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Press Release

Presidio Bank Reports Financial Results for the Third Quarter of 2018

Company Release - 10/22/2018 9:00 AM ET

SAN FRANCISCO--(BUSINESS WIRE)-- Presidio Bank (OTCBB: PDOB), a Bay Area business bank, today reported unaudited results for the third quarter ended September 30, 2018 with Net Income of $3.5 million, up $664 thousand (24%) from the second quarter of 2018 and up $1.4 million (68%) from the third quarter of 2017. Diluted Earnings per Share were $0.53 for the quarter, up from $0.44 in the second quarter of 2018 and up from $0.32 in the third quarter of 2017. Total Assets were $834 million at September 30, 2018, down $19 million from June 30, 2018 but up $49 million from September 30, 2017.

“Moderate loan growth combined with good expense control and increasing margins resulted in another quarter of strong profitability growth for the Bank,” said Presidio Bank CEO Steve Heitel. “Our Return on Assets and Return on Equity once again reached new highs.”

Financial Highlights

  • Total Loans Outstanding were up $16 million from the quarter ending June 30, 2018 and up $52 million from September 30, 2017 or 8%. New Loan Originations were $42 million, down from $50 million in the second quarter of 2018. Loan growth was centered in Personal Lines of Credit and Home Equity Lines. Despite relatively soft originations in the third quarter, the loan pipeline remains solid heading into the fourth quarter.
  • Total Deposits decreased by $23 million from the quarter ended June 30, 2018 and increased by $37 million from September 30, 2017 or 5%. During the quarter ended June 30, 2018, the decline in Money Market Deposits and Time Deposits was partially offset by an increase in Demand Deposits which now account for 43% of total deposits. The decline in Time Deposits was due to the Bank’s decision to not renew a $10 million Certificate of Deposit from the State of California.
  • Net Interest Income of $9.1 million in the third quarter of 2018 was up 9% from the second quarter of 2018 and up 15.5% from the third quarter of 2017. This increase is due to higher average loan and securities balances, increased loan yields, and increased interest rates on liquid assets invested by the Bank. Net Interest Margin increased during the quarter to 4.32% from 4.20% in the second quarter of 2018 due to lower levels of liquid assets maintained combined with higher loan yields, and a larger securities portfolio. The Bank’s Cost of Funds remained essentially flat from the second quarter.
  • Operating Expenses decreased by 3.4% over the second quarter of 2018. This decrease was largely due to a reduction in Professional and Legal Expense due to some one-time expenses that were incurred in the second quarter. In addition, the Loss Reserve for Unfunded Loans was decreased by $113 thousand, booked as a contra expense. This decrease was due primarily to a decrease in unfunded construction loans. The Bank’s efficiency ratio improved from 59% in the second quarter of 2018 to 53% in the third quarter of 2018.
  • Year-over-year revenue growth is 21% while year-over-year expense growth is 11%.
  • Credit Quality remains stable and strong with a Classified to Capital Ratio of 2.6% at September 30, 2018. The Loan Loss Provision Expense for the third quarter was $98 thousand due to growth in the loan portfolio. The Bank has one classified relationship and thirteen criticized relationships. Balances on Classified and Criticized Loans increased by $1.2 million during the quarter. Total Criticized and Classified Loans represent 3% of Loan Commitments and 4% of Loans Outstanding at September 30, 2018. The Bank has no Non-Performing Loans.
  • Book Value per Share increased to $13.59 per share at September 30, 2018 from $13.06 per share at June 30, 2018 and $12.15 per share at September 30, 2017.

“Presidio Bank is honored to be nominated as one of three finalists for the San Francisco Chamber of Commerce 2018 Excellence in Business Award,” said Presidio Bank Chairman and Founder, Jim Woolwine. “In addition, the Bank was once again recognized by the San Francisco Business Times as one of the Bay Area’s top corporate philanthropists.”

