954 0 Kommentare Presidio Bank Reports Results for the Second Quarter 2019

Presidio Bank (OTCBB: PDOB), a Bay Area business bank, today reported unaudited results for the second quarter ended June 30, 2019 with Net Income of $2.7 million, down from $3.1 million in the first quarter of 2019 and down from $2.8 million in the second quarter of 2018. During the second quarter of 2019, the Bank incurred $726 thousand in pretax costs related to its recently announced merger with Heritage Bank of Commerce. Net of these costs, Net Income would have increased over the first quarter of 2019 and the second quarter of 2018. Diluted Earnings per Share were $0.41 for the second quarter of 2019 versus $0.47 for the first quarter of 2019 and $0.44 for the second quarter of 2018. Total Assets were $840 million at June 30, 2019, down $66 million from March 31, 2019 and down $13 million from June 30, 2018.

“The Bank had another solid quarter of core operating results with strong net interest margin and good expense control,” said Presidio Bank CEO Steve Heitel. “We are excited about our upcoming merger with Heritage Bank of Commerce and the ability to expand our geographic reach and product offerings.”

Financial Highlights

Total Loans Outstanding were down $7 million from the quarter ending March 31, 2019 and up $45 million from the quarter ending June 30, 2018 or 7%. Growth in Commercial Real Estate Loans was offset by declines in Construction Loans, Personal Loans and Residential Real Estate Loans. A number of bridge loans paid off during the quarter as real estate sales activity remains strong. Line of Credit utilization was 39%, up from 37% in the first quarter of 2019. Loan Originations for the second quarter of 2019 were $47 million, up from $24 million in the first quarter of 2019. Loan pipeline activity remains solid, although loan payoffs are expected to remain elevated.
Total Deposits decreased by $71 million from the quarter ended March 31, 2019. $54 million of decline was centered in three client relationships. One client brought in a large temporary deposit at the end of the first quarter that was distributed in the second quarter. A large deposit client was sold and balances transferred to the acquiror’s bank. A third client had a seasonal reduction in balances with a rebound expected in the third quarter. In addition, the Bank reduced brokered deposits by $10 million during the quarter. Despite a $59 million reduction during the quarter, Demand Deposits still account for 43% of Total Deposits.
Net Interest Income of $9.7 million in the second quarter of 2019 was up from $9.5 million in the first quarter. Net Interest Income was up 16% from the second quarter of 2018. Net Interest Margin declined slightly during the second quarter of 2019 to 4.61% from 4.64% in the first quarter of 2019. Loan Yields for the quarter increased to 5.54% from 5.50% in the first quarter of 2019. Cost of Deposits was up to 0.44% in the quarter from 0.41% in the first quarter of 2019.
Gross Operating Expenses were up 6% from the first quarter of 2019 and 17% from the second quarter of 2018. Adjusted for merger related expenses, Operating Expenses declined by 7% from the first quarter of 2019 and increased by 2% from the second quarter of 2018. The decline from the first quarter of 2019 was largely due to the seasonal decline in Compensation and Benefit Expense.
Year-to-date June 30, 2019 Total Revenue grew 16% over year-to-date June 30, 2018 Total Revenue while Total Expenses grew 12% for the same period. Adjusted for merger related expenses, Total Expenses grew only 5%. The Bank’s efficiency ratio was 59.9% in the second quarter of 2019 versus 57.3% in the first quarter of 2019 and 59.1% in the second quarter of 2018.
Credit quality deteriorated modestly during the quarter as classified loans increased by $3.4 million. The Classified to Capital Ratio increased to 11.8% from 8.8% due to two newly classified relationships. Total Criticized and Classified Loans still only represent 3% of Loan Commitments and 4% of Loans Outstanding. The Bank still has one non-performing loan totaling $3.7 million.
Book Value per Share increased to $15.16 per share at June 30, 2019 from $14.67 per share at March 31, 2019 and $13.06 at June 30, 2018.

“I am pleased to report that the Bank has maintained its Outstanding Rating for Community Reinvestment in a recent Federal Reserve Examination,” said Presidio Bank Chairman Jim Woolwine. “In addition, Presidio has once again been named to the San Francisco Business Times list of Top Corporate Philanthropists.”

