Market Overview

Presidio Bank Reports Results for the Second Quarter of 2018

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Presidio Bank (OTC:PDOB), a Bay Area business bank, today reported
unaudited results for the second quarter ended June 30, 2018 with Net
Income of $2.8 million, up $600 thousand (27%) from the first quarter of
2018 and up $1.2 million (78%) from the second quarter of 2017. Total
Assets were $853 million at June 30, 2018, up $3 million from March 31,
2018 and up $107 million from June 30, 2017.

"While asset growth was modest in the second quarter, the Bank continues
to significantly improve its profitability and efficiency," said
Presidio Bank CEO Steve Heitel. "Our Return on Assets and Return on
Equity are both up more than 50% from the same period a year ago."

Financial Highlights

  • Total Loans Outstanding were up $3 million from the quarter ending
    March 31, 2018 and up $50 million from June 30, 2017 or 8%. New Loan
    Originations were $50 million, down from $80 million in the
    exceptionally strong first quarter of 2018. Loan growth was centered
    in Commercial Real Estate and Multi Family loans, which offset a
    decline in Commercial and Industrial loans. The decline in Commercial
    and Industrial loans was due to seasonal pay downs and several
    borrowers that sold assets during the quarter and reduced line of
    credit balances with the proceeds.
  • Total Deposits decreased by $1 million from the quarter ended March
    31, 2018 and increased by $98 million from June 30, 2017 or 15%.
    Year-to-date, deposits are up $53 million. During the quarter ended
    June 30, 2018, the decline in Non-Interest Bearing Demand Deposits was
    offset by a like increase in Money Market Deposits. Despite the
    decline, Non-Interest Bearing Demand Deposits still represent 39% of
    Total Deposits.
  • Net Interest Income of $8.3 million in the second quarter of 2018 was
    up 3% from the first quarter of 2018 and up 21% from the second
    quarter of 2017. This increase is due to higher average loan balances,
    increased loan yields, and increased interest rates on liquid assets
    invested by the Bank. Net Interest Margin decreased during the quarter
    to 4.20% from 4.27% in the first quarter of 2018 due to higher deposit
    costs and higher levels of liquid assets maintained during the quarter
    which more than offset higher loan yields. Cost of Deposits increased
    from 0.16% to 0.27% as the Bank increased rates on deposits in
    response to market forces. In June, the Bank increased its investment
    securities portfolio by $30 million which should increase the yield on
    liquid assets in future quarters.
  • Operating Expenses decreased by 2% over the first quarter of 2018.
    This decrease was largely due to a reduction in Employer Paid Taxes
    and Employee Benefits Expense from the seasonal high in the first
    quarter, which more than offset an increase in incentive compensation
    due to above budget deposit growth in the first half of the year.
    Operating Expenses increased 17% over the second quarter of 2017 due
    to growth related increases in Compensation and Benefits, higher
    occupancy costs due to the lease and leasehold improvements on our new
    Walnut Creek facility and higher data processing costs. The Bank's
    efficiency ratio improved from 62% in the first quarter of 2018 to 59%
    in the second quarter of 2018.
  • Year-over-year revenue growth is 24% while year-over-year expense
    growth is 14%.
  • Credit Quality remains stable and strong with a Classified to Capital
    Ratio of 2.6% at June, 30 2018. The Loan Loss Provision Expense for
    the second quarter was zero due to modest growth in the loan portfolio
    and a $500 thousand reduction in Classified Loans. Total Criticized
    and Classified Loans are up $5 million from March 31, 2018 and
    represent 5% of Loan Commitments and 4% of Loans Outstanding at June
    30, 2018. The Bank has no Non-Performing Loans.
  • Diluted Earnings per Common Share were $0.44 for the quarter, up from
    $0.34 in the first quarter of 2018 and up from $0.26 in the second
    quarter of 2017
  • Book Value per Share increased to $13.06 per share at June 30, 2018
    from $12.68 per share at March 31, 2018 and $11.75 per share at June
    30, 2017.

"With the recent promotions of Clay Jones to President and Karol Watson
to Executive Vice President, Chief Operations Officer, the Bank has
internally filled two important roles and evidenced its management
depth," said Presidio Bank Chairman and Founder, Jim Woolwine. "These
moves reward two executives that have been instrumental in our success
and position the Bank for continued growth."