 

3rd Quarter 2018 Financial Results

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

 

Condensed Balance Sheet

                                           
  9/30/2018       6/30/2018     Change       9/30/2017     Change   12/31/2017     Change
                   
Cash and due from banks 9,041 8,842 2.3% 10,677 -15.3% 7,613 18.8%
Interest bearing due from banks   78,598       130,412 -39.7%   126,277 -37.8%   129,952 -39.5%
Total cash and equivalents 87,639 139,254 -37.1% 136,954 -36.0% 137,565 -36.3%
Investment securities 59,282 41,326 43.4% 12,801 363.1% 12,313 381.5%
Loans, net of fees 668,934 653,226 2.4% 617,269 8.4% 626,282 6.8%
Allowance for loan losses   (7,423)       (7,325) 1.3%   (7,166) 3.6%   (7,166) 3.6%
Net loans 661,511 645,901 2.4% 610,103 8.4% 619,116 6.8%
Premises and equipment, net 2,371 2,464 -3.8% 2,452 -3.3% 2,627 -9.8%
Other assets and interest receivable   23,366       24,373 -4.1%   23,312 0.2%   22,237 5.1%
Total assets 834,169 853,318 -2.2% 785,622 6.2% 793,858 5.1%
 
Non-interest-bearing demand 315,493 298,354 5.7% 304,726 3.5% 295,070 6.9%
Interest bearing transaction 101,712 108,338 -6.1% 98,019 3.8% 120,109 -15.3%
Money market and savings accounts 278,867 302,077 -7.7% 247,857 12.5% 238,706 16.8%
Time deposits   38,400       48,698 -21.1%   46,871 -18.1%   50,269 -23.6%
Total deposits 734,472 757,467 -3.0% 697,473 5.3% 704,154 4.3%
Borrowings 9,928 9,961 -0.3% 10,346 -4.0% 10,174 -2.4%
Other liabilities   5,014       5,152 -2.7%   4,001 25.3%   4,767 5.2%
Total liabilities 749,414 772,580 -3.0% 711,820 5.3% 719,095 4.2%
 
Common stock 67,783 66,995 1.2% 65,585 3.4% 65,960 2.8%
Retained earnings 17,401 13,908 25.1% 8,252 110.9% 8,854 96.5%
Other comprehensive income   (429)       (165) 160.3%   (35) 1131.9%   (51) 733.6%
Total shareholder’s equity   84,755       80,738 5.0%   73,802 14.8%   74,763 13.4%
Total liabilities and equity   834,169       853,318 -2.2%   785,622 6.2%   793,858 5.1%
 
Book value per share
Book value per share $ 13.59 $ 13.06 $ 12.15 $ 12.29
Total shares outstanding EOP 6,238 6,184 6,074 6,084
 
Capital Ratios
Tier 1 leverage ratio 9.9% 9.8% 9.9% 9.7%
Tier 1 risk-based capital ratio 10.0% 9.9% 9.8% 9.8%
Tangible common risk-based ratio 10.0% 9.9% 9.8% 9.8%
Total risk-based capital ratio 12.2% 12.1% 12.2% 12.1%
 
 

Condensed Statement of Income

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

         
For the Three Months Ended For the Nine Months Ended
  9/30/2018       6/30/2018    

Change
Fav./
(Unfav.)

      9/30/2017    

Change
Fav./
(Unfav.)

  9/30/2018       9/30/2017    

Change
Fav./
(Unfav.)

                       
Interest income 9,866 9,042 9.1% 8,362 18.0% 27,478 22,563 21.8%
Interest expense   752       707 (6.4%)   472 (59.4%)   1,946       1,336 (45.6%)
Net interest income 9,114 8,335 9.3% 7,890 15.5% 25,532 21,227 20.3%
Provision for loan loss   98       - NM   100 2.2%   257       298 13.7%
Net interest income after provision 9,016 8,335 8.2% 7,790 15.7% 25,275 20,929 20.8%
 
Other income 279 309 (9.7%) 268 4.1% 907 660 37.3%
 
Compensation and benefit expenses 3,301 3,254 (1.4%) 3,036 (8.7%) 9,838 8,711 (12.9%)
Occupancy and equipment expenses 625 602 (3.9%) 628 0.4% 1,844 1,665 (10.7%)
Data processing 388 400 3.1% 346 (12.2%) 1,173 977 (20.0%)
Professional and legal 145 278 48.0% 77 (89.0%) 570 419 (36.1%)
Other operating expenses   473       571 17.2%   533 11.2%   1,818       1,921 5.4%
Total operating expenses   4,932       5,105 3.4%   4,620 (6.8%)   15,243       13,693 (11.3%)
Net income before taxes 4,363 3,539 23.3% 3,438 26.9% 10,939 7,896 38.5%
Income taxes   870       710 (22.5%)   1,358 35.9%   2,391       3,021 20.9%
Net income   3,493       2,829 23.5%   2,080 67.9%   8,548       4,875 75.3%
 
