Presidio Bank Reports Results for the Second Quarter 2016

SAN FRANCISCO--()--Presidio Bank (OTCBB:PDOB), a Bay Area business bank, today reported unaudited results for the second quarter ended June 30, 2016 with Net Income of $1,149 thousand, up 22% from the quarter ended March 31, 2016 and up 65% from the second quarter 2015. For the six months ended June 30, 2016, Net Income was $2,090 thousand, up 77% over the same period a year ago.

“We are pleased to report another quarter of strong profit growth”

“We are pleased to report another quarter of strong profit growth,” said Presidio Bank President and CEO Steve Heitel. “Compared to the same quarter last year, loans were up almost $100 million, revenue was up 22% and expenses increased by only 7%. This represents another significant step to achieving the profitability and efficiency metrics we are striving for.”

Financial Highlights

  • Total Loans Outstanding increased $22 million or 4% from the quarter ended March 31, 2016 and increased $99 million or 22% over the second quarter 2015. Despite a somewhat higher than average loan payoffs anticipated in the second half of the year, the loan pipeline remains solid and net loan growth is expected to continue.
  • Total Deposits decreased by $37 million from the quarter ended March 31, 2016 but increased by $24 million from the second quarter of 2015. This decline had been expected due to a build-up of temporary deposits in the past three quarters. Non-Interest Bearing Demand Deposits remain at 37% of Total Deposits.
  • Net Interest Income of $5.9 million in the second quarter of 2016 was down 1% from the first quarter of 2016 and up 24% from the second quarter of 2015. The decline from the first quarter of 2016 was primarily due to a decrease in loan fees recognized in the second quarter. Net Interest Margin decreased during the quarter to 3.70% from 3.86% in the first quarter of 2016 due to lower loan fees and a 6 basis point decline in loan yields during the quarter. Deposit costs and cost of funds were flat for the quarter. Net Interest Margin was 3.40% for the second quarter of 2015.
  • Operating Expenses decreased 13% from the first quarter of 2016. Compensation and Benefits Expense is seasonally high in the first quarter. In addition, there were a number of one-time expense items in the first quarter that inflated expense totals for that period. Operating Expenses increased 7% over the second quarter of 2015. Compensation and Benefits Expense was up 5% due to a modest increase in headcount; Occupancy and Equipment Expense was up 3% due to a lease extension on the San Francisco Office; and Data Processing Expense was up 10% due to higher volumes. Net Income Applicable to Common Shareholders was $1,149 thousand for the second quarter of 2016, up 22% from the first quarter of 2016 and up 112% from the second quarter of 2015. The disproportionate increase over the second quarter of 2015 is due primarily to elimination of dividends on the Bank’s Perpetual Preferred Stock which was fully redeemed in the third quarter of 2015.
  • Credit quality is unchanged and strong with a classified to capital ratio of 3.9%, up slightly from 3.8% in the first quarter due to a nominally higher balance on a classified line of credit. The number of classified borrowers declined during the quarter from six to four. The Allowance for Loans Losses increased by $67 thousand to $6.4 million due to loan growth during the quarter. The Allowance for Loan Losses now covers Non-Performing Loans by almost six times. The Bank has one non-performing loan totaling $1.1 million.
  • Diluted earnings per common share were $0.19 for the quarter compared to $0.16 in the first quarter of 2016 and $0.12 in the second quarter of 2015.
  • Book value per share increased to $10.82 per share as of June, 2016 from $10.75 per share at March 31, 2016 and $10.27 per share at June 30, 2015. The increase in book value was muted by stock option exercises that have added nearly $6 million of capital during the first half of 2016 and raised the Tier 1 Risk-Based Capital ratio to above 10% at quarter end.

“On July 26, 2016, Presidio Bank will be celebrating its Tenth Anniversary,” said Presidio Bank Chairman and Founder, Jim Woolwine. “During this time, the Bank has built a great team, established five offices in key Bay Area locations, grown to more than $600 million in assets and made significant contributions to the communities that we serve. We look forward to building on this strong foundation.”