 

2nd Quarter 2018 Financial Results

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

 

Condensed Balance Sheet

                                           
  6/30/2018       3/31/2018     Change       6/30/2017     Change   12/31/2017     Change
                   
Cash and due from banks 8,842 14,682 -39.8% 9,789 -9.7% 7,613 16.2%
Interest bearing due from banks   130,412       154,434 -15.6%   101,532 28.4%   129,952 0.4%
Total cash and equivalents 139,254 169,116 -17.7% 111,321 25.1% 137,565 1.2%
Investment securities 41,326 11,810 249.9% 12,736 224.5% 12,313 235.6%
Loans, net of fees 653,226 649,994 0.5% 603,689 8.2% 626,282 4.3%
Allowance for loan losses   (7,325)       (7,325) 0.0%   (7,014) 4.4%   (7,166) 2.2%
Net loans 645,901 642,669 0.5% 596,675 8.3% 619,116 4.3%
Premises and equipment, net 2,464 2,537 -2.9% 1,335 84.6% 2,627 -6.2%
Other assets and interest receivable   24,373       23,796 2.4%   24,159 0.9%   22,237 9.6%
Total assets 853,318 849,928 0.4% 746,226 14.4% 793,858 7.5%
 
Non-interest-bearing demand 298,354 337,201 -11.5% 250,344 19.2% 295,070 1.1%
Interest bearing transaction 108,338 108,399 -0.1% 103,727 4.4% 120,109 -9.8%
Money market and savings accounts 302,077 262,503 15.1% 258,564 16.8% 238,706 26.5%
Time deposits   48,698       50,082 -2.8%   47,293 3.0%   50,269 -3.1%
Total deposits 757,467 758,185 -0.1% 659,928 14.8% 704,154 7.6%
Borrowings 9,961 10,059 -1.0% 10,152 NM 10,174 -2.1%
Other liabilities   5,152       4,466 15.4%   4,837 6.5%   4,767 8.1%
Total liabilities 772,580 772,710 0.0% 674,917 14.5% 719,095 7.4%
 
Common stock 66,995 66,241 1.1% 65,185 2.8% 65,960 1.6%
Retained earnings 13,908 11,079 25.5% 6,173 125.3% 8,854 57.1%
Other comprehensive income   (165)       (102) 61.4%   (49) 236.1%   (51) 220.2%
Total shareholder's equity   80,738       77,218 4.6%   71,309 13.2%   74,763 8.0%
Total liabilities and equity   853,318       849,928 0.4%   746,226 14.4%   793,858 7.5%
 
Book value per share
Book value per share $ 13.06 $ 12.68 $ 11.75 $ 12.29
Total shares outstanding EOP 6,184 6,090 6,069 6,084
 
Capital Ratios
Tier 1 leverage ratio 9.8% 9.7% 10.0% 9.7%
Tier 1 risk-based capital ratio 9.9% 9.5% 9.6% 9.8%
Tangible common risk-based ratio 9.9% 9.5% 9.6% 9.8%
Total risk-based capital ratio 12.1% 11.7% 12.0% 12.1%
 
 

Condensed Statement of Income

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

         
For the three months ended For the six months ended
  6/30/2018       3/31/2018    

Change
Fav./
(Unfav.)

      6/30/2017    

Change
Fav./
(Unfav.)

  6/30/2018       6/30/2017    

Change
Fav./
(Unfav.)

                       
Interest income 9,042 8,570 5.5% 7,349 23.0% 17,612 14,202 24.0%
Interest expense   707       487 (45.0%)   442 (59.9%)   1,194       865     (38.1%)
Net interest income 8,335 8,083 3.1% 6,907 20.7% 16,418 13,337 23.1%
Provision for loan loss   -       159 NM   198 NM   159       198     19.7%
Net interest income after provision 8,335 7,924 5.2% 6,709 24.2% 16,259 13,139 23.7%
 