2^nd Quarter 2019 Financial Results
(Dollars in thousands, except per share amounts, unaudited)

Condensed Balance Sheet

	6/30/2019			3/31/2019			Change		6/30/2018			Change		12/31/2018			Change

Cash and due from banks		13,389			18,021		-25.7	%		8,842		51.4	%		7,804		71.6	%
Interest bearing due from banks		48,013			102,859		-53.3	%		130,412		-63.2	%		67,877		-29.3	%
Total cash and equivalents		61,402			120,880		-49.2	%		139,254		-55.9	%		75,681		-18.9	%
Investment securities		54,743			56,255		-2.7	%		41,326		32.5	%		57,925		-5.5	%
Loans, net of fees		698,073			705,114		-1.0	%		653,226		6.9	%		710,939		-1.8	%
Allowance for loan losses		(7,463	)		(7,463	)	0.0	%		(7,325	)	1.9	%		(7,439	)	0.3	%
Net loans		690,610			697,651		-1.0	%		645,901		6.9	%		703,500		-1.8	%
Premises and equipment, net		2,063			2,175		-5.2	%		2,464		-16.3	%		2,287		-9.8	%
Other assets and interest receivable		31,669			29,098		8.8	%		24,373		29.9	%		23,042		37.4	%
Total assets		840,487			906,059		-7.2	%		853,318		-1.5	%		862,435		-2.5	%

Non-interest-bearing demand		307,648			366,381		-16.0	%		298,354		3.1	%		319,358		-3.7	%
Interest bearing transaction		94,385			119,282		-20.9	%		108,338		-12.9	%		116,120		-18.7	%
Money market and savings accounts		268,411			243,680		10.1	%		302,077		-11.1	%		285,245		-5.9	%
Time deposits		51,916			64,363		-19.3	%		48,698		6.6	%		37,995		36.6	%
Total deposits		722,360			793,706		-9.0	%		757,467		-4.6	%		758,718		-4.8	%
Borrowings		10,007			9,875		1.3	%		9,961		0.5	%		9,865		1.4	%
Other liabilities		12,155			9,859		23.3	%		5,152		135.9	%		5,182		134.6	%
Total liabilities		744,522			813,440		-8.5	%		772,580		-3.6	%		773,765		-3.8	%

Common stock		69,109			68,728		0.6	%		66,995		3.2	%		67,978		1.7	%
Retained earnings		26,447			23,752		11.3	%		13,908		90.1	%		20,693		27.8	%
Other comprehensive income		409			139		194.0	%		(165	)	NM			(1	)	NM
Total shareholder’s equity		95,965			92,619		3.6	%		80,738		18.9	%		88,670		8.2	%
Total liabilities and equity		840,487			906,059		-7.2	%		853,318		-1.5	%		862,435		-2.5	%

Book value per share
Book value per share	$	15.16		$	14.67				$	13.06				$	14.21
Total shares outstanding EOP		6,331			6,311					6,184					6,241

Capital Ratios
Tier 1 leverage ratio		10.9	%		10.7	%				9.8	%				10.3	%
Tier 1 risk-based capital ratio		10.9	%		10.5	%				9.9	%				10.0	%
Tangible common risk-based ratio		10.9	%		10.5	%				9.9	%				10.0	%
Total risk-based capital ratio		13.0	%		12.5	%				12.1	%				12.1	%

NM = Not Meaningful

Condensed Statement of Income (Dollars in thousands, except per share amounts, unaudited)

	For the three months ended													For the six months ended
	6/30/2019			3/31/2019			Change Fav./ (Unfav.)		6/30/2018			Change Fav./ (Unfav.)		6/30/2019			6/30/2018			Change Fav./ (Unfav.)

Interest income		10,698			10,495		1.9	%		9,042		18.3	%		21,193			17,612		20.3	%
Interest expense		1,037			985		(5.4	%)		707		(46.8	%)		2,022			1,194		(69.3	%)
Net interest income		9,661			9,510		1.6	%		8,335		15.9	%		19,171			16,418		16.8	%
Provision for loan loss		-			24		NM			-		NM			24			159		84.7	%
Net interest income after provision		9,661			9,486		1.8	%		8,335		15.9	%		19,147			16,259		17.8	%

Other income		278			311		(10.5	%)		309		(9.8	%)		589			629		(6.4	%)

