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Press Release

Presidio Bank Reports Results for the Third Quarter 2014

Company Release - 10/28/2014 4:40 PM ET

Net Income up 23% over Third Quarter 2013

Total Assets exceed $500 million for the first time

SAN FRANCISCO--(BUSINESS WIRE)-- Presidio Bank (OTCBB: PDOB), a Bay Area business bank, today reported unaudited results for the third quarter ended September 30, 2014 with net income for the quarter of $895 thousand, a 23% increase over the $728 thousand achieved in the third quarter of 2013. Deposits and total assets also grew to record levels during the quarter.

“We are pleased to have passed the $500 million in total assets milestone,” said Presidio Bank President and CEO Steve Heitel. “The Bank had solid deposit and income growth during the quarter. While loans declined modestly due to some construction loan payoffs, we expect resumption of loan growth in the fourth quarter, which is traditionally our strongest.”

Financial Highlights

  • Total Loans Outstanding declined by $8 million or 2% over the quarter ended June 30, 2014 but increased by $50 million or 14% over the quarter ended September 30, 2013. A number of construction loans paid off earlier than anticipated as a reflection of the robust real estate market in the San Francisco Bay Area. Prior to the modest decline this quarter, the Bank had enjoyed six consecutive quarters of loan growth.
  • Total Deposits increased by $41 million or 10% from the quarter ended June 30, 2014 and by $77 million or 20% from the quarter ended September 30, 2013. As has happened in the past, a number of depositors had significant inflows towards the end of the quarter. It is likely these balances will normalize during the fourth quarter. The trend line for Deposit Growth remains positive.
  • Net Interest Income of $4.8 million in the third quarter was up 4% over the second quarter of 2014. This growth was inflated somewhat by lack of Loan Loss Provision Expense in the third quarter versus $81 thousand taken in the second quarter. After normalizing this impact, Net Interest Income still grew by 2.6% during the quarter and was up by 16% over the same quarter in 2013.
  • Operating Expenses increased 2% from the second quarter primarily due to increased Compensation Expense and the commencement of lease expense in September for the Bank’s new San Mateo Office.
  • Net Income Applicable to Common Shareholders was $806 thousand for the quarter, an increase of 38% over the third quarter of 2013. Net Income Applicable to Common Shareholders was up 9% over the second quarter of 2014.
  • As previously announced, the Bank completed a capital raise during the quarter, which consisted of $10 million of 8%, 10-year maturity, subordinated notes which it expects will count as Tier II capital. The debt is reflected on the September 30 balance sheet however, since it closed at the end of September, interest expense related to this debt was nominal for third quarter.
  • Credit Quality remains strong. The Bank has just two borrowers classified as non-performing totaling $1.4 million. This represents just 0.34% of total loans outstanding. Loan Loss Reserves of $4.9 million cover non-performing loans 3.5 times. At September 30, 2014, the Bank had one past due loan totaling $2.1 million. That loan subsequently paid off in early October.
  • Diluted Earnings per Common Share were $0.18 for the quarter compared to $0.17 in the second quarter of 2014 and $0.14 in the third quarter of 2013.
  • Book Value per Share increased to $9.53 per share as of September 30, 2014 from $9.31 per share at June 30, 2014 and $8.74 per share at September 30, 2013.

“I am pleased that the Bank successfully raised $10 million in Tier II capital to help fund our next stage of growth as we continue to expand in the San Francisco Bay Area,” said Presidio Bank Chairman and Founder, Jim Woolwine. “As part of our growth strategy and capital planning, our Board of Directors conducts an ongoing review of our capital position and capital needs. As part of that review, we will continue to assess additional capital options, including a common equity capital raise in 2015 to enhance our Tier 1 capital.”

             

3rd Quarter 2014 Financial Results

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

Condensed Balance Sheet

 
  9/30/2014       6/30/2014     Change     9/30/2013     Change       12/31/2013     Change
 
Cash and due from banks 7,972 2,517 216.7 % 5,557 43.4 % 5,694 40.0 %
Interest bearing due from banks   84,612       56,366     50.1 %     51,284     65.0 %   49,545     70.8 %
Total cash and equivalents 92,584 58,883 57.2 % 56,841 62.9 % 55,239 67.6 %
Investment securities 14,419 14,492 -0.5 % 14,218 1.4 % 14,230 1.3 %
Loans, net of fees 401,421 408,752 -1.8 % 351,470 14.2 % 373,421 7.5 %
Allowance for loan losses   (4,952 )     (4,952 )   0.0 %     (4,865 )   1.8 %   (4,867 )   1.7 %
Net loans 396,469 403,800 -1.8 % 346,605 14.4 % 368,554 7.6 %
Premises and equipment, net 1,090 1,032 5.6 % 909 20.0 % 932 17.0 %
Other assets and interest receivable   5,773       5,386     7.2 %     4,949     16.6 %   4,863     18.7 %
Total assets 510,335 483,593 5.5 % 423,523 20.5 % 443,818 15.0 %
 