Other income 309 320 (3.5%) 191 61.5% 629 393 60.1%
 
Compensation and benefit expenses 3,254 3,283 0.9% 2,736 (18.9%) 6,537 5,674 (15.2%)
Occupancy and equipment expenses 602 616 2.3% 518 (16.2%) 1,218 1,038 (17.4%)
Data processing 400 385 (4.1%) 326 (22.6%) 785 632 (24.1%)
Professional and legal 278 147 (89.2%) 203 (37.1%) 425 342 (24.3%)
Other operating expenses   571       777 26.5%   586 2.5%   1,348       1,387     2.8%
Total operating expenses   5,105       5,208 2.0%   4,369 (16.9%)   10,313       9,073     (13.7%)
Net income before taxes 3,539 3,036 16.6% 2,531 39.8% 6,575 4,459 47.5%
Income taxes   710       811 12.5%   939 24.4%   1,521       1,663     8.5%
Net income   2,829       2,225 27.2%   1,592 77.7%   5,054       2,796 80.8%
 
Earnings Per Share
Basic earnings per share $ 0.46 $ 0.36 26.6% $ 0.27 73.2% $ 0.83 $ 0.47 76.0%
Diluted earnings per share $ 0.44 $ 0.34 26.8% $ 0.26 70.5% $ 0.78 $ 0.45 73.0%
Average shares outstanding 6,053 6,025 5,899 6,038 5,881
Average diluted shares 6,419 6,398 6,157 6,409 6,136
 
Performance Ratios
Return on average assets 1.38% 1.14% 0.90% 1.26% 0.79%
Return on average common equity 14.31% 11.78% 9.03% 13.06% 8.07%
Net interest margin 4.20% 4.27% 3.98% 4.23% 3.86%
Cost of funds 0.38% 0.28% 0.28% 0.33% 0.27%
Efficiency ratio 59.1% 62.1% 61.6% 60.6% 66.3%
 
Average Balances
Total assets 822,750 794,442 711,847 808,674 711,982
Earning assets 795,498 768,150 695,297 781,899 696,726
Total loans 642,855 635,039 588,980 638,968 578,445
Total deposits 728,532 703,081 627,004 715,877 627,310
Common equity 79,177 76,591 70,741 77,891 69,756
 
 

NM = Not Meaningful

 

Condensed Balance Sheet (5 Quarter Data)

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

                             
  6/30/2018       3/31/2018       12/31/2017       9/30/2017       6/30/2017
               
Cash and due from banks 8,842 14,682 7,613 10,677 9,789
Interest bearing due from banks   130,412       154,434       129,952       126,277       101,532
Total cash and equivalents 139,254 169,116 137,565 136,954 111,321
Investment securities 41,326 11,810 12,313 12,801 12,736
Loans, net of fees 653,226 649,994 626,282 617,269 603,689
Allowance for loan losses   (7,325)       (7,325)       (7,166)       (7,166)       (7,014)
Net loans 645,901 642,669 619,116 610,103 596,675
Premises and equipment, net 2,464 2,537 2,627 2,452 1,335
Other assets and interest receivable   24,373       23,796       22,237       23,312       24,159
Total assets 853,318 849,928 793,858 785,622 746,226
 
Non-interest-bearing demand 298,354 337,201 295,070 304,726 250,344
Interest bearing transaction 108,338 108,399 120,109 98,019 103,727
Money market and savings accounts 302,077 262,503 238,706 247,857 258,564
Time deposits   48,698       50,082       50,269       46,871       47,293
Total deposits 757,467 758,185 704,154 697,473 659,928
Borrowings 9,961 10,059 10,174 10,346 10,152
Other liabilities   5,152       4,466       4,767       4,001       4,837
Total liabilities 772,580 772,710 719,095 711,820 674,917
 
Common stock 66,995 66,241 65,960 65,585 65,185
Retained earnings 13,908 11,079 8,854 8,252 6,173
Other comprehensive income   (165)       (102)       (51)       (35)       (49)
Total shareholder's equity   80,738       77,218       74,763       73,802       71,309
Total liabilities and equity   853,318       849,928       793,858       785,622       746,226
 
Book value per share
Book value per share $ 13.06 $ 12.68 $ 12.29 $ 12.15 $ 11.75
Total shares outstanding EOP 6,184 6,090 6,084 6,074 6,069
 
Capital Ratios
Tier 1 leverage ratio 9.8% 9.7% 9.7% 9.9% 10.0%
Common equity tier 1 capital ratio 9.9% 9.5% 9.8% 9.8% 9.6%
Tier 1 risk-based capital ratio 9.9% 9.5% 9.8% 9.8% 9.6%
Total risk-based capital ratio 12.1% 11.7% 12.1% 12.2% 12.0%
 
 

