Professional Holding Corp. Reports Second Quarter 2022 Results

Jul 28th, 2022 20:15 EST

CORAL GABLES, Fla.--(BUSINESS WIRE)--Professional Holding Corp. (the “Company”) (NASDAQ:PFHD), the parent company of Professional Bank (the “Bank”), today reported net income of $7.0 million, or $0.52 per share, for the second quarter of 2022 compared to net income of $2.4 million, or $0.18 per share, for the first quarter of 2022, and net income of $6.3 million, or $0.47 per share, for the second quarter of 2021.

“We are extremely proud of our record setting quarter of loan production and net income. Our team continues to deliver high quality results and we look forward to building on this momentum in the future,” said Abel Iglesias, Chief Executive Officer.

Results of Operations for the Three Months Ended June 30, 2022

  • Net income increased $4.6 million, or 189.1%, to $7.0 million compared to $2.4 million in the prior quarter, due to higher net interest income of $2.9 million, higher noninterest income of $0.5 million, and lower noninterest expense of $3.9 million, partially offset by higher provision expense of $1.4 million and higher income tax provision of $1.3 million.
  • Net interest income increased $2.9 million, or 15.0%, to $21.9 million compared to $19.0 million in the prior quarter, primarily as a result of the Federal Reserve’s target Federal Funds Rate increases during the second quarter as the Company maintains an asset sensitive balance sheet. The Company’s yield on average interest earning assets increased 45 basis points while cost of funds decreased four basis points compared to the prior quarter. Net interest income also benefited from average loan growth of $79.2 million to $1.9 billion compared to $1.8 billion in the prior quarter.
  • Provision for loan losses expense increased $1.4 million, or 163.2%, to $2.2 million compared to $0.9 million in the prior quarter primarily due to loan growth during the second quarter. The ratio of annualized charge-offs to average loans was 0.14% during the three months ended June 30, 2022, compared to 0% in the prior quarter.
  • Noninterest income increased $0.5 million, or 39.9% to $1.8 million compared to $1.3 million in the prior quarter. The increase was comprised of higher income from bank-owned life insurance primarily due to purchases of approximately $15.0 million during the quarter and $0.5 million of expected insurance proceeds on a previously recognized contingency, partially offset by a decrease in swap fee income of $0.1 million due to a lower volume of swap transactions.
  • Noninterest expense decreased $3.9 million, or 23.6%, to $12.6 million compared to $16.5 million in the prior quarter, primarily due to lower salaries and employee benefits of $3.7 million. The decrease in salaries and employee benefits reflects the first quarter expense of $2.9 million related to the departure of the Company’s former Chief Executive Officer. In addition, in the second quarter the Company began capitalizing certain qualified costs in connection with the development of internal-use software, including $0.4 million related to salary expense, and increased capitalization of deferred salaries cost of  $0.4 million as a result of the current quarter record loan production.