Compensation and benefit expenses		3,274			3,678		11.0	%		3,254		(0.6	%)		6,952			6,537		(6.4	%)
Occupancy and equipment expenses		665			628		(5.9	%)		602		(10.6	%)		1,293			1,218		(6.1	%)
Data processing		438			445		1.5	%		400		(9.5	%)		883			785		(12.6	%)
Merger expense		726			33		(2104.8	%)		-		NM			759			-		NM
Professional and legal		265			176		(51.2	%)		278		4.5	%		441			425		(3.7	%)
Other operating expenses		583			665		12.4	%		571		(2.1	%)		1,248			1,348		7.4	%
Total operating expenses		5,951			5,625		(5.8	%)		5,105		(16.6	%)		11,576			10,313		(12.2	%)
Net income before taxes		3,988			4,172		(4.4	%)		3,539		12.7	%		8,160			6,575		24.1	%
Income taxes		1,283			1,113		(15.3	%)		710		(80.7	%)		2,396			1,521		(57.5	%)
Net income		2,705			3,059		(11.6	%)		2,829		(4.4	%)		5,764			5,054		14.0	%

Earnings Per Share
Basic earnings per share	$	0.43		$	0.49		(12.2	%)	$	0.46		(7.3	%)	$	0.91		$	0.83		10.6	%
Diluted earnings per share	$	0.41		$	0.47		(12.2	%)	$	0.44		(5.9	%)	$	0.88		$	0.78		12.4	%
Average shares outstanding		6,244			6,198					6,053					6,227			6,038
Average diluted shares		6,522			6,473					6,419					6,505			6,409

Performance Ratios
Return on average assets		1.24	%		1.44	%				1.38	%				1.34	%		1.26	%
Return on average common equity		11.45	%		13.58	%				14.31	%				12.51	%		13.06	%
Net interest margin		4.61	%		4.64	%				4.20	%				4.63	%		4.23	%
Cost of funds		0.54	%		0.52	%				0.38	%				0.53	%		0.33	%
Efficiency ratio		59.9	%		57.3	%				59.1	%				58.6	%		60.6	%

Average Balances
Total assets		873,108			864,060					822,750					868,609			808,674
Earning assets		839,730			831,305					795,498					835,541			781,899
Total loans		703,845			709,283					642,855					706,549			638,968
Total deposits		758,192			749,334					728,532					753,788			715,877
Common equity		94,880			91,346					79,177					93,123			77,891

NM = Not Meaningful

Condensed Balance Sheet (5 Quarter Data)
(Dollars in thousands, except per share amounts, unaudited)

	6/30/2019			3/31/2019			12/31/2018			9/30/2018			6/30/2018

Cash and due from banks		13,389			18,021			7,804			9,041			8,842
Interest bearing due from banks		48,013			102,859			67,877			78,598			130,412
Total cash and equivalents		61,402			120,880			75,681			87,639			139,254
Investment securities		54,743			56,255			57,925			59,282			41,326
Loans, net of fees		698,073			705,114			710,939			668,934			653,226
Allowance for loan losses		(7,463	)		(7,463	)		(7,439	)		(7,423	)		(7,325	)
Net loans		690,610			697,651			703,500			661,511			645,901
Premises and equipment, net		2,063			2,175			2,287			2,371			2,464
Other assets and interest receivable		31,669			29,098			23,042			23,366			24,373
Total assets		840,487			906,059			862,435			834,169			853,318

Non-interest-bearing demand		307,648			366,381			319,358			315,493			298,354
Interest bearing transaction		94,385			119,282			116,120			101,712			108,338
Money market and savings accounts		268,411			243,680			285,245			278,867			302,077
Time deposits		51,916			64,363			37,995			38,400			48,698
Total deposits		722,360			793,706			758,718			734,472			757,467
Borrowings		10,007			9,875			9,865			9,928			9,961
Other liabilities		12,155			9,859			5,182			5,014			5,152
Total liabilities		744,522			813,440			773,765			749,414			772,580

Common stock		69,109			68,728			67,978			67,783			66,995
Retained earnings		26,447			23,752			20,693			17,401			13,908
Other comprehensive income		409			139			(1	)		(429	)		(165	)
Total shareholder’s equity		95,965			92,619			88,670			84,755			80,738
Total liabilities and equity		840,487			906,059			862,435			834,169			853,318

Book value per share
Book value per share	$	15.16		$	14.67		$	14.21		$	13.59		$	13.06
Total shares outstanding EOP		6,331			6,311			6,241			6,238			6,184

Capital Ratios
Tier 1 leverage ratio		10.9	%		10.7	%		10.3	%		9.9	%		9.8	%
Common equity tier 1 capital ratio		10.9	%		10.5	%		10.0	%		10.2	%		9.9	%
Tier 1 risk-based capital ratio		10.9	%		10.5	%		10.0	%		10.2	%		9.9	%
Total risk-based capital ratio		13.0	%		12.5	%		12.1	%		12.3	%		12.1	%

