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Press Release

Presidio Bank Reports Results for the Second Quarter of 2017

Company Release - 7/20/2017 8:00 AM ET

SAN FRANCISCO--(BUSINESS WIRE)-- Presidio Bank (OTCBB:PDOB), a Bay Area business bank, today reported unaudited results for the second quarter ended June 30, 2017 with Net Income of $1.6 million, up 32% from the first quarter of 2017. Total Assets were $746 million at June 30, 2017, up 8% from March 31, 2017, and up 15% from June 30, 2016.

“We are pleased to report solid growth in Loans, Deposits, Revenue and Income in the second quarter,” said Presidio Bank President and CEO Steve Heitel. “In addition, the Bank continues to show improvement in its efficiency and profitability metrics.”

Financial Highlights

  • Total Loans Outstanding were up $26 million from the quarter ending March 31, 2017 and up $59 million from June 30, 2016 or 11%. New Loan Originations continue to be strong with New Loan Commitments of $76 million in the second quarter of 2017, up from $70 million in the first quarter of 2017. Loan growth in the second quarter of 2017 came primarily from Commercial and Industrial Loans $11 million, Land and Construction Loans $9 million, and Commercial Real Estate Loans $7 million. Undisbursed Construction Loans continue to exceed historical averages and total $54 million at June 30, 2017. It is likely a high percentage of these loans will fund during 2017.
  • Total Deposits increased by $52 million from the quarter ended March 31, 2017, rebounding from the seasonal low in the first quarter. Total Deposits are up $120 million or 22% from the quarter ended June 30, 2016. Non-Interest-Bearing Demand Deposits remain at 38% of Total Deposits.
  • Net Interest Income of $6.9 million in the second quarter of 2017 was up 7.4% from the first quarter of 2017 and up 18% from the second quarter of 2016. This increase is due to higher average loan balances and the impact of rate increases by the Federal Reserve, which has led to an increase in Prime rate. Net Interest Margin increased during the quarter to 3.98% from 3.74% in the first quarter of 2017 due to higher Loan Yields and lower levels of average Liquid Assets carried during the quarter.
  • Operating Expenses decreased by 7% over the first quarter of 2017. In addition to the normal seasonal reduction in Employer Paid Taxes and Employee Benefits Expense, the second quarter benefited from a reduction in Loan Loss Provision Expense on Undisbursed Loans, which totaled $26 thousand in the second quarter versus $247 thousand in the first quarter. This reduction is due to slower growth in undisbursed Construction Loans in the second quarter. The reduction in Operating Expenses combined with the Revenue growth in the quarter resulted in an improvement in the Bank’s efficiency ratio from 71% in the first quarter to 62% in the second quarter.
  • Year-to-date revenue growth is 12.9% while year-to-date expense growth is 5.9%, achieving the Bank’s target of growing revenues twice as fast as expenses.
  • Credit Quality remains stable and strong with a Classified to Capital Ratio of 4.3% at June 30, 2017. The Loan Loss Provision Expense for the second quarter was $198 thousand driven by growth in the loan portfolio and the downgrade of one commercial relationship to Special Mention. In addition, the Bank took a $51 thousand Charge-off during the quarter, which represents the previously reserved portion of the Bank’s one non-performing loan. The Allowance for Loan Losses covers Non-Performing Loans by more than seven times.
  • Diluted Earnings per Common Share were $0.26 for the quarter, up from $0.19 from the quarter ended March 31, 2017.
  • Book Value per Share increased to $11.75 per share at June 30, 2017 from $11.50 per share at March 31, 2017 and $10.82 per share at June 30, 2016.

“In addition to strong financial results this quarter, Presidio Bank was honored to receive the 2017 Tall Tree Award as the Outstanding Business from the Palo Alto Chamber of Commerce,” said Presidio Bank Chairman and Founder, Jim Woolwine. “The Bank was also once again named to the San Francisco Business Times List of Top Corporate Philanthropists.”

