Presidio Bank Reports Results for the Fourth Quarter and Full Year 2016

Net Income up 76% for the year.

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, 2016 with Net Income for the year of $4.5 million, up 76% from 2015. Net Income for the quarter was $1.2 million, up 2% from the quarter ended September 30, 2016 and up 71% from the fourth quarter 2015. Total Assets were a record high $748 million at December 31, 2016, up $9 million from September 30, 2016 and up $93 million or 14% from December 31, 2015.

“We are particularly pleased to have achieved our goal of growing revenues twice as fast as expenses which resulted in a significant improvement in our profitability metrics.”

“Presidio Bank had a solid year in 2016,” said Presidio Bank President and CEO Steve Heitel. “We are particularly pleased to have achieved our goal of growing revenues twice as fast as expenses which resulted in a significant improvement in our profitability metrics.”

Financial Highlights

  • Total Loans Outstanding were up $30 million from the quarter ending September 30, 2016 and up $49 million for the year or 9%. Growth in Commercial and Industrial Loans, Commercial Real Estate Loans and Multifamily Loans helped offset a $30 million decline in Construction and Land Development Loans during the year. New Loan Originations were strong with New Loan Commitments of $73 million in the fourth quarter, up from $68 million in the third quarter and $44 million in the second quarter.
  • Total Deposits increased by $8 million from the quarter ended September 30, 2016. The growth occurred in spite of a large money market deposit of $75 million, which came in at the end of August and left as expected early in the fourth quarter. Total Deposits increased $84 million for the year or 15%. Demand Deposits increased by $35 million during the quarter and now total 39% of Total Deposits.
  • Net Interest Income of $6.3 million in the fourth quarter of 2016 was up 3% from the third quarter of 2016 and up 15% from the fourth quarter of 2015. For the year Net Interest Income is up 22% over 2015. Net Interest Margin decreased during the quarter to 3.45% from 3.59% in the third quarter of 2016, due primarily to higher levels of lower yielding Liquid Assets carried during the quarter. Loan Yields and Deposit Costs were essentially flat for the quarter. For the year, Net Interest Margin was 3.63% compared to 3.48% in 2015.
  • Operating Expenses increased by 4.6% over the third quarter of 2016. As in the prior quarter, the majority of this increase came in Compensation and Benefits Expense and was related to growth-driven additions to staff and an increase to the accrual for Incentive Compensation due to higher than planned deposit balances. For the year, Operating Expenses were up 10% compared to Revenue growth of 21%. The Bank’s efficiency ratio improved from 74.7% in 2015 to 67.9% in 2016. Net Income Applicable to Common Shareholders was up 117% for the year, as 2015 included $475,000 of dividends on preferred stock retired in September of 2015.
  • Credit Quality remains strong with a Classified to Capital Ratio of 5.9% at December 31, 2016. The number of classified relationships totals five. The Allowance for Loans Losses increased by $226 thousand to $6.9 million due to the increase in Loans during the quarter along with an $86 thousand impairment reserve on the Bank’s one Non-Performing Loan. The Allowance for Loan Losses covers Non-Performing Loans by more than six times.
  • Diluted Earnings per Common Share were $0.20 for the quarter compared to $0.19 in the third quarter of 2016 and $0.13 in the fourth quarter of 2015. Diluted Earnings per Common Share were $0.75 for the year, up from $0.41 in 2015.
  • Book Value per Share increased to $11.31 per share at December 31, 2016 from $11.04 per share at September 30, 2016 and $10.51 per share at December 31, 2015.

“I am very proud of what our Presidio Bank team achieved in 2016 and am grateful to our clients, shareholders and friends for their continued support,” said Presidio Bank Chairman and Founder, Jim Woolwine.