               

2nd Quarter 2016 Financial Results

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

 

Condensed Balance Sheet

 
6/30/2016 3/31/2016 Change 6/30/2015 Change 12/31/2015 Change
 
Cash and due from banks 9,430 12,723 -25.9% 501 1782.2% 6,175 52.7%
Interest bearing due from banks 73,324 96,867 -24.3% 126,275 -41.9% 103,211 -29.0%
Total cash and equivalents 82,754 109,590 -24.5% 126,776 -34.7% 109,386 -24.3%
Investment securities 14,456 14,548 -0.6% 14,191 1.9% 15,034 -3.8%
Loans, net of fees 544,577 522,942 4.1% 446,068 22.1% 523,815 4.0%
Allowance for loan losses (6,368) (6,301) 1.1% (5,172) 23.1% (6,301) 1.1%
Net loans 538,209 516,641 4.2% 440,896 22.1% 517,514 4.0%
Premises and equipment, net 1,101 1,155 -4.7% 1,381 -20.3% 1,231 -10.6%
Other assets and interest receivable 11,264 11,274 -0.1% 10,660 5.7% 11,102 1.5%
Total assets 647,784 653,208 -0.8% 594,308 9.0% 654,267 -1.0%
 
Non-interest-bearing demand 201,121 210,872 -4.6% 190,129 5.8% 210,997 -4.7%
Interest bearing transaction 83,121 104,147 -20.2% 67,403 23.3% 78,359 6.1%
Money market and savings accounts 213,227 220,936 -3.5% 207,446 2.8% 249,876 -14.7%
Time deposits 42,755 40,827 4.7% 51,046 -16.2% 40,118 6.6%
Total deposits 540,224 576,782 -6.3% 516,024 4.7% 579,350 -6.8%
Borrowings 37,510 9,773 283.8% 9,880 NM 9,891 279.2%
Other liabilities 6,272 6,629 -5.4% 7,079 -11.4% 7,472 -16.1%
Total liabilities 584,006 593,184 -1.5% 532,983 9.6% 596,713 -2.1%
 
Preferred stock - - NM 6,869 -100.0% - NM
Common stock 62,807 60,248 4.2% 56,375 11.4% 58,796 6.8%
Retained earnings 989 (160) 718.1% (2,264) 143.7% (1,100) 189.9%
Other comprehensive income (18) (64) 71.9% (59) 69.5% (142) 87.3%
Total shareholder’s equity 63,778 60,024 6.3% 60,921 4.7% 57,554 10.8%
Total liabilities and equity 647,784 653,208 -0.8% 593,904 9.1% 654,267 -1.0%
 
Book value per share
Book value per share $ 10.82 $ 10.75 $ 10.27 $ 10.51
Total shares outstanding EOP 5,893 5,581 5,261 5,477
 
Capital Ratios
Tier 1 leverage ratio 9.8% 9.5% 10.6% 9.0%
Tier 1 risk-based capital ratio 10.1% 9.8% 11.7% 9.4%
Total risk-based capital ratio 12.8% 12.5% 14.7% 12.2%
Tangible common risk-based ratio 10.1% 9.8% 10.4% 9.4%
 
       

Condensed Statement of Income

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

 
For the three months ended For the six months ended

6/30/2016

 

3/31/2016

  Change  

6/30/2015

  Change

6/30/2016

 

6/30/2015

  Change
Fav./ Fav./ Fav./

 

 

 

  (Unfav.)  

 

  (Unfav.)

 

 

 

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Interest income 6,309 6,372 (1.0%) 5,171 22.0% 12,681 10,167 24.7%
Interest expense 436 413 (5.6%) 428 (1.9%) 849 833 (1.9%)
Net interest income 5,873 5,959 (1.4%) 4,743 23.8% 11,832 9,334 26.8%
Provision for loan loss 67 - NM - NM 67 - NM
Net interest income after provision 5,806 5,959 (2.6%) 4,743 22.4% 11,765 9,334 26.0%
 
Other income 161 171 (5.8%) 183 (12.0%) 333 352 (5.4%)
 