 

2nd Quarter 2017 Financial Results
(Dollars in thousands, except per share amounts, unaudited)

 

Condensed Balance Sheet

           
                             
  6/30/2017       3/31/2017     Change     6/30/2016     Change     12/31/2016     Change
 
Cash and due from banks 9,789 6,239 56.9 % 9,430 3.8 % 6,035 62.2 %
Interest bearing due from banks   101,532       88,944   14.2 %   73,324   38.5 %   150,159   -32.4 %
Total cash and equivalents 111,321 95,183 17.0 % 82,754 34.5 % 156,194 -28.7 %
Investment securities 12,736 12,893 -1.2 % 14,456 -11.9 % 13,249 -3.9 %
Loans, net of fees 603,689 578,033 4.4 % 544,577 10.9 % 572,780 5.4 %
Allowance for loan losses   (7,014 )     (6,868 ) 2.1 %   (6,368 ) 10.1 %   (6,868 ) 2.1 %
Net loans 596,675 571,165 4.5 % 538,209 10.9 % 565,912 5.4 %
Premises and equipment, net 1,335 1,005 32.8 % 1,101 21.3 % 1,020 30.9 %
Other assets and interest receivable   24,159       11,610   108.1 %   11,264   114.5 %   11,128   117.1 %
Total assets 746,226 691,856 7.9 % 647,784 15.2 % 747,503 -0.2 %
 
Non-interest-bearing demand 250,344 233,059 7.4 % 201,121 24.5 % 257,757 -2.9 %
Interest bearing transaction 103,727 98,560 5.2 % 83,121 24.8 % 99,604 4.1 %
Money market and savings accounts 258,564 228,801 13.0 % 213,227 21.3 % 259,711 -0.4 %
Time deposits   47,293       48,016   -1.5 %   42,755   10.6 %   46,412   1.9 %
Total deposits 659,928 608,436 8.5 % 540,224 22.2 % 663,484 -0.5 %
Borrowings 10,152 9,860 3.0 % 37,510 NM 9,845 3.1 %
Other liabilities   4,837       4,233   14.3 %   6,272   -22.9 %   6,812   -29.0 %
Total liabilities 674,917 622,529 8.4 % 584,006 15.6 % 680,140 -0.8 %
 
Common stock 65,185 64,801 0.6 % 62,807 3.8 % 64,122 1.7 %
Retained earnings 6,173 4,581 34.8 % 989 -524.2 % 3,377 82.8 %
Other comprehensive income   (49 )     (55 ) 10.9 %   (18 ) -172.2 %   (137 ) -64.2 %
Total shareholder’s equity   71,309       69,327   2.9 %   63,778   11.8 %   67,362   5.9 %
Total liabilities and equity   746,226       691,856   7.9 %   647,784   15.2 %   747,503   -0.2 %
 
Book value per share
Book value per share $ 11.75 $ 11.50 $ 10.82 $ 11.31
Total shares outstanding EOP 6,069 6,030 5,893 5,957
 
Capital Ratios
Tier 1 leverage ratio 10.0 % 9.7 % 9.8 % 9.1 %
Tier 1 risk-based capital ratio 9.6 % 10.1 % 10.1 % 10.1 %
Tangible common risk-based ratio 9.6 % 10.1 % 10.1 % 10.1 %
Total risk-based capital ratio 12.0 % 12.6 % 12.8 % 12.7 %
 
 

Condensed Statement of Income

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

 
    For the three months ended     For the six months ended
  6/30/2017       3/31/2017    

Change
Fav./
(Unfav.)

    6/30/2016    

Change
Fav./
(Unfav.)

  6/30/2017       6/30/2016    

Change
Fav./
(Unfav.)

           
Interest income 7,349 6,853 7.2 % 6,309 16.5 % 14,202 12,681 12.0 %
Interest expense   442       422   (4.7 %)   436   (1.4 %)   865       849   (1.8 %)
Net interest income 6,907 6,431 7.4 % 5,873 17.6 % 13,337 11,832 12.7 %
Provision for loan loss   198       -   NM   67   NM   198       67   NM  
Net interest income after provision 6,709 6,431 4.3 % 5,806 15.6 % 13,139 11,765 11.7 %
 