Condensed Statement of Income (5 Quarter Data)

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

   
For the three months ended
 
6/30/2018     3/31/2018     12/31/2017     9/30/2017     6/30/2017
                         
 
Interest income 9,042 8,570 8,236 8,362 7,349
Interest expense   707       487       483       472       442
Net interest income 8,335 8,083 7,753 7,890 6,907
Provision for loan loss   -       159       -       100       198
Net interest income after provision 8,335 7,924 7,753 7,790 6,709
 
Other income 309 320 287 268 191
 
Compensation and benefit expenses 3,254 3,283 2,814 3,036 2,736
Occupancy and equipment expenses 602 616 617 628 518
Data processing 400 385 388 346 326
Professional and legal 278 147 155 77 203
Other operating expenses   571       777       627       533       586
Total operating expenses   5,105       5,208       4,601       4,620       4,369
Net income before taxes 3,539 3,036 3,439 3,438 2,531
Income taxes   710       811       2,838       1,358       939
Net income   2,829       2,225       601       2,080       1,592
 
Earnings Per Share
Basic earnings per share $ 0.46 $ 0.36 $ 0.10 $ 0.33 $ 0.27
Diluted earnings per share $ 0.44 $ 0.34 $ 0.09 $ 0.32 $ 0.26
Average shares outstanding 6,053 6,025 6,009 6,001 5,899
Average diluted shares 6,419 6,398 6,328 6,277 6,157
 
Performance Ratios
Return on average assets 1.38% 1.14% 0.32% 1.10% 0.90%
Return on average common equity 14.31% 11.78% 3.25% 11.31% 9.03%
Net interest margin 4.20% 4.27% 4.11% 4.34% 3.98%
Cost of funds 0.38% 0.28% 0.28% 0.28% 0.28%
Efficiency ratio 59.1% 62.1% 57.4% 57.0% 61.6%
 
Average Balances
Total assets 822,750 794,442 774,015 748,229 711,847
Earning assets 795,498 768,150 747,679 721,374 695,297
Total loans 642,855 635,039 608,584 612,493 588,980
Total deposits 728,532 703,081 684,233 660,790 627,004
Common equity 79,177 76,591 75,531 73,108 70,741
 
 

Loans (5 Quarter Data)

(Dollars in Thousands, unaudited)

                             
6/30/2018     3/31/2018     12/31/2017     9/30/2017     6/30/2017
               
Commercial real estate 303,444 283,238 271,346 268,357 275,189
Land and construction 53,771 54,088 44,714 39,599 22,657
Commercial 180,783 201,094 197,748 194,884 187,537
Personal 13,709 17,172 16,295 21,292 23,008
Residential 31,011 33,114 34,174 34,389 33,671
Multifamily 71,505 62,325 63,024 59,764 62,634
Deferred loan fees (997)     (1,037)     (1,019)     (1,016)     (1,007)
Loans 653,226 649,994 626,282 617,269 603,689
Allowance for loan losses (7,325)     (7,325)     (7,166)     (7,166)     (7,015)
Net loans 645,901 642,669 619,116 610,103 596,675
 
 

Non-Performing Assets (5 Quarter Data)

(Dollars in Thousands, unaudited)

                             
6/30/2018     3/31/2018     12/31/2017     9/30/2017     6/30/2017
               
Non-Accrual Loans - - - - 991
 
Non-Performing Loans (NPL) - - - - 991
Other Real Estate Owned - - - - -
Non-Performing Assets (NPA) - - - - 991
90+ Days Delinquent - - - - -
NPAs & 90 Day Delinquent - - - - 991
Quarterly Net Charge-off's - - - (51) 51
 
NPAs / Assets % 0.00% 0.00% 0.00% 0.00% 0.13%
NPAs & 90 Day / Assets % 0.00% 0.00% 0.00% 0.00% 0.13%
NPAs / Actual Loans and OREO % 0.00% 0.00% 0.00% 0.00% 0.13%
Loan Loss Reserves / Loans (%) 1.12% 1.13% 1.14% 1.16% 1.16%
 
   

Net Interest Income (Quarterly Data)

(Dollars in Thousands, unaudited)