Compensation and benefit expenses 2,424 3,044 20.4% 2,301 (5.3%) 5,468 4,896 (11.7%)
Occupancy and equipment expenses 531 516 (2.9%) 432 (22.9%) 1,046 878 (19.1%)
Data processing 304 323 5.9% 277 (9.7%) 627 564 (11.2%)
Professional and legal 141 136 (3.7%) 191 26.2% 276 301 8.3%
Other operating expenses 593 553 (7.2%) 542 (9.4%) 1,149 1,053 (9.1%)
Total operating expenses 3,993 4,572 12.7% 3,743 (6.7%) 8,566 7,692 (11.4%)
Net income before taxes 1,974 1,558 26.7% 1,183 66.9% 3,532 1,994 77.1%
Income taxes 825 618 (33.5%) 487 (69.4%) 1,442 815 (76.9%)
Net income 1,149 940 22.2% 696 65.1% 2,090 1,179 77.3%
Preferred dividends - - NM 155 NM - 276 100.0%
Net income to common 1,149 940 22.2% 541 112.4% 2,090 903 131.5%
 
Earnings Per Share
Basic earnings per share $ 0.20 $ 0.17 $ 0.13 $ 0.37 $ 0.21
Diluted earnings per share $ 0.19 $ 0.16 $ 0.12 $ 0.36 $ 0.20
Basic shares outstanding 5,713 5,517 4,315 5,614 4,268
Diluted shares outstanding 5,922 5,756 4,546 5,838 4,504
 
Performance Ratios
Return on average assets 0.71% 0.59% 0.48% 0.65% 0.43%
Return on average common equity 7.46% 6.40% 5.00% 6.95% 4.28%
Net interest margin 3.70% 3.86% 3.40% 3.78% 3.51%
Cost of funds 0.30% 0.29% 0.33% 0.30% 0.34%
Efficiency ratio 66.2% 74.6% 76.1% 70.4% 79.5%
 
Average Balances
Total assets 653,042 636,043 575,636 644,540 547,550
Earning assets 638,560 621,240 561,247 629,900 535,648
Total loans 531,739 522,422 424,455 527,081 419,222
Total deposits 568,518 558,000 508,336 563,259 483,315
Common equity 61,945 59,117 43,205 60,514 42,406
 

NM = Not Meaningful

 
           

Condensed Balance Sheet (5 Quarter Data)

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

 
6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
 
Cash and due from banks 9,430 12,723 6,175 8,984 501
Interest bearing due from banks 73,324 96,867 103,211 108,898 126,275
Total cash and equivalents 82,754 109,590 109,386 117,882 126,776
Investment securities 14,456 14,548 15,034 14,203 14,191
Loans, net of fees 544,577 522,942 523,815 475,466 446,068
Allowance for loan losses (6,368) (6,301) (6,301) (5,594) (5,172)
Net loans 538,209 516,641 517,514 469,872 440,896
Premises and equipment, net 1,101 1,155 1,231 1,313 1,381
Other assets and interest receivable 11,264 11,274 11,102 10,829 10,660
Total assets 647,784 653,208 654,267 614,099 593,904
 
Non-interest-bearing demand 201,121 210,872 210,997 204,348 190,129
Interest bearing transaction 83,121 104,147 78,359 69,142 67,403
Money market and savings accounts 213,227 220,936 249,876 216,602 207,446
Time deposits 42,755 40,827 40,118 44,388 51,046
Total deposits 540,224 576,782 579,350 534,480 516,024
Borrowings 37,510 9,773 9,891 9,767 9,880
Other liabilities 6,272 6,629 7,472 15,020 7,079
Total liabilities 584,006 593,184 596,713 559,267 532,983
 
Preferred stock - - - 6,869
Common stock 62,807 60,248 58,796 56,789 56,375
Retained earnings 989 (160) (1,100) (1,824) (2,264)
Other comprehensive income (18) (64) (142) (133) (59)
Total shareholder’s equity 63,778 60,024 57,554 54,832 60,921
Total liabilities and equity 647,784 653,208 654,267 614,099 593,904
 
Book value per share
Book value per share $ 10.82 $ 10.75 $ 10.51 $ 10.37 $ 10.27
Total shares outstanding EOP 5,893 5,581 5,477 5,288 5,261
 
Capital Ratios
Tier 1 leverage ratio 9.8% 9.5% 9.0% 9.1% 10.6%
Tier 1 risk-based capital ratio 10.1% 9.8% 9.4% 9.7% 11.6%
Total risk-based capital ratio 12.8% 12.5% 12.2% 12.6% 14.6%
Tangible common risk-based ratio 10.1% 9.8% 9.4% 9.7% 10.3%
 