 

4th Quarter 2016 Financial Results

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

 
Condensed Balance Sheet
                   
12/31/2016   9/30/2016   Change   12/31/2015   Change
 
Cash and due from banks 6,035 6,743 -10.5 % 6,175 -2.3 %
Interest bearing due from banks   150,159       168,954     -11.1 %     103,211     45.5 %
Total cash and equivalents 156,194 175,697 -11.1 % 109,386 42.8 %
Investment securities 13,249 13,955 -5.1 % 15,034 -11.9 %
Loans, net of fees 572,780 542,867 5.5 % 523,815 9.3 %
Allowance for loan losses   (6,868 )     (6,642 )   3.4 %     (6,301 )   9.0 %
Net loans 565,912 536,225 5.5 % 517,514 9.4 %
Premises and equipment, net 1,020 1,041 -2.0 % 1,231 -17.1 %
Other assets and interest receivable   11,127       10,952     1.6 %     11,102     0.2 %
Total assets 747,502 737,870 1.3 % 654,267 14.3 %
 
Non-interest-bearing demand 257,757 222,877 15.6 % 210,998 22.2 %
Interest bearing transaction 99,604 80,112 24.3 % 78,359 27.1 %
Money market and savings accounts 259,710 291,551 -10.9 % 249,876 3.9 %
Time deposits   46,412       61,404     -24.4 %     40,118     15.7 %
Total deposits 663,483 655,944 1.1 % 579,351 14.5 %
Borrowings 9,845 9,770 0.8 % 9,891 -0.5 %
Other liabilities   6,812       6,531     4.3 %     7,472     -8.8 %
Total liabilities 680,140 672,245 1.2 % 596,714 14.0 %
 
Common stock 64,122 63,492 1.0 % 58,795 9.1 %
Retained earnings 3,377 2,174 -55.3 % (1,100 ) 407.0 %
Other comprehensive income   (137 )     (41 )   -234.1 %     (142 )   3.5 %
Total shareholder’s equity   67,362       65,625     2.6 %     57,553     17.0 %
Total liabilities and equity 747,502 737,870 1.3 % 654,267 14.3 %
 
Book value per share
Book value per share $ 11.31 $ 11.04 $ 10.51
Total shares outstanding EOP 5,957 5,944 5,477
 
Capital Ratios
Tier 1 leverage ratio 9.1 % 9.5 % 9.0 %
Common equity tier 1 capital ratio 10.1 % 10.3 % 9.4 %
Tier 1 risk-based capital ratio 10.1 % 10.3 % 9.4 %
Total risk-based capital ratio 12.7 % 12.9 % 12.1 %
 
         
Condensed Statement of Income

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

 
For the three months ended For the twelve months ended
    Change     Change    

Change

12/31/2016

9/30/2016

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12/31/2015

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12/31/2016

12/31/2015

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Interest income 6,736 6,575 2.4 % 5,860 14.9 % 25,993 21,583 20.4 %
Interest expense   455       471     3.4 %     409     (11.2 %)   1,775       1,662     (6.8 %)
Net interest income 6,281 6,104 2.9 % 5,451 15.2 % 24,218 19,921 21.6 %
Provision for loan loss   226       274     17.5 %     707     68.0 %   567       1,129     (49.8 %)
Net interest income after provision 6,055 5,830 3.9 % 4,744 27.6 % 23,651 18,792 25.9 %
 
Other income 189 177 6.8 % 158 19.6 % 698 701 (0.4 %)
 
Compensation and benefit expenses 2,657 2,546 (4.4 %) 2,441 (8.8 %) 10,671 9,668 (10.4 %)
Occupancy and equipment expenses 547 531 (3.0 %) 441 (24.0 %) 2,124 1,765 (20.3 %)
Data processing 340 320 (6.3 %) 299 (13.7 %) 1,287 1,152 (11.7 %)
Professional and legal 121 142 14.8 % 114 (6.1 %) 539 531 (1.5 %)
Other operating expenses   612       548     (11.7 %)     575     (6.4 %)   2,310       2,212     (4.4 %)
Total operating expenses   4,277       4,087     (4.6 %)     3,870     (10.5 %)   16,931       15,328     (10.5 %)
Net income before taxes 1,967 1,920 2.4 % 1,032 90.6 % 7,418 4,165 78.1 %
Income taxes   763       736     (3.7 %)     329     (131.9 %)   2,941       1,623     (81.2 %)
Net income 1,204 1,184 1.7 % 703 71.3 % 4,477 2,542 76.1 %
Preferred dividends and accretion   -       -           -         -       475      
Net income to common   1,204       1,184     1.7 %     703     71.3 %   4,477       2,067     116.6 %
 