Results of Operations for the Six Months Ended June 30, 2022

  • Net income decreased $1.7 million, or 15.3%, to $9.4 million compared to $11.1 million in the prior year, due to increased noninterest expense driven by the expenses associated with the departure of the Company’s former Chief Executive Officer and higher provision expense, partially offset by higher net interest income.
  • Net interest income increased $5.9 million, or 16.7%, to $41.0 million compared to $35.1 million in the prior year, primarily as a result of the Federal Reserve’s target Federal Funds Rate increases in 2022 as the Company maintains an asset sensitive balance sheet, in addition to an increase in average loans from $1.7 billion in 2021 to $1.8 billion in 2022. Interest income also benefited from increased average balances and higher yields in the investment portfolio.
  • Provision for loan losses increased $1.3 million, or 71.7%, to $3.1 million compared to $1.8 million in the prior year primarily due to loan growth. The ratio of annualized charge-offs to average loans was 0.07% during the six months ended June 30, 2022, compared to 1.80% in the prior year.
  • Noninterest income decreased $0.4 million, or 10.7% to $3.1 million compared to the prior year. The decrease primarily reflected lower service charges of $0.5 million on deposit accounts compared to prior year due to service charges of approximately $0.7 million, associated with acting as a correspondent bank for a Payroll Protection Program lender. Swap fee income and loans held for sale income also decreased $0.5 million and $0.2 million, respectively in 2022 compared to 2021 due to lower volume in both noninterest income categories. These decreases were partially offset by an increase of $0.8 million in other noninterest income, comprised of $0.5 million of expected insurance proceeds on a previously recognized contingency and a $0.2 million loss on fixed asset disposals recorded in 2021.
  • Noninterest expense increased $6.4 million, or 28.0%, to $29.1 million compared to $22.7 million in the prior year primarily due to higher salaries and employee benefits of $4.8 million and higher other noninterest expense of $1.5 million, partially offset by prior year acquisition costs of $0.7 million. The increase in salaries and benefits was driven by the $2.9 million expense related to the departure of the Company’s former Chief Executive Officer, and higher employee compensation costs from higher headcount and bonus and sales incentives paid out during the 2022 period. The increase in other noninterest expense was primarily comprised of a $0.7 million loss related to a previously recognized contingency from the first quarter, and a $0.3 million increase related to our Community Reinvestment Act (“CRA”) mutual fund investment valuation.

Financial Condition

At June 30, 2022:

  • Total assets decreased $0.2 billion, or 28.8%, annualized to $2.7 billion, compared to March 31, 2022, primarily as a result of decreases in cash and cash equivalents, partially offset by an increase in loans.
  • Total loans increased $164.5 million, or 36.2%, annualized to $2.0 billion, compared to $1.8 billion at March 31, 2022. The increase was driven by loan originations of approximately $315.8 million, partially offset by paydowns and prepayments of $85.8 million. The Professional Bank PPP loan balance decreased $22.9 million, or 73.7%, to $8.2 million from March 31, 2022.
  • Total deposits decreased $0.2 billion, or 31.9% annualized, compared to March 31, 2022, with decreases in interest bearing and noninterest bearing accounts. Cost of deposits decreased two basis points to 0.24% for the three months ended June 30, 2022, from 0.26% for the three months ended March 31, 2022.
  • As of June 30, 2022, nonperforming assets decreased $0.7 million to $1.5 million compared to $2.1 million at March 31, 2022, due to a charge-off of a nonperforming consumer loan of $0.7 million during the three months ended June 30, 2022. There were no net charge-offs in the prior quarter.

Capital and Liquidity

The Company continues to remain well capitalized per regulatory requirements. As of June 30, 2022, the Company had a total risk-based capital ratio of 12.8% and a leverage capital ratio of 8.1%. The Company maintains a strong liquidity position. At June 30, 2022, in addition to its balance sheet liquidity, the Company had the ability to generate approximately $488.1 million in liquidity through available resources. Additionally, the Company retained $10.5 million in cash at the holding company.

Net Interest Income and Net Interest Margin Analysis

Net interest income was $21.9 million for the three months ended June 30, 2022. The following table shows the average outstanding balance of each principal category of the Company’s assets, liabilities, and shareholders’ equity, together with the average yields on assets and the average costs of liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the respective periods. For the three months ended June 30, 2022, the Company’s cost of funds was 0.28%.

(Dollars in thousands)

For the Three Months Ended

June 30, 2022

 

March 31, 2022

 

June 30, 2021

Average

Outstanding

Balance

Interest

Income/

Expense(4)

Average

Yield/Rate

 

Average

Outstanding

Balance

Interest

Income/

Expense(4)

Average

Yield/Rate

 

Average

Outstanding

Balance

Interest

Income/

Expense(4)

Average

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

Interest-earning deposits

$

474,835

$

963

0.81

%

 

$

576,478

$

276

0.19

%

 

$

580,632

$

178

0.12

%

Federal funds sold

 

31,584

 

66

0.84

%

 

 

28,234

 

18

0.26

%

 

 

69,506

 

24

0.14

%

Federal Reserve Bank stock, FHLB stock and other corporate stock

 

7,318

 

105

5.76

%

 

 