Earnings Per Share
Basic earnings per share $ 0.56 $ 0.46 21.9% $ 0.33 69.2% $ 1.39 $ 0.81 72.7%
Diluted earnings per share $ 0.53 $ 0.44 22.9% $ 0.32 68.2% $ 1.31 $ 0.77 70.4%
Average shares outstanding 6,132 6,053 6,001 6,070 5,968
Average diluted shares 6,454 6,419 6,277 6,424 6,232
 
Performance Ratios
Return on average assets 1.60% 1.38% 1.10% 1.37% 0.90%
Return on average common equity 16.64% 14.31% 11.31% 14.27% 9.16%
Net interest margin 4.32% 4.20% 4.34% 4.27% 4.03%
Cost of funds 0.39% 0.38% 0.28% 0.35% 0.28%
Efficiency ratio 52.5% 59.1% 57.0% 57.9% 63.1%
 
Average Balances
Total assets 864,605 822,750 748,229 827,522 724,197
Earning assets 836,348 795,498 721,374 800,248 705,032
Total loans 665,655 642,855 612,493 647,961 589,918
Total deposits 763,647 728,532 660,790 731,975 638,390
Common equity 83,346 79,177 73,108 79,730 70,886
 
 

NM = Not Meaningful

 

Condensed Balance Sheet (5 Quarter Data)

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

 
    9/30/2018       6/30/2018       3/31/2018       12/31/2017       9/30/2017
               
Cash and due from banks 9,041 8,842 14,682 7,613 10,677
Interest bearing due from banks   78,598       130,412       154,434       129,952       126,277
Total cash and equivalents 87,639 139,254 169,116 137,565 136,954
Investment securities 59,282 41,326 11,810 12,313 12,801
Loans, net of fees 668,934 653,226 649,994 626,282 617,269
Allowance for loan losses   (7,423)       (7,325)       (7,325)       (7,166)       (7,166)
Net loans 661,511 645,901 642,669 619,116 610,103
Premises and equipment, net 2,371 2,464 2,537 2,627 2,452
Other assets and interest receivable   23,366       24,373       23,796       22,237       23,312
Total assets 834,169 853,318 849,928 793,858 785,622
 
Non-interest-bearing demand 315,493 298,354 337,201 295,070 304,726
Interest bearing transaction 101,712 108,338 108,399 120,109 98,019
Money market and savings accounts 278,867 302,077 262,503 238,706 247,857
Time deposits   38,400       48,698       50,082       50,269       46,871
Total deposits 734,472 757,467 758,185 704,154 697,473
Borrowings 9,928 9,961 10,059 10,174 10,346
Other liabilities   5,014       5,152       4,466       4,767       4,001
Total liabilities 749,414 772,580 772,710 719,095 711,820
 
Common stock 67,783 66,995 66,241 65,960 65,585
Retained earnings 17,401 13,908 11,079 8,854 8,252
Other comprehensive income   (429)       (165)       (102)       (51)       (35)
Total shareholder’s equity   84,755       80,738       77,218       74,763       73,802
Total liabilities and equity   834,169       853,318       849,928       793,858       785,622
 
Book value per share
Book value per share $ 13.59 $ 13.06 $ 12.68 $ 12.29 $ 12.15
Total shares outstanding EOP 6,238 6,184 6,090 6,084 6,074
 
Capital Ratios
Tier 1 leverage ratio 9.9% 9.8% 9.7% 9.7% 9.9%
Common equity tier 1 capital ratio 10.0% 9.9% 9.5% 9.8% 9.8%
Tier 1 risk-based capital ratio 10.0% 9.9% 9.5% 9.8% 9.8%
Total risk-based capital ratio 12.2% 12.1% 11.7% 12.1% 12.2%
 
 

Condensed Statement of Income (5 Quarter Data)