Condensed Statement of Income (5 Quarter Data)
(Dollars in thousands, except per share amounts, unaudited)

	For the three months ended
	6/30/2019			3/31/2019			12/31/2018			9/30/2018			6/30/2018

Interest income		10,698			10,495			10,323			9,866			9,042
Interest expense		1,037			985			812			752			707
Net interest income		9,661			9,510			9,511			9,114			8,335
Provision for loan loss		-			24			16			98			-
Net interest income after provision		9,661			9,486			9,495			9,016			8,335

Other income		278			311			315			279			309

Compensation and benefit expenses		3,274			3,678			3,335			3,301			3,254
Occupancy and equipment expenses		665			628			606			625			602
Data processing		438			445			420			388			400
Merger expense		726			33			-			-			-
Professional and legal		265			176			161			145			278
Other operating expenses		583			665			503			473			571
Total operating expenses		5,951			5,625			5,025			4,932			5,105
Net income before taxes		3,988			4,172			4,785			4,363			3,539
Income taxes		1,283			1,113			1,503			870			710
Net income		2,705			3,059			3,282			3,493			2,829

Earnings Per Share
Basic earnings per share	$	0.43		$	0.49		$	0.53		$	0.56		$	0.46
Diluted earnings per share	$	0.41		$	0.47		$	0.50		$	0.53		$	0.44
Average shares outstanding		6,244			6,198			6,160			6,132			6,053
Average diluted shares		6,522			6,473			6,458			6,454			6,419

Performance Ratios
Return on average assets		1.24	%		1.44	%		1.52	%		1.60	%		1.38	%
Return on average common equity		11.45	%		13.58	%		14.95	%		16.64	%		14.31	%
Net interest margin		4.61	%		4.64	%		4.55	%		4.32	%		4.20	%
Cost of funds		0.54	%		0.52	%		0.42	%		0.39	%		0.38	%
Efficiency ratio		59.9	%		57.3	%		51.2	%		52.5	%		59.1	%

Average Balances
Total assets		873,108			864,060			857,104			864,605			822,750
Earning assets		839,730			831,305			829,811			836,348			795,498
Total loans		703,845			709,283			675,569			665,655			642,855
Total deposits		758,192			749,334			754,400			763,647			728,532
Common equity		94,880			91,346			87,084			83,346			79,177

Loans (5 Quarter Data) (Dollars in Thousands, unaudited)

	6/30/2019		3/31/2019		12/31/2018		9/30/2018		6/30/2018

Commercial real estate	330,747		321,407		328,667		304,123		303,444
Land and construction	41,403		44,188		56,179		55,185		53,771
Commercial	190,626		190,307		176,179		177,747		180,783
Personal	20,723		31,429		34,738		22,505		13,709
Residential	34,003		39,507		38,357		36,552		31,011
Multifamily	81,557		79,260		77,928		73,839		71,505
Deferred loan fees	(986	)	(984	)	(1,109	)	(1,017	)	(997	)
Loans	698,073		705,114		710,939		668,934		653,226
Allowance for loan losses	(7,463	)	(7,463	)	(7,439	)	(7,423	)	(7,325	)
Net loans	690,610		697,651		703,500		661,511		645,901



Non-Performing Assets (5 Quarter Data) (Dollars in Thousands, unaudited)

	6/30/2019		3/31/2019		12/31/2018		9/30/2018		6/30/2018

Non-Accrual Loans	3,746		3,746		3,746		-		-
Non-Performing Loans (NPL)	3,746		3,746		3,746		-		-
Other Real Estate Owned	-		-		-		-		-
Non-Performing Assets (NPA)	3,746		3,746		3,746		-		-
90+ Days Delinquent	-		-		-		-		-
NPAs & 90 Day Delinquent	3,746		3,746		3,746		-		-
Quarterly Net Charge-off's	-		-		-		-		-

NPAs / Assets %	0.45	%	0.41	%	0.43	%	0.00	%	0.00	%
NPAs & 90 Day / Assets %	0.45	%	0.41	%	0.43	%	0.00	%	0.00	%
NPAs / Actual Loans and OREO %	0.45	%	0.41	%	0.43	%	0.00	%	0.00	%
Loan Loss Reserves / Loans (%)	1.07	%	1.06	%	1.05	%	1.11	%	1.12	%