7,598

 

97

5.18

%

 

 

7,391

 

99

5.37

%

Investment securities - taxable

 

177,082

 

704

1.59

%

 

 

187,273

 

638

1.38

%

 

 

70,137

 

161

0.92

%

Investment securities - tax exempt

 

28,422

 

232

3.27

%

 

 

25,902

 

213

3.34

%

 

 

20,172

 

189

3.76

%

Loans(1)

 

1,853,077

 

21,600

4.68

%

 

 

1,773,887

 

19,780

4.52

%

 

 

1,699,403

 

18,311

4.32

%

Total interest earning assets

 

2,572,318

 

23,670

3.69

%

 

 

2,599,372

 

21,022

3.28

%

 

 

2,447,241

 

18,962

3.11

%

Loans held for sale

 

639

 

 

 

 

693

 

 

 

 

2,638

 

 

Noninterest earning assets

 

152,134

 

 

 

 

136,270

 

 

 

 

115,358

 

 

Total assets

$

2,725,091

 

 

 

$

2,736,335

 

 

 

$

2,565,237

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

1,663,120

 

1,491

0.36

%

 

 

1,672,387

 

1,586

0.38

%

 

 

1,377,712

 

1,430

0.42

%

Borrowed funds

 

25,735

 

270

4.21

%

 

 

50,493

 

389

3.12

%

 

 

56,347

 

330

2.35

%

Total interest-bearing liabilities

 

1,688,855

 

1,761

0.42

%

 

 

1,722,880

 

1,975

0.46

%

 

 

1,434,059

 

1,760

0.49

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

784,252

 

 

 

 

764,763

 

 

 

 

890,292

 

 

Other noninterest-bearing liabilities

 

21,098

 

 

 

 

16,666

 

 

 

 

17,690

 

 

Stockholders’ equity

 

230,886

 

 

 

 

232,026

 

 

 

 

223,196

 

 

Total liabilities and stockholders’ equity

$

2,725,091

 

 

 

$

2,736,335

 

 

 

$

2,565,237

 

 

Net interest income

 

$

21,909

 

 

 

$

19,047

 

 

 

$

17,202

 

Net interest spread(2)

 

 

3.27

%

 

 

 

2.82

%

 

 

 

2.62

%

Net interest margin(3)

 

 

3.42

%

 

 

 

2.97

%

 

 

 

2.82

%

_________________________________________

(1)

Includes nonaccrual loans.

(2)

Net interest spread is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities.

(3)

Net interest margin is a ratio of net interest income to average interest earning assets for the same period.

(4)

Interest income on loans includes loan fees of $1.4 million, $1.6 million and $1.6 million for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

Net interest income was $41.0 million and the Company’s cost of funds was 0.30% for the six months ended June 30, 2022.

 

 

For the Six Months Ended

 

 

June 30, 2022

 

June 30, 2021

(Dollars in thousands)

 

Average

Outstanding

Balance

 

Interest

Income/

Expense(4)

 

Average

Yield/Rate

 

Average

Outstanding

Balance

 

Interest

Income/

Expense(4)

 

Average

Yield/Rate

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning deposits

 

$

525,376

 

$

1,238

 

0.48

%

 

$

380,989

 

$

224

 

0.12

%

Federal funds sold

 

 

29,918

 

 

85

 

0.57

%

 

 

56,955

 

 

40

 

0.14

%

Federal Reserve Bank stock, FHLB stock and other corporate stock

 

 

7,457

 

 

202

 

5.46

%

 

 

7,676

 

 

194

 

5.10

%

Investment securities - taxable

 

 

182,150

 

 

1,342

 

1.49

%

 

 

69,968

 

 

340

 

0.98

%

Investment securities - tax-exempt

 

 

27,169

 

 

445

 

3.30

%

 

 

20,902

 

 

392

 

3.78

%

Loans (1)

 

 

1,813,701

 

 

41,380

 

4.60

%

 

 

1,681,566

 

 

37,544

 

4.50

%

Total interest earning assets

 

 

2,585,771

 