Earnings Per Share
Basic earnings per share $ 0.20 $ 0.20 $ 0.13 $ 0.77 $ 0.43
Diluted earnings per share $ 0.20 $ 0.19 $ 0.13 $ 0.75 $ 0.41
Average shares outstanding 5,946 5,926 5,328 5,788 4,773
Average diluted shares 6,126 6,096 5,598 5,987 5,022
 
Performance Ratios
Return on average assets 0.65 % 0.68 % 0.41 % 0.66 % 0.43 %
Return on average common equity 7.15 % 7.22 % 4.62 % 7.04 % 4.25 %
Net interest margin 3.45 % 3.59 % 3.48 % 3.63 % 3.48 %
Cost of funds 0.27 % 0.29 % 0.28 % 0.29 % 0.31 %
Efficiency ratio 66.1 % 65.1 % 70.0 % 68.0 % 74.7 %
 
Average Balances
Total assets 738,307 694,088 638,063 680,565 585,174
Earning assets 725,247 679,353 623,229 666,298 572,116
Total loans 537,641 547,748 484,925 534,930 444,418
Total deposits 655,149 603,428 564,380 596,303 514,833
Common equity 66,788 65,228 56,198 63,275 54,148
 
             
Condensed Balance Sheet (5 Quarter Data)

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

                 
12/31/2016   9/30/2016   6/30/2016   3/31/2016   12/31/2015
 
Cash and due from banks 6,035 6,743 9,430 12,723 6,175
Interest bearing due from banks   150,159       168,954       73,324       96,867       103,211  
Total cash and equivalents 156,194 175,697 82,754 109,590 109,386
Investment securities 13,249 13,955 14,456 14,548 15,034
Loans, net of fees 572,780 542,867 544,577 522,942 523,815
Allowance for loan losses   (6,868 )     (6,642 )     (6,368 )     (6,301 )     (6,301 )
Net loans 565,912 536,225 538,209 516,641 517,514
Premises and equipment, net 1,020 1,041 1,101 1,155 1,231
Other assets and interest receivable   11,127       10,952       11,264       11,274       11,102  
Total assets 747,502 737,870 647,784 653,208 654,267
 
Non-interest-bearing demand 257,757 222,877 201,121 210,872 210,997
Interest bearing transaction 99,604 80,112 83,121 104,147 78,359
Money market and savings accounts 259,710 291,551 213,227 220,936 249,876
Time deposits   46,412       61,404       42,755       40,827       40,118  
Total deposits 663,483 655,944 540,224 576,782 579,350
Borrowings 9,845 9,770 37,510 9,773 9,891
Other liabilities   6,812       6,531       6,272       6,629       7,472  
Total liabilities 680,140 672,245 584,006 593,184 596,713
 
Common stock 64,122 63,492 62,807 60,248 58,796
Retained earnings 3,377 2,174 989 (160 ) (1,100 )
Other comprehensive income   (137 )     (41 )     (18 )     (64 )     (142 )
Total shareholder’s equity   67,362       65,625       63,778       60,024       57,554  
Total liabilities and equity   747,502       737,870       647,784       653,208       654,267  
- - -
Book value per share
Book value per share $ 11.31 $ 11.04 $ 10.82 $ 10.75 $ 10.51
Total shares outstanding EOP 5,957 5,944 5,893 5,581 5,477
 
Capital Ratios
Tier 1 leverage ratio 9.1 % 9.5 % 9.8 % 9.5 % 9.0 %
Common equity tier 1 capital ratio 10.1 % 10.3 % 10.1 % 9.8 % 9.4 %
Tier 1 risk-based capital ratio 10.1 % 10.3 % 10.1 % 9.8 % 9.4 %
Total risk-based capital ratio 12.7 % 12.9 % 12.8 % 12.5 % 12.2 %
 
 
Condensed Statement of Income (5 Quarter Data)

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

     
For the three months ended
12/31/2016     9/30/2016     6/30/2016     3/31/2016     12/31/2015  
       