Net Interest Income (Quarterly Data) (Dollars in Thousands, unaudited)
		For the Three Months Ended
		6/30/2019						3/31/2019
					Interest							Interest
		Average			Income /	Average			Average			Income /	Average
		Balance			Expense	Rate			Balance			Expense	Rate
Assets:
Interest-bearing deposits	$	80,113		$	483	2.42	%	$	64,868		$	389	2.43	%
Federal Reserve and Federal Home Loan Bank stock		5,560			80	5.79			4,897			81	6.71
Investment Securities		50,212			408	3.26			52,257			409	3.18
Loans: (2)
Commercial		195,386			2,989	6.14			180,631			2,739	6.15
Land and Construction		42,537			715	6.74			53,729			889	6.71
Commercial Real Estate		325,544			4,181	5.15			325,034			4,027	5.03
Residential		34,456			530	6.16			38,349			586	6.20
Multifamily		80,984			998	4.94			78,281			951	4.93
Personal		24,938			314	5.06			33,259			424	5.16
Total Loans		703,845			9,727	5.54			709,283			9,616	5.50
Total Earning Assets		839,730			10,698	5.11			831,305			10,495	5.12
Allowance for loan losses		(7,463	)						(7,463	)
Cash and cash equivalents		10,766							10,760
Other assets		30,075							29,458
Total Assets	$	873,108						$	864,060

Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	104,364		$	117	0.45	%	$	110,416		$	105	0.38	%
Money market deposits		259,619			477	0.74			254,365			438	0.70
Savings deposits		3,484			2	0.28			3,506			2	0.26
Certificates and other time deposits		59,318			230	1.55			57,877			211	1.48
Total Interest-bearing Deposits		426,785			826	0.78			426,164			756	0.72
Borrowings		9,893			211	8.55			12,641			229	7.33
Total Interest-bearing Liabilities		436,678			1,037	0.95			438,805			985	0.91
Noninterest-bearing deposits		331,407							323,170
Other liabilities		10,143							10,739
Total Liabilities		778,228							772,714
Stockholders' Equity		94,880							91,346
Total Liabilities and Stockholders' Equity	$	873,108						$	864,060
Net Interest Income				$	9,661						$	9,510
Net Interest Margin						4.61	%						4.64	%
Cost of Funds						0.54	%						0.52	%
Cost of Deposits						0.44	%						0.41	%

Net Interest Income (Annual Data) (Dollars in Thousands, unaudited)
		For the Six Months Ended
		6/30/2019						6/30/2018
					Interest							Interest
		Average			Income /	Average			Average			Income /	Average
		Balance			Expense	Rate			Balance			Expense	Rate
Assets:
Interest-bearing deposits	$	72,533		$	872	2.42	%	$	128,478		$	1,071	1.68	%
Federal Reserve and Federal Home Loan Bank stock		5,230			161	6.22			4,731			153	6.52
Investment Securities		51,229			817	3.22			9,722			108	2.25
Loans: (2)
Commercial		188,049			5,729	6.14			194,728			5,189	5.37
Land and Construction		48,102			1,603	6.72			49,329			1,588	6.49
Commercial Real Estate		325,291			8,209	5.09			283,420			6,862	4.88
Residential		36,392			1,115	6.18			31,941			838	5.29
Multifamily		79,640			1,949	4.94			64,993			1,484	4.60
Personal		29,075			738	5.12			14,557			319	4.41
Total Loans		706,549			19,343	5.52			638,968			16,280	5.14
Total Earning Assets		835,541			21,193	5.12			781,899			17,612	4.54
Allowance for loan losses		(7,463	)						(7,272	)
Cash and cash equivalents		10,763							9,418
Other assets		29,768							24,629
Total Assets	$	868,609						$	808,674

Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	107,373		$	222	0.42	%	$	109,885		$	108	0.20	%
Money market deposits		257,006			915	0.72			247,683			444	0.36
Savings deposits		3,495			5	0.27			3,829			4	0.20
Certificates and other time deposits		58,602			441	1.52			49,978			216	0.88
Total Interest-bearing Deposits		426,476			1,583	0.75			411,375			772	0.38
Borrowings		11,260			439	7.85			10,074			422	8.45
Total Interest-bearing Liabilities		437,736			2,022	0.93			421,449			1,194	0.57
Noninterest-bearing deposits		327,312							304,502
Other liabilities		10,438							4,832
Total Liabilities		775,486							730,783
Stockholders' Equity		93,123							77,891
Total Liabilities and Stockholders' Equity	$	868,609						$	808,674
Net Interest Income				$	19,171						$	16,418
Net Interest Margin						4.63	%						4.23	%
Cost of Funds						0.53	%						0.33	%
Cost of Deposits						0.42	%						0.22	%

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.