Other income 191 202 (5.4 %) 161 18.6 % 393 333 18.0 %
 
Compensation and benefit expenses 2,736 2,938 6.9 % 2,424 (12.9 %) 5,674 5,468 (3.8 %)
Occupancy and equipment expenses 518 520 0.4 % 531 2.4 % 1,038 1,046 0.8 %
Data processing 326 306 (6.6 %) 304 (7.3 %) 632 627 (0.8 %)
Professional and legal 203 139 (46.0 %) 141 (43.9 %) 342 276 (23.9 %)
Other operating expenses   586       801   26.9 %   593   1.2 %   1,387       1,149     (20.7 %)
Total operating expenses   4,369       4,704   7.1 %   3,993   (9.4 %)   9,073       8,566     (5.9 %)
Net income before taxes 2,531 1,929 31.2 % 1,974 28.2 % 4,459 3,532 26.3 %
Income taxes   939       725   (29.5 %)   825   (13.8 %)   1,663       1,442     (15.4 %)
Net income   1,592       1,204   32.2 %   1,149   38.6 %   2,796       2,090   33.8 %
 
Earnings Per Share
Basic earnings per share $ 0.27 $ 0.20 $ 0.20 $ 0.47 $ 0.37
Diluted earnings per share $ 0.26 $ 0.19 $ 0.19 $ 0.45 $ 0.36
Average shares outstanding 5,899 5,932

5,673

5,881 5,614
Average diluted shares 6,157 6,185

5,882

6,136 5,838
 
Performance Ratios
Return on average assets 0.90 % 0.69 % 0.71 % 0.79 % 0.65 %
Return on average common equity 9.03 % 7.09 % 7.46 % 8.07 % 6.95 %
Net interest margin 3.98 % 3.74 % 3.70 % 3.86 % 3.78 %
Cost of funds 0.28 % 0.27 % 0.30 % 0.27 % 0.30 %
Efficiency ratio 61.6 % 71.0 % 66.2 % 66.3 % 70.4 %
 
Average Balances
Total assets 711,847 712,119 653,042 711,982 644,540
Earning assets 695,297 698,171 638,560 696,726 629,900
Total loans 588,980 567,792 531,739 578,445 527,081
Total deposits 627,004 628,228 568,518 627,310 563,259
Common equity

70,741

68,760 61,945 69,756 60,514
 

NM = Not Meaningful

 

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

 
                     
  6/30/2017       3/31/2017       12/31/2016       9/30/2016       6/30/2016  
       
Cash and due from banks 9,789 6,239 6,035 6,743 9,430
Interest bearing due from banks   101,532       88,944       150,159       168,954       73,324  
Total cash and equivalents 111,321 95,183 156,194 175,697 82,754
Investment securities 12,736 12,893 13,249 13,955 14,456
Loans, net of fees 603,689 578,033 572,780 542,867 544,577
Allowance for loan losses   (7,014 )     (6,868 )     (6,868 )     (6,642 )     (6,368 )
Net loans 596,675 571,165 565,912 536,225 538,209
Premises and equipment, net 1,335 1,005 1,020 1,041 1,101
Other assets and interest receivable   24,159       11,610       11,128       10,952       11,264  
Total assets 746,226 691,856 747,503 737,870 647,784
 
Non-interest-bearing demand 250,344 233,059 257,757 222,877 201,121
Interest bearing transaction 103,727 98,560 99,604 80,112 83,121
Money market and savings accounts 258,564 228,801 259,711 291,551 213,227
Time deposits   47,293       48,016       46,412       61,404       42,755  
Total deposits 659,928 608,436 663,484 655,944 540,224
Borrowings 10,152 9,860 9,845 9,770 37,510
Other liabilities   4,837       4,233       6,812       6,531       6,272  
Total liabilities 674,917 622,529 680,140 672,245 584,006
 
Common stock 65,185 64,801 64,122 63,492 62,807
Retained earnings 6,173 4,581 3,377 2,174 989
Other comprehensive income   (49 )     (55 )     (137 )     (41 )     (18 )
Total shareholder’s equity   71,309       69,327       67,362       65,625       63,778  
Total liabilities and equity   746,226       691,856       747,503       737,870       647,784  

 

 

 

 

Book value per share
Book value per share $ 11.75 $ 11.50 $ 11.31 $ 11.04 $ 10.82
Total shares outstanding EOP 6,069 6,030 5,957 5,944 5,893
 
Capital Ratios
Tier 1 leverage ratio 10.0 % 9.7 % 9.1 % 9.5 % 9.8 %
Common equity tier 1 capital ratio 9.6 % 10.1 % 10.1 % 10.3 % 10.1 %
Tier 1 risk-based capital ratio 9.6 % 10.1 % 10.1 % 10.3 % 10.1 %
Total risk-based capital ratio 12.0 % 12.6 % 12.7 % 12.9 % 12.8 %
 