Interest income 6,736 6,575 6,309 6,372 5,860
Interest expense   455       471       436       413       409  
Net interest income 6,281 6,104 5,873 5,959 5,451
Provision for loan loss   226       274       67       -       707  
Net interest income after provision 6,055 5,830 5,806 5,959 4,744
 
Other income 189 177 161 171 158
 
Compensation and benefit expenses 2,657 2,546 2,424 3,044 2,441
Occupancy and equipment expenses 547 531 531 516 441
Data processing 340 320 304 323 299
Professional and legal 121 142 141 136 114
Other operating expenses   612       548       593       553       575  
Total operating expenses   4,277       4,087       3,993       4,572       3,870  
Net income before taxes 1,967 1,920 1,974 1,558 1,032
Income taxes   763       736       825       618       329  
Net income 1,204 1,184 1,149 940 703
Preferred dividends   -       -       -       -       -  
Net income to common   1,204       1,184       1,149       940       703  
 
Earnings Per Share
Basic earnings per share $ 0.20 $ 0.20 $ 0.20 $ 0.17 $ 0.13
Diluted earnings per share $ 0.20 $ 0.19 $ 0.19 $ 0.16 $ 0.13
Average shares outstanding 5,946 5,926 5,713 5,693 5,328
Average diluted shares 6,126 6,096 5,922 5,922 5,598
 
Performance Ratios
Return on average assets 0.65 % 0.68 % 0.71 % 0.59 % 0.41 %
Return on average common equity 7.15 % 7.22 % 7.46 % 6.38 % 4.62 %
Net interest margin 3.45 % 3.59 % 3.70 % 3.86 % 3.48 %
Cost of funds 0.27 % 0.29 % 0.30 % 0.29 % 0.29 %
Efficiency ratio 66.1 % 65.1 % 66.2 % 74.6 % 70.0 %
 
Average Balances
Total assets 738,307 694,088 653,042 636,043 638,063
Earning assets 725,247 679,353 638,560 621,240 623,229
Total loans 537,641 547,748 531,739 522,422 484,925
Total deposits 655,149 603,428 568,518 558,000 564,380
Common equity 66,788 65,228 61,945 59,117 56,198
 
 
Loans (5 Quarter Data)

(Dollars in Thousands, unaudited)

                                 
12/31/2016     9/30/2016     6/30/2016     3/31/2016     12/31/2015  
       
Commercial real estate 263,463 248,646 244,457 226,555 224,220
Land and construction 12,298 20,025 38,714 47,960 42,493
Commercial 180,412 161,783 150,613 145,127 153,853
Personal 31,352 31,411 35,376 30,465 27,103
Residential 30,510 30,977 26,852 25,013 30,212
Multifamily 55,593 50,832 49,379 48,659 46,827
Deferred loan fees (848 )   (806 )   (813 )   (837 )   (893 )
Loans 572,779 542,867 544,577 522,942 523,814
Allowance for loan losses (6,868 )   (6,642 )   (6,368 )   (6,301 )   (6,301 )

Net loans

565,912 536,225 538,209 516,641 517,514
 
 
Non-Performing Assets (5 Quarter Data)

(Dollars in Thousands, unaudited)

                                 
12/31/2016   9/30/2016   6/30/2016   3/31/2016   12/31/2015
       
Non-Accrual Loans 1,055 1,068 1,074 1,094 1,213
Non-Performing Loans (NPL) 1,055 1,068 1,074 1,094 1,213
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) 1,055 1,068 1,074 1,094 1,213
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent 1,055 1,068 1,074 1,094 1,213
 
Quarterly Net Charge-offs - - - - -
NPAs / Assets % 0.14 % 0.14 % 0.17 % 0.17 % 0.19 %
NPAs & 90 Day / Assets % 0.14 % 0.14 % 0.17 % 0.17 % 0.19 %
NPAs / Actual Loans and OREO % 0.14 % 0.14 % 0.17 % 0.17 % 0.19 %
Loan Loss Reserves / Loans (%) 1.20 % 1.22 % 1.17 % 1.20 % 1.20 %
 
 
Net Interest Income (Quarter Data)

(Dollars in Thousands, unaudited)