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

   
For the Three Months Ended
  9/30/2018       6/30/2018       3/31/2018       12/31/2017       9/30/2017
               
Interest income 9,866 9,042 8,570 8,236 8,362
Interest expense   752       707       487       483       472
Net interest income 9,114 8,335 8,083 7,753 7,890
Provision for loan loss   98       -       159       -       100
Net interest income after provision 9,016 8,335 7,924 7,753 7,790
 
Other income 279 309 320 287 268
 
Compensation and benefit expenses 3,301 3,254 3,283 2,814 3,036
Occupancy and equipment expenses 625 602 616 617 628
Data processing 388 400 385 388 346
Professional and legal 145 278 147 155 77
Other operating expenses   473       571       777       627       533
Total operating expenses   4,932       5,105       5,208       4,601       4,620
Net income before taxes 4,363 3,539 3,036 3,439 3,438
Income taxes   870       710       811       2,838       1,358
Net income   3,493       2,829       2,225       601       2,080
 
Earnings Per Share
Basic earnings per share $ 0.56 $ 0.46 $ 0.36 $ 0.10 $ 0.33
Diluted earnings per share $ 0.53 $ 0.44 $ 0.34 $ 0.09 $ 0.32
Average shares outstanding 6,132 6,053 6,025 6,009 6,001
Average diluted shares 6,454 6,419 6,398 6,328 6,277
 
Performance Ratios
Return on average assets 1.60% 1.38% 1.14% 0.32% 1.10%
Return on average common equity 16.64% 14.31% 11.78% 3.25% 11.31%
Net interest margin 4.32% 4.20% 4.27% 4.11% 4.34%
Cost of funds 0.39% 0.38% 0.28% 0.28% 0.28%
Efficiency ratio 52.5% 59.1% 62.1% 57.4% 57.0%
 
Average Balances
Total assets 864,605 822,750 794,442 774,015 748,229
Earning assets 836,348 795,498 768,150 747,679 721,374
Total loans 665,655 642,855 635,039 608,584 612,493
Total deposits 763,647 728,532 703,081 684,233 660,790
Common equity 83,346 79,177 76,591 75,531 73,108
 
 

Loans (5 Quarter Data)

(Dollars in Thousands, unaudited)

                             
9/30/2018     6/30/2018     3/31/2018     12/31/2017     9/30/2017
Commercial real estate 304,123     303,444     283,238     271,346     268,357
Land and construction 55,185 53,771 54,088 44,714 39,599
Commercial 177,747 180,783 201,094 197,748 194,884
Personal 22,505 13,709 17,172 16,295 21,292
Residential 36,552 31,011 33,114 34,174 34,389
Multifamily 73,839 71,505 62,325 63,024 59,764
Deferred loan fees (1,017)     (997)     (1,037)     (1,019)     (1,016)
Loans 668,934 653,226 649,994 626,282 617,269
Allowance for loan losses (7,423)     (7,325)     (7,325)     (7,166)     (7,166)
Net loans 661,511 645,901 642,669 619,116 610,103
 
 

Non-Performing Assets (5 Quarter Data)

(Dollars in Thousands, unaudited)

                             
9/30/2018     6/30/2018     3/31/2018     12/31/2017     9/30/2017
Non-Accrual Loans -     -     -     -     -
Non-Performing Loans (NPL) - - - - -
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) - - - - -
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent - - - - -
Quarterly Net Charge-off's - - - - (51)
 
NPAs / Assets % 0.00% 0.00% 0.00% 0.00% 0.00%
NPAs & 90 Day / Assets % 0.00% 0.00% 0.00% 0.00% 0.00%
NPAs / Actual Loans and OREO % 0.00% 0.00% 0.00% 0.00% 0.00%
Loan Loss Reserves / Loans (%) 1.11% 1.12% 1.13% 1.14% 1.16%
 
                       

Net Interest Income (Quarterly Data)

(Dollars in Thousands, unaudited)

 
For the Three Months Ended
 
9/30/2018

 