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

   
For the three months ended
  6/30/2017       3/31/2017       12/31/2016       9/30/2016       6/30/2016  
       
Interest income 7,349 6,853 6,736 6,575 6,309
Interest expense   442       422       455       471       436  
Net interest income 6,907 6,431 6,281 6,104 5,873
Provision for loan loss   198       -       226       274       67  
Net interest income after provision 6,709 6,431 6,055 5,830 5,806
 
Other income 191 202 189 177 161
 
Compensation and benefit expenses 2,736 2,938 2,657 2,546 2,424
Occupancy and equipment expenses 518 520 547 531 531
Data processing 326 306 340 320 304
Professional and legal 203 139 121 142 141
Other operating expenses   586       801       612       548       593  
Total operating expenses   4,369       4,704       4,277       4,087       3,993  
Net income before taxes 2,531 1,929 1,967 1,920 1,974
Income taxes   939       725       763       736       825  
Net income   1,592       1,204       1,204       1,184       1,149  
 
Earnings Per Share
Basic earnings per share $ 0.27 $ 0.20 $ 0.20 $ 0.20 $ 0.20
Diluted earnings per share $ 0.26 $ 0.19 $ 0.19 $ 0.19 $ 0.19
Average shares outstanding 5,899 5,932 5,906 5,906

5,673

Average diluted shares 6,157 6,185 6,085 6,076

5,882

 
Performance Ratios
Return on average assets 0.90 % 0.69 % 0.65 % 0.68 % 0.71 %
Return on average common equity 9.03 % 7.09 % 7.15 % 7.22 % 7.46 %
Net interest margin 3.98 % 3.74 % 3.45 % 3.59 % 3.70 %
Cost of funds 0.28 % 0.27 % 0.27 % 0.29 % 0.30 %
Efficiency ratio 61.6 % 71.0 % 66.1 % 65.1 % 66.2 %
 
Average Balances
Total assets 711,847 712,119 738,307 694,088 653,042
Earning assets 695,297 698,171 725,247 679,353 638,560
Total loans 588,980 567,792 537,641 547,748 531,739
Total deposits 627,004 628,228 655,149 603,428 568,518
Common equity

70,741

68,760 66,788 65,228 61,945
 
           

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

                 
6/30/2017     3/31/2017     12/31/2016     9/30/2016     6/30/2016  
 
Commercial real estate 275,189 268,334 263,463 248,646 244,457
Land and construction 22,657 13,629 12,298 20,025 38,714
Commercial 187,537 176,073 180,412 161,783 150,613
Personal 23,008 30,992 31,352 31,411 35,376
Residential 33,671 27,077 30,510 30,977 26,852
Multifamily 62,634 62,898 55,593 50,832 49,379
Deferred loan fees (1,007 )   (970 )   (848 )   (806 )   (813 )
Loans 603,689 578,033 572,779 542,867 544,577
Allowance for loan losses (7,015 )   (6,868 )   (6,868 )   (6,642 )   (6,368 )
Net loans 596,675 571,165 565,912 536,225 538,209
 
 

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

                     

6/30/2017

   

3/31/2017

   

12/31/2016

   

9/30/2016

   

6/30/2016

 
       
Non-Accrual Loans 991 1,042 1,055 1,068 1,074
Non-Performing Loans (NPL) 991 1,042 1,055 1,068 1,074
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) 991 1,042 1,055 1,068 1,074
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent 991 1,042 1,055 1,068 1,074
Quarterly Net Charge-offs 51 - - - -
 
NPAs / Assets % 0.13 % 0.15 % 0.14 % 0.14 % 0.17 %
NPAs & 90 Day / Assets % 0.13 % 0.15 % 0.14 % 0.14 % 0.17 %
NPAs / Actual Loans and OREO % 0.13 % 0.15 % 0.14 % 0.14 % 0.17 %
Loan Loss Reserves / Loans (%) 1.16 % 1.19 % 1.20 % 1.22 % 1.17 %
 
 

Net Interest Income (Quarter Data)
(Dollars in Thousands, unaudited)