 
      For the Three Months Ended
12/31/2016   12/31/2015
  Interest       Interest    
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 174,024 $ 213 0.49 % $ 124,773 $ 91 0.29 %
Federal Reserve and Federal Home Loan Bank stock 4,216 160 15.12 3,775 71 7.45
Investment Securities 9,367 34 1.44 9,757 48 1.95
 
Loans: (2)
Commercial 157,595 1,905 4.81 142,328 1,642 4.58
Land and Construction 15,524 267 6.84 37,580 495 5.22
Commercial Real Estate 250,071 2,912 4.63 208,961 2,463 4.68
Residential 30,500 320 4.17 26,936 287 4.23
Multifamily 52,092 613 4.68 43,628 509 4.63
Personal 31,858   312 3.90 25,492   255 3.96
Total Loans 537,641   6,329 4.68 484,925   5,650 4.62
Total Earning Assets 725,247 6,736 3.70 623,229 5,860 3.73
Allowance for loan losses (6,642 ) (5,679 )
Cash and cash equivalents 8,640 9,289
Other assets 11,061   11,223  
Total Assets $ 738,307   $ 638,063  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 93,846 $ 43 0.18 % $ 80,069 $ 37 0.18 %
Money market deposits 264,975 147 0.22 227,963 122 0.21
Savings deposits 3,221 1 0.08 2,540 1 0.11
Certificates and other time deposits 50,966   53 0.41 43,538   38 0.35
Total Interest-bearing Deposits 413,008 244 0.23 354,108 198 0.22
Borrowings 9,886   211 8.48 9,794   211 8.55
Total Interest-bearing Liabilities 422,894 455 0.43 363,902 409 0.45
Noninterest-bearing deposits 242,141 210,271
Other liabilities 6,483   7,692  
Total Liabilities 671,518 581,866
Stockholders' Equity 66,788   56,198  
Total Liabilities and Stockholders' Equity $ 738,307   $ 638,063  
Net Interest Income $ 6,281 $ 5,451
Net Interest Margin 3.44 % 3.47 %
Cost of funds 0.27 % 0.28 %
 
 
Net Interest Income (YTD)

(Dollars in Thousands, unaudited)

     
For the Twelve Months Ended
12/31/2016   12/31/2015
  Interest       Interest    
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 117,087 $ 592 0.51 % $ 113,656 $ 292 0.26 %
Federal Reserve and Federal Home Loan Bank stock 4,016 373 9.30 3,434 310 9.02
Investment Securities 10,265 143 1.39 10,607 154 1.45
 
Loans: (2)
Commercial 153,918 7,221 4.69 135,740 6,256 4.61
Land and Construction 33,487 1,754 5.24 25,902 1,368 5.28
Commercial Real Estate 238,263 11,205 4.70 199,211 9,547 4.79
Residential 28,281 1,186 4.19 25,133 1,048 4.17
Multifamily 48,843 2,248 4.60 38,434 1,803 4.69
Personal 32,137   1,272 3.96 19,999   805 4.03
Total Loans 534,930   24,884 4.65 444,418   20,828 4.69
Total Earning Assets 666,298 25,993 3.90 572,116 21,583 3.77
Allowance for loan losses (6,452 ) (5,314 )
Cash and cash equivalents 9,272 8,147
Other assets 11,446   10,225  
Total Assets $ 680,565   $ 585,174  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 88,330 $ 173 0.20 % $ 73,822 $ 152 0.21 %
Money market deposits 237,624 541 0.23 206,587 450 0.22
Savings deposits 3,335 4 0.11 2,375 3 0.11
Certificates and other time deposits 47,003   195 0.41 48,880   213 0.44
Total Interest-bearing Deposits 376,293 912 0.24 331,663 818 0.25
Borrowings 14,088   863 6.12 9,855   844 8.56
Total Interest-bearing Liabilities 390,382 1,775 0.45 341,518 1,662 0.49
Noninterest-bearing deposits 220,010 183,170
Other liabilities 6,898   6,338  
Total Liabilities 617,289 531,026
Stockholders' Equity 63,275   54,148  
Total Liabilities and Stockholders' Equity $ 680,565   $ 585,174  
Net Interest Income $ 24,218 $ 19,921
Net Interest Margin 3.63 % 3.48 %
Cost of funds 0.29 % 0.32 %

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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