funds 0.33 % 0.18 % 0.20 % 0.23 % 0.22 %
Efficiency ratio 71.0 % 68.8 % 71.1 % 70.7 % 75.0 %
 
Average Balances
Total assets 543,885 484,699 444,672 490,032 419,865
Earning assets 535,387 476,849 437,002 482,371 412,817
Total loans 403,479 403,372 356,992 397,300 335,535
Total deposits 482,904 426,552 395,489 431,559 370,914
Common equity 40,943 39,892 37,239 39,482 36,174
 

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 (office) / 925-787-2956 (mobile)
SVP/Marketing Director
agelinas@presidiobank.com

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