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Presidio Bank Reports Results for the Second Quarter of 2018

July 30, 2018

SAN FRANCISCO--(BUSINESS WIRE)--Jul 30, 2018--Presidio Bank (OTCBB: 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.”

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