Non-interest-bearing demand 167,411 132,538 26.3 % 125,452 33.4 % 132,546 26.3 %
Interest bearing transaction 63,260 61,222 3.3 % 65,749 -3.8 % 71,760 -11.8 %
Money market and savings accounts 166,866 169,909 -1.8 % 141,198 18.2 % 153,180 8.9 %
Time deposits   52,967       45,736     15.8 %     41,108     28.8 %   39,672     33.5 %
Total deposits 450,504 409,405 10.0 % 373,507 20.6 % 397,158 13.4 %
Borrowings 10,048 26,147 -61.6 % - NM - NM
Other liabilities   2,913       2,095     39.0 %     2,523     15.5 %   2,376     22.6 %
Total liabilities 463,465 437,647 5.9 % 376,030 23.3 % 399,534 16.0 %
 
Preferred stock 6,860 6,844 0.2 % 11,051 -37.9 % 6,811 0.7 %
Common stock 43,949 43,798 0.3 % 43,333 1.4 % 43,540 0.9 %
Retained earnings (3,797 ) (4,588 ) 17.2 % (6,683 ) 43.2 % (5,898 ) 35.6 %
Other comprehensive income   (142 )     (108 )   -31.5 %     (208 )   31.7 %   (169 )   16.0 %
Total shareholder’s equity   46,870       45,946     2.0 %     47,493     -1.3 %   44,284     5.8 %
Total liabilities and equity 510,335 483,593 5.5 % 423,523 20.5 % 443,818 15.0 %
 
Book value per share
Book value per share $ 9.53 $ 9.31 $ 8.74 $ 8.99
Total shares outstanding EOP 4,199 4,199 4,170 4,170
 
Capital Ratios
Tier 1 leverage ratio 9.7 % 9.6 % 11.1 % 10.0 %
Tier 1 risk-based capital ratio 10.1 % 10.0 % 11.9 % 10.5 %
Total risk-based capital ratio 13.5 % 11.2 % 13.2 % 11.7 %
Tangible common risk-based ratio 8.6 % 8.5 % 9.1 % 8.8 %
 

Condensed Statement of Income

 
For the three months ended For the nine months ended
  9/30/2014       6/30/2014    

Change
Fav./
(Unfav.)

    9/30/2013    

Change
Fav./
(Unfav.)

  9/30/2014       9/30/2013    

Change
Fav./
(Unfav.)

           
Interest income 4,963 4,841 2.5 % 4,317 15.0 % 14,377 12,366 16.3 %
Interest expense   197       195     (1.0 %)     209     5.7 %   586       607     3.4 %
Net interest income 4,766 4,646 2.6 % 4,108 16.0 % 13,791 11,759 17.3 %
Provision for loan loss   -       81     NM       -     NM     81       -     NM  
Net interest income after provision 4,766 4,565 4.4 % 4,108 16.0 % 13,710 11,759 16.6 %
 
Other income 182 182 0.0 % 146 24.9 % 534 420 27.2 %
 
Compensation and benefit expenses 2,165 2,064 (4.9 %) 1,794 (20.7 %) 6,416 5,463 (17.4 %)
Occupancy and equipment expenses 393 373 (5.4 %) 383 (2.6 %) 1,139 1,153 1.2 %
Data processing 261 261 0.0 % 249 (4.9 %) 778 748 (4.0 %)
Professional and legal 88 118 25.4 % 105 15.9 % 302 449 32.7 %
Other operating expenses   498       525     5.1 %     491     (1.5 %)   1,486       1,489     0.2 %
Total operating expenses   3,405       3,341     (1.9 %)     3,021     (12.7 %)   10,121       9,301     (8.8 %)
Net income before taxes 1,543 1,406 9.7 % 1,233 25.1 % 4,123 2,877 43.3 %
Income taxes   648       576     (12.5 %)     506     (28.2 %)   1,706       1,180     (44.6 %)
Net income 895 830 7.8 % 728 23.0 % 2,417 1,698 42.4 %
Preferred dividends   89       89     0.0 %     142     37.5 %   267       427     37.5 %
Net income to common 806 741 8.8 % 585 37.7 % 2,150 1,271 69.2 %
 
Earnings Per Share
Basic earnings per share $ 0.19 $ 0.17 $ 0.14 $ 0.50 $ 0.30
Diluted earnings per share $ 0.18 $ 0.17 $ 0.14 $ 0.48 $ 0.30
Average shares outstanding 4,187 4,171 4,131 4,167 4,113
Average diluted shares 4,390 4,352 4,177 4,338 4,141
 
Performance Ratios
Return on average assets 0.73 % 0.69 % 0.68 % 0.68 % 0.55 %
Return on average common equity 8.02 % 7.64 % 6.40 % 7.37 % 4.74 %
Net interest margin 3.96 % 3.95 % 3.88 % 3.97 % 3.89 %
Cost of funds 0.18 % 0.18 % 0.22 % 0.19 % 0.22 %
Efficiency ratio 68.8 % 69.2 % 71.0 % 70.7 % 76.4 %
 
Average Balances
Total assets 484,699 479,221 427,409 471,881 411,506
Earning assets 476,849 471,872 420,255 464,504 404,666
Total loans 403,372 399,895 342,378 395,218 328,304
Total deposits 426,552 419,923 377,918 414,256 362,689
Common equity 39,892 38,931 36,295 38,991 35,814
 
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 four banking offices in San Francisco, Walnut Creek, San Rafael 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.

Presidio Bank
Steve Heitel, 415-229-8428
President & CEO
or
Ed Murphy, 415-229-8403
EVP/CFO
or
Annette Gelinas, 415-229-8415 (o) / 925-787-2956 (c)
SVP/Marketing Director
agelinas@presidiobank.com

Source: Presidio Bank