6/30/2018

    Interest     Interest
Average Income / Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 116,875 $ 577 1.96 % $ 135,803 $ 569 1.68 %
Federal Reserve and Federal Home Loan Bank stock 4,867 79 6.47 4,806 76 6.35
Investment Securities 48,951 363 2.94 12,034 78 2.59
Loans: (2)
Commercial 182,772 2,591 5.62 190,167 2,610 5.51
Land and Construction 53,000 856 6.40 52,828 816 6.20
Commercial Real Estate 305,632 3,854 5.00 288,246 3,546 4.93
Residential 32,565 471 5.74 31,297 426 5.46
Multifamily 74,251 872 4.66 67,247 776 4.63
Personal 17,435 203 4.63 13,070   145   4.47
Total Loans 665,655 8,847 5.27 642,855   8,319   5.19
Total Earning Assets 836,348 9,866 4.68 795,498 9,042   4.56
Allowance for loan losses (7,390) (7,325)
Cash and cash equivalents 10,156 9,295
Other assets 25,491 25,282  
Total Assets $ 864,605 $ 822,750  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 107,491 $ 64 0.24 % $ 112,088 $ 67 0.24 %
Money market deposits 291,017 364 0.50 258,372 306 0.47
Savings deposits 3,892 3 0.25 3,846 2 0.25
Certificates and other time deposits 43,674 110 1.00 49,729   121   0.97
Total Interest-bearing Deposits 446,074 541 0.48 424,035 496 0.47
Borrowings 9,952 211 8.41 10,059   211   8.41
Total Interest-bearing Liabilities 456,026 752 0.65 434,094 707 0.65
Noninterest-bearing deposits 317,573 304,497
Other liabilities 7,660 4,982  
Total Liabilities 781,259 743,573
Stockholders' Equity 83,346 79,177  
Total Liabilities and Stockholders' Equity $ 864,605 $ 822,750  
Net Interest Income $ 9,114 $ 8,335
Net Interest Margin 4.32 % 4.20 %
Cost of Funds 0.39 % 0.38 %
Cost of Deposits 0.28 % 0.27 %
 
   

Net Interest Income (Annual Data)

(Dollars in Thousands, unaudited)

 
For the Nine Months Ended
 
9/30/2018       9/30/2017
    Interest         Interest    
Average Income / Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 124,568 $ 1,648 1.77 % $ 102,188 $ 807 1.06 %
Federal Reserve and Federal Home Loan Bank stock 4,777 232 6.50 4,459 225 6.75
Investment Securities 22,942 472 2.75 8,467 96 1.52
Loans: (2)
Commercial 190,699 7,779 5.45 178,945 6,910 5.16
Land and Construction 50,566 2,444 6.46 21,234 992 6.25
Commercial Real Estate 290,905 10,716 4.93 270,284 9,505 4.70
Residential 32,151 1,309 5.45 30,980 1,086 4.69
Multifamily 68,113 2,356 4.62 60,991 2,083 4.57
Personal 15,527 522 4.49 27,484 859 4.18
Total Loans 647,961 25,126 5.18 589,918 21,435 4.86
Total Earning Assets 800,248 27,478 4.59 705,032 22,563 4.28
Allowance for loan losses (7,311) (6,972)
Cash and cash equivalents 9,667 8,974
Other assets 24,918 17,163
Total Assets $ 827,522 $ 724,197
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 109,078 $ 172 0.21 % $ 102,941 $ 142 0.18 %
Money market deposits 262,286 808 0.41 239,093 372 0.21
Savings deposits 3,850 6 0.22 4,620 3 0.09
Certificates and other time deposits 47,854 327 0.91 46,965 186 0.53
Total Interest-bearing Deposits 423,068 1,313 0.41 393,619 703 0.24
Borrowings 10,033 633 8.44 10,033 633 8.44
Total Interest-bearing Liabilities 433,101 1,946 0.60 403,652 1,336 0.44
Noninterest-bearing deposits 308,907 244,771
Other liabilities 5,784 4,888
Total Liabilities 747,792 653,311
Stockholders' Equity 79,730 70,886
Total Liabilities and Stockholders' Equity $ 827,522 $ 724,197
Net Interest Income $ 25,532 $ 21,227
Net Interest Margin 4.27 % 4.03 %
Cost of Funds 0.35 % 0.28 %
Cost of Deposits 0.24 % 0.15 %
 

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.

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

Source: Presidio Bank