   
For the Six Months Ended
6/30/2017   6/30/2016
  Interest     Interest  
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 105,319 $ 483 0.93 % $ 88,129 $ 227 0.52 %
Federal Reserve and Federal Home Loan Bank stock 4,374 151 6.95 3,865 135 7.05
Investment Securities 8,589 64 1.50 10,826 75 1.39
Loans: (2)
Commercial 174,400 4,133 4.78 149,450 3,531 4.75
Land and Construction 15,360 469 6.15 43,139 1,076 5.01
Commercial Real Estate 267,966 6,227 4.69 228,758 5,341 4.70
Residential 29,446 666 4.56 27,048 565 4.20
Multifamily 61,279 1,393 4.58 46,946 1,098 4.71
Personal 29,994   616 4.14 31,740   633 4.01
Total Loans 578,445   13,504 4.71 527,081   12,245 4.67
Total Earning Assets 696,726 14,202 4.11 629,900 12,681 4.05
Allowance for loan losses (6,884 )

(6,306

)
Cash and cash equivalents 9,144 9,313
Other assets

12,996

11,633

Total Assets $

711,982

  $ 644,540  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 102,725 $ 95 0.19 % $ 87,231 $ 89 0.20 %
Money market deposits 234,166 235 0.20 221,025 250 0.23
Savings deposits 4,393 2 0.09 3,408 2 0.13
Certificates and other time deposits 46,943   110 0.47 41,095   79 0.38
Total Interest-bearing Deposits 388,228 443 0.23 352,759 419 0.24
Borrowings 9,884   422 8.61 13,630   430 6.34
Total Interest-bearing Liabilities 398,113 865 0.44 366,389 849 0.47
Noninterest-bearing deposits 239,082 210,500
Other liabilities

5,032

  7,138  
Total Liabilities

642,226

584,027
Stockholders' Equity

69,756

  60,514  
Total Liabilities and Stockholders' Equity $

711,982

  $ 644,540  
Net Interest Income $ 13,337 $ 11,832
Net Interest Margin 3.86 % 3.78 %
Cost of funds 0.27 % 0.30 %
 
 

Net Interest Income (Quarter Data)
(Dollars in Thousands, unaudited)

   
For the Three Months Ended
6/30/2017   3/31/2017
  Interest     Interest  
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 93,405 $ 223 0.96 % $ 117,365 $ 260 0.90 %
Federal Reserve and Federal Home Loan Bank stock 4,518 69 6.13 4,229 82 7.83
Investment Securities 8,395 31 1.49 8,785 33 1.50
Loans: (2)
Commercial 182,033 2,191 4.83 166,682 1,942 4.72
Land and Construction 17,072 269 6.33 13,628 199 5.94
Commercial Real Estate 267,931 3,183 4.77 268,000 3,043 4.61
Residential 31,139 366 4.71 27,735 301 4.40
Multifamily 63,085 718 4.56 59,453 675 4.60
Personal 27,720   298 4.31 32,294   318 4.00
Total Loans 588,980   7,025 4.78 567,792   6,478 4.63
Total Earning Assets 695,297 7,349 4.24 698,171 6,853 3.98
Allowance for loan losses (6,900 ) (6,868 )
Cash and cash equivalents 9,055 9,234
Other assets 14,395.02   11,582  
Total Assets $ 711,847   $ 712,119  
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 104,413 $ 51 0.20 % $ 101,019 $ 44 0.18 %
Money market deposits 234,203 120 0.21 234,129 115 0.20
Savings deposits 5,258 1 0.09 3,519 1 0.09
Certificates and other time deposits 47,988   59 0.49 46,494   51 0.45
Total Interest-bearing Deposits 391,862 231 0.24 385,162 211 0.22
Borrowings 9,981   211 8.48 9,786   211 8.74
Total Interest-bearing Liabilities 401,844 442 0.44 394,948 422 0.43
Noninterest-bearing deposits 235,141 243,067
Other liabilities 4,122   5,344  
Total Liabilities 641,107 643,358
Stockholders' Equity 70,741   68,760  
Total Liabilities and Stockholders' Equity $ 711,847   $ 712,119  
Net Interest Income $ 6,906 $ 6,431
Net Interest Margin 3.98 % 3.74 %
Cost of funds 0.28 % 0.27 %

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
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