PDOB - Presidio Bank Reports Results for the Second Quarter 2019

July, 25 2019 05:00 PM Presidio Bank (San Francisco)

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190725005027/en/

Steve Heitel, Chief Executive Officer
415.229.8428

Ed Murphy, EVP/CFO
415.229.8403

MEDIA:
Annette Gelinas
SVP/Marketing Director
925.287.7881 (o) / 925.787.2956 (c)
agelinas@presidiobank.com

Company Name:	Presidio Bank (San Francisco)
Stock Symbol:	PDOB
Market:	OTC

Twitter