   

Condensed Statement of Income (5 Quarter Data)

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

 
For the three months ended
6/30/2016   3/31/2016   12/31/2015   9/30/2015   6/30/2015
 
Interest income 6,309 6,372 5,860 5,557 5,171
Interest expense 436 413 409 421 428
Net interest income 5,873 5,959 5,451 5,136 4,743
Provision for loan loss 67 - 707 422 -
Net interest income after provision 5,806 5,959 4,744 4,714 4,743
 
Other income 161 171 158 191 183
 
Compensation and benefit expenses 2,424 3,044 2,441 2,331 2,301
Occupancy and equipment expenses 531 516 441 445 432
Data processing 304 323 299 289 277
Professional and legal 141 136 114 116 191
Other operating expenses 593 553 575 584 542
Total operating expenses 3,993 4,572 3,870 3,765 3,743
Net income before taxes 1,974 1,558 1,032 1,140 1,183
Income taxes 825 618 329 480 487
Net income 1,149 940 703 660 696
Preferred dividends - - - 231 155
Net income to common 1,149 940 703 429 541
 
Earnings Per Share
Basic earnings per share $ 0.20 $ 0.17 $ 0.13 $ 0.04 $ 0.13
Diluted earnings per share $ 0.19 $ 0.16 $ 0.13 $ 0.08 $ 0.12
Average shares outstanding 5,713 5,517 5,328 5,263 4,296
Average diluted shares 5,922 5,756 5,598 5,515 4,526
 
Performance Ratios
Return on average assets 0.71% 0.59% 0.41% 0.45% 0.48%
Return on average common equity 7.46% 6.38% 4.62% 3.84% 5.00%
Net interest margin 3.70% 3.86% 3.48% 3.43% 3.43%
Cost of funds 0.30% 0.29% 0.29% 0.30% 0.32%
Efficiency ratio 66.2% 74.6% 70.0% 70.2% 76.1%
 
Average Balances
Total assets 653,042 636,043 638,463 606,634 575,636
Earning assets 638,560 621,240 624,057 592,748 561,247
Total loans 531,739 522,422 484,924 453,483 424,455
Total deposits 568,518 558,000 564,379 527,295 508,336
Common equity 61,945 59,117 56,197 54,963 43,205
 
           

Loans (5 Quarter Data)

(Dollars in Thousands, unaudited)

 
6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
 
Commercial real estate 244,457 226,555 224,220 207,595 205,796
Land and construction 38,714 47,960 42,493 35,109 29,380
Commercial 150,613 145,127 153,853 142,134 131,263
Personal 35,376 30,465 27,103 23,367 17,214
Residential 26,852 25,013 30,212 26,077 27,589
Multifamily 49,379 48,659 46,827 41,998 35,584
Deferred loan fees (813) (837) (893) (813) (758)
Loans 544,577 522,942 523,814 475,466 446,068
Allowance for loan losses (6,368) (6,301) (6,301) (5,594) (5,172)
Net loans 538,209 516,641 517,514 469,872 440,896
 
           

Non-Performing Assets (5 Quarter Data)

(Dollars in Thousands, unaudited)

 
6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
Non-Accrual Loans 1,074 1,094 1,213 1,232 1,252
Non-Performing Loans (NPL) 1,074 1,094 1,213 1,232 1,252
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) 1,074 1,094 1,213 1,232 1,252
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent 1,074 1,094 1,213 1,232 1,252
 
Quarterly Net Charge-off's - - - - -
NPAs / Assets % 0.17% 0.17% 0.19% 0.20% 0.21%
NPAs & 90 Day / Assets % 0.17% 0.17% 0.19% 0.20% 0.21%
NPAs / Actual Loans and OREO % 0.17% 0.17% 0.19% 0.20% 0.21%
Loan Loss Reserves / Loans (%) 1.17% 1.20% 1.20% 1.18% 1.16%
 
   

Net Interest Income

(Dollars in Thousands, unaudited)