 

44,692

 

3.49

%

 

 

2,218,056

 

 

38,734

 

3.52

%

Loans held for sale

 

 

666

 

 

 

 

 

 

1,999

 

 

 

 

Noninterest earning assets

 

 

144,246

 

 

 

 

 

 

122,420

 

 

 

 

Total assets

 

$

2,730,683

 

 

 

 

 

$

2,342,475

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

1,667,728

 

 

3,077

 

0.37

%

 

 

1,293,693

 

 

2,747

 

0.43

%

Borrowed funds

 

 

38,046

 

 

659

 

3.49

%

 

 

101,129

 

 

906

 

1.81

%

Total interest-bearing liabilities

 

 

1,705,774

 

 

3,736

 

0.44

%

 

 

1,394,822

 

 

3,653

 

0.53

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

774,562

 

 

 

 

 

 

708,215

 

 

 

 

Other noninterest-bearing liabilities

 

 

18,894

 

 

 

 

 

 

18,288

 

 

 

 

Shareholders’ equity

 

 

231,453

 

 

 

 

 

 

221,150

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,730,683

 

 

 

 

 

$

2,342,475

 

 

 

 

Net interest income

 

 

 

$

40,956

 

 

 

 

 

$

35,081

 

 

Net interest spread (2)

 

 

 

 

 

3.05

%

 

 

 

 

 

2.99

%

Net interest margin (3)

 

 

 

 

 

3.19

%

 

 

 

 

 

3.19

%

__________________________________

(1)

Includes nonaccrual loans.

(2)

Net interest spread is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities.

(3)

Net interest margin is a ratio of net interest income to average interest earning assets for the same period.

(4)

Interest income on loans includes loan fees of $3.0 million and $4.4 million for the six months ended June 30, 2022, and 2021, respectively.

Provision for Loan Losses

Provision for loan losses increased $1.4 million, or 163.2%, to $2.2 million compared to $0.9 million in the prior quarter primarily due to loan growth during the quarter.

Investment Securities

The Company’s investment portfolio decreased $14.5 million, or 6.8%, to $198.4 million compared to the prior quarter. The decrease was primarily due to $10.6 million in investment calls, redemptions and paydowns coupled with an increase in unrealized losses of $5.8 million during the quarter, partially offset by purchases of approximately $2.1 million of municipal bonds. To supplement interest income earned on the Company’s loan portfolio, the Company invests in high quality mortgage-backed securities, government agency bonds, corporate bonds, community development district bonds, and equity securities (including mutual funds). Equity securities include $0.9 million of investments, made through our subsidiary Pro Opp Fund LLC, in businesses directly and indirectly related to the Company’s core business as permitted under the U.S. Bank Holding Company Act. Pro Opp Fund LLC has an additional $0.8 million of unfunded investments outstanding.

Loan Portfolio

The Company’s primary source of income is derived from interest earned on loans. The Company’s loan portfolio consists of loans secured by real estate, as well as commercial business loans, construction and development loans, and other consumer loans. The Company’s loan clients primarily consist of small-to medium-sized businesses, the owners and operators of those businesses, and other professionals, entrepreneurs and high net worth individuals. The Company’s owner-occupied and investment commercial real estate loans, residential construction loans, and commercial business loans provide higher risk-adjusted returns, shorter maturities, and more sensitivity to interest rate fluctuations and are complemented by the relatively lower risk residential real estate loans to individuals. The Company’s lending activities are principally directed to the Miami-Dade MSA. The following table summarizes and provides additional information about certain segments of the Company’s loan portfolio as of June 30, 2022, March 31, 2022, and December 31, 2021:

(Dollars in thousands)

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

Amount

 

Percent

 

Amount

 

Percent

 

Amount

 

Percent

Loans held for investment:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

1,034,487

 

 

52.1

%

 

$

931,904

 

 

51.1

%

 

$

902,654

 

 

50.8

%

Residential real estate

 

 

422,239

 

 

21.2

%

 

 

381,182

 

 

20.9

%

 

 

377,511

 

 