 
For the Three Months Ended
 
6/30/2018       3/31/2018
    Interest         Interest    
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 135,803 $ 569 1.68 % $ 121,072 $ 501 1.68 %
Federal Reserve and Federal Home Loan Bank stock 4,806 76 6.35 4,655 77 6.70
Investment Securities 12,034 78 2.59 7,384 31 1.69
Loans: (2)
Commercial 190,167 2,589 5.46 199,340 2,579 5.25
Land and Construction 52,828 762 5.79 45,791 772 6.83
Commercial Real Estate 288,246 3,619 5.04 278,540 3,317 4.83
Residential 31,297 426 5.46 32,592 412 5.12
Multifamily 67,247 776 4.63 62,715 708 4.58
Personal 13,070 147 4.51 16,061 173 4.37
Total Loans 642,855 8,319 5.19 635,039 7,961 5.08
Total Earning Assets 795,498 9,042 4.56 768,150 8,570 4.52
Allowance for loan losses (7,325) (7,219)
Cash and cash equivalents 9,295 9,543
Other assets 25,282 23,968
Total Assets $ 822,750 $ 794,442
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 112,088 $ 67 0.24 % $ 107,657 $ 41 0.15 %
Money market deposits 258,372 306 0.47 236,876 138 0.24
Savings deposits 3,846 2 0.25 3,812 1 0.14
Certificates and other time deposits 49,729 121 0.97 50,230 96 0.78
Total Interest-bearing Deposits 424,035 496 0.47 398,575 276 0.28
Borrowings 10,059 211 8.41 10,088 211 8.48
Total Interest-bearing Liabilities 434,094 707 0.65 408,663 487 0.48
Noninterest-bearing deposits 304,497 304,506
Other liabilities 4,982 4,682
Total Liabilities 743,573 717,851
Stockholders' Equity 79,177 76,591
Total Liabilities and Stockholders' Equity $ 822,750 $ 794,442
Net Interest Income $ 8,335 $ 8,083
Net Interest Margin 4.20 % 4.27 %
Cost of Funds 0.38 % 0.28 %
Cost of Deposits 0.27 % 0.16 %
 
 

Net Interest Income (Annual Data)

(Dollars in Thousands, unaudited)

 
    For the Six Months Ended
 
6/30/2018       6/30/2017
    Interest         Interest    
Average Income/ Average Average Income/ Average
Balance Expense Rate Balance Expense Rate
Assets:
Interest-bearing deposits $ 128,478 $ 1,071 1.68 % $ 105,319 $ 483 0.93 %
Federal Reserve and Federal Home Loan Bank stock 4,731 153 6.52 4,374 151 6.95
Investment Securities 9,722 108 2.25 8,589 64 1.50
Loans: (2)
Commercial 194,728 5,189 5.37 174,400 4,133 4.78
Land and Construction 49,329 1,588 6.49 15,360 469 6.15
Commercial Real Estate 283,420 6,862 4.88 267,966 6,227 4.69
Residential 31,941 838 5.29 29,446 666 4.56
Multifamily 64,993 1,484 4.60 61,279 1,393 4.58
Personal 14,557 319 4.41 29,994 616 4.14
Total Loans 638,968 16,280 5.14 578,445 13,504 4.71
Total Earning Assets 781,899 17,612 4.54 696,726 14,202 4.11
Allowance for loan losses (7,272) (6,884)
Cash and cash equivalents 9,418 9,144
Other assets 24,629 12,996
Total Assets $ 808,674 $ 711,982
 
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits $ 109,885 $ 108 0.20 % $ 102,725 $ 95 0.19 %
Money market deposits 247,683 444 0.36 234,166 235 0.20
Savings deposits 3,829 4 0.20 4,393 2 0.09
Certificates and other time deposits 49,978 216 0.88 46,943 110 0.47
Total Interest-bearing Deposits 411,375 772 0.38 388,228 443 0.23
Borrowings 10,074 422 8.45 9,884 422 8.61
Total Interest-bearing Liabilities 421,449 1,194 0.57 398,113 865 0.44
Noninterest-bearing deposits 304,502 239,082
Other liabilities 4,832 5,032
Total Liabilities 730,783 642,226
Stockholders' Equity 77,891 69,756
Total Liabilities and Stockholders' Equity $ 808,674 $ 711,982
Net Interest Income $ 16,418 $ 13,337
Net Interest Margin 4.23 % 3.86 %
Cost of Funds 0.33 % 0.27 %
Cost of Deposits 0.22 % 0.14 %
 

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.

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