 
For the Three Months Ended
6/30/2016   6/30/2015
  Interest     Interest  
Average Income / Average Average Income / Average
Balance Expense   Rate Balance   Expense   Rate
Assets:
Interest-bearing deposits $ 92,265 $ 110 0.48 % $ 122,557 $ 79 0.26 %
Federal Reserve and Federal Home Loan Bank stock 3,969 69 7.02 3,319 117 14.14
 
Investment Securities 10,587 37 1.39 10,917 35 1.29
 
Loans: (2)
Commercial Real Estate 148,278 1,687 4.58 134,739 1,544 4.60
Land and Construction 41,350 493 4.80 18,179 241 5.31
Commercial Real Estate 232,950 2,721 4.70 192,965 2,300 4.78
Residential 26,389 276 4.21 24,761 256 4.15
Multifamily 48,959 579 4.75 35,971 422 4.70
Personal 33,814 338 4.02 17,840 177 3.99
Total Loans 531,739 6,093 4.61 424,455 4,941 4.67
Total Earning Assets 638,560 6,309 3.97 561,248 5,172 3.70
Allowance for loan losses (6,306) (6,306)
Cash and cash equivalents 9,298 7,638
Other assets 11,491 13,056
Total Assets $ 653,042 $ 575,636
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 91,645 $ 46 0.20 % $ 72,765 $ 39 0.22 %
Money market deposits 223,106 127 0.23 206,924 118 0.23
Savings deposits 3,666 1 0.12 2,357 1 0.11
Certificates and other time deposits 42,288 44 0.42 50,924 59 0.47
Total Interest-bearing Deposits 360,705 219 0.24 332,970 217 0.26
Borrowings 15,863 217 5.51 9,884 211 8.66
Total Interest-bearing Liabilities 376,568 436 0.47 342,854 428 0.51
Noninterest-bearing deposits 208,142 175,367
Other liabilities 6,417 7,344
Total Liabilities 591,127 525,565
Stockholders' Equity 61,915 50,071
Total Liabilities and Stockholders' Equity $ 653,042 $ 575,636
Net Interest Income $ 5,873 $ 4,743
Net Interest Margin 3.70 % 3.40 %
Cost of funds 0.30 % 0.33 %
 
 

Net Interest Income

(Dollars in Thousands, unaudited)

 
For the Six Months Ended
6/30/2016   6/30/2015
  Interest     Interest  
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 88,129 $ 227 0.52 % $ 102,169 $ 127 0.25 %
Federal Reserve and Federal Home Loan Bank stock 3,865 135 7.05 3,206 168 10.59
 
Investment Securities 10,826 75 1.39 11,051 71 1.29
 
Loans: (2)
Commercial Real Estate 149,450 3,531 4.75 132,714 3,058 4.65
Land and Construction 43,139 1,076 5.01 16,406 446 5.48
Commercial Real Estate 228,758 5,341 4.70 193,220 4,624 4.83
Residential 27,048 565 4.20 24,355 503 4.16
Multifamily 46,946 1,098 4.71 35,262 820 4.69
Personal 31,740 633 4.01 17,265 351 4.09
Total Loans 527,081 12,245 4.67 419,222 9,801 4.71
Total Earning Assets 629,900 12,681 4.05 535,648 10,167 3.83
Allowance for loan losses (6,306) (6,306)
Cash and cash equivalents 9,313 7,819
Other assets 11,633 10,388
Total Assets $ 644,540 $ 547,550
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 87,231 $ 89 0.20 % $ 70,832 $ 77 0.22 %
Money market deposits 221,025 250 0.23 193,939 214 0.22
Savings deposits 3,408 2 0.13 2,448 1 0.12
Certificates and other time deposits 41,095 79 0.38 50,913 118 0.47
Total Interest-bearing Deposits 352,759 419 0.24 318,132 410 0.26
Borrowings 13,630 430 6.34 9,897 422 8.60
Total Interest-bearing Liabilities 366,389 849 0.47 328,029 833 0.51
Noninterest-bearing deposits 210,500 165,183
Other liabilities 7,138 5,062
Total Liabilities 584,027 498,274
Stockholders' Equity 60,514 49,275
Total Liabilities and Stockholders' Equity $ 644,540 $ 547,550
Net Interest Income $ 11,832 $ 9,334
Net Interest Margin 3.78 % 3.51 %
Cost of funds 0.30 % 0.34 %
 

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.

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

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