21.2

%

Commercial (non-PPP) (1)

 

 

387,317

 

 

19.5

%

 

 

357,124

 

 

19.6

%

 

 

325,415

 

 

18.3

%

Commercial (PPP)

 

 

8,176

 

 

0.4

%

 

 

31,097

 

 

1.7

%

 

 

58,615

 

 

3.3

%

Construction and land development

 

 

114,938

 

 

5.8

%

 

 

98,984

 

 

5.4

%

 

 

91,520

 

 

5.1

%

Consumer and other

 

 

20,076

 

 

1.0

%

 

 

22,425

 

 

1.2

%

 

 

21,449

 

 

1.2

%

Total loans held for investment, gross

 

 

1,987,233

 

 

100.0

%

 

 

1,822,716

 

 

100.0

%

 

 

1,777,164

 

 

100.0

%

Allowance for loan losses

 

 

(15,142

)

 

 

 

 

(13,555

)

 

 

 

 

(12,704

)

 

 

Loans held for investment, net

 

$

1,972,091

 

 

 

 

$

1,809,161

 

 

 

 

$

1,764,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale:

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

 

 

%

 

$

988

 

 

100.0

%

 

$

165

 

 

100.0

%

Total loans held for sale

 

$

 

 

 

 

$

988

 

 

 

 

$

165

 

 

 

_________________________________________

(1)

Includes search fund lending of $102.1 million, $91.4 million, and $84.0 million for June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

Nonperforming Assets

As of June 30, 2022, the Company had nonperforming assets of $1.5 million, or 0.06% of total assets, compared to nonperforming assets of $2.1 million, or 0.07% of total assets, at March 31, 2022. The decrease was due to the charge-off of a $0.7 million impaired loan in the consumer loan category.

Allowance for Loan and Lease Loss (“ALLL”)

The Company’s allowance for loan losses increased $1.6 million, or 11.7%, to $15.1 million at June 30, 2022, compared to March 31, 2022, primarily as a result of higher loan production volume during the second quarter as well as a $0.7 million charge-off of a previously disclosed impaired loan. The Company’s allowance for loan losses as a percentage of total loans held for investment (excluding Professional Bank PPP loans - non-GAAP, see Explanation of Certain Unaudited Non-GAAP Financial Measures) was 0.77% at June 30, 2022, compared to 0.76% at March 31, 2022. There were minimal changes to qualitative loss factors to address rising inflation and threats of a recessionary environment and minimal change in the historical loss factors for the current period with the principal driver for the increased allowance being loan growth.

PROFESSIONAL HOLDING CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands, except share data)

 

 

June 30, 2022

March 31, 2022

December 31, 2021

ASSETS

 

 

 

Cash and due from banks

$

41,202

 

$

45,792

 

$

38,469

 

Interest earning deposits

 

299,834

 

 

671,845

 

 

545,521

 

Federal funds sold

 

27,043

 

 

24,089

 

 

13,477

 

Cash and cash equivalents

 

368,079

 

 

741,726

 

 

597,467

 

Securities available for sale, at fair value - taxable

 

164,354

 

 

175,758

 

 

175,536

 

Securities available for sale, at fair value - tax exempt

 

27,453

 

 

30,446

 

 

18,765

 

Securities held to maturity (fair value June 30, 2022 – $197, March 31, 2022 – $214, December 31, 2021 – $242)

 

204

 

 

218

 

 

236

 

Equity securities

 

6,359

 

 

6,439

 

 

6,638

 

Loans, net of allowance of $15,142, $13,555, and $12,704 as of June 30, 2022, March 31, 2022, and December 31, 2021, respectively

 

1,972,091

 

 

1,809,161

 

 

1,764,460

 

Loans held for sale

 

 

 

988

 

 

165

 

Premises and equipment, net

 

8,570

 

 

8,499

 

 

9,020

 

Bank owned life insurance

 

54,134

 

 

38,758

 

 

38,485

 

Goodwill and intangibles

 

25,639

 

 

25,698

 

 

25,766

 

Other assets

 

34,631

 

 

29,534

 

 

27,573

 

Total assets

$

2,661,514

 

$

2,867,225

 

$

2,664,111

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Deposits

 

 

 

Demand – noninterest bearing

$

777,501

 

$

871,357

 

$

674,003

 

Demand – interest bearing

 

339,942

 

 

356,600

 

 

310,362

 

Money market and savings

 

1,055,813

 

 

1,103,472

 

 

1,121,330

 

Time deposits

 

208,479

 

 

255,848

 

 

265,693

 

Total deposits

 

2,381,735

 

 

2,587,277

 

 

2,371,388

 

Federal Home Loan Bank advances

 

 

 

5,000

 

 

35,000

 

Official Checks

 

5,815

 

 

6,144

 

 

4,125

 

Other borrowings

 

 

 

 

 

10,000

 

Subordinated debt

 

24,436

 

 

24,409

 

 

 

Accrued interest and other liabilities

 

15,930

 

 

14,622

 

 

12,074

 

Total liabilities

 

2,427,916

 

 

2,637,452

 

 

2,432,587

 

Stockholders’ equity

 

 

 

Preferred stock, 10,000,000 shares authorized, none issued

 

 

 

 

 

 

Class A Voting Common stock, $0.01 par value; authorized 50,000,000 shares. Issued 14,699,975 and outstanding 13,742,381 shares as of June 30, 2022, issued 14,623,395 and outstanding 13,665,801 shares at March 31, 2022, issued 14,393,750 and outstanding 13,446,400 shares at December 31, 2021

 

147

 

 

146

 

 

144

 

Class B Non-Voting Common stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding on June 30, 2022, March 31, 2022, and December 31, 2021

 

 

 

 

 

 

Treasury stock, at cost

 

(16,201

)

 

(16,201

)

 

(16,003

)

Additional paid in capital

 

215,541

 

 

214,351

 

 

212,012

 

Retained earnings

 

45,533

 

 

38,539

 

 

36,120

 

Accumulated other comprehensive income (loss)

 

(11,422

)

 

(7,062

)

 

(749

)

Total stockholders’ equity

 

233,598

 

 

229,773

 

 

231,524

 

Total liabilities and stockholders' equity

$

2,661,514

 

$

2,867,225

 

$

2,664,111

 

PROFESSIONAL HOLDING CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

(Dollar amounts in thousands, except share data)

 

 

Three Months Ended

 

Six Months Ended

June 30, 2022

March 31, 2022

June 30, 2021

 

June 30, 2022

June 30, 2021

Interest income

 

 

 

 

 

 

Loans, including fees

$

21,600

 

$

19,780

 

$

18,311

 

 

$

41,380

 

$

37,544

 

Investment securities - taxable

 

704

 

 

638

 

 

161

 

 

 

1,342

 

 

340

 

Investment securities - tax-exempt

 

232

 

 

213

 

 

189

 

 

 

445

 

 

392

 

Dividend income on restricted stock

 

105

 

 

97

 

 

99

 

 

 

202

 

 

194

 

Other

 

1,029

 

 

294

 

 

202

 

 

 

1,323

 

 

264

 

Total interest income

 

23,670

 

 

21,022

 

 

18,962

 

 

 

44,692

 

 

38,734

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

Deposits

 

1,491

 

 

1,586

 

 

1,430

 

 

 

3,077

 

 

2,747

 

Federal Home Loan Bank advances

 

3

 

 

134

 

 

190

 

 

 

137

 

 

386

 

Subordinated debt

 

266

 

 

232

 

 

77

 

 

 

498

 

 

207

 

Other borrowings

 

1

 

 

23

 

 

63

 

 

 

24

 

 

313

 

Total interest expense

 

1,761

 

 

1,975

 

 

1,760

 

 

 

3,736

 

 

3,653

 

 

 

 

 

 

 

 

Net interest income

 

21,909

 

 

19,047

 

 

17,202

 

 

 

40,956

 

 

35,081

 

Provision for loan losses

 

2,240

 

 

851

 

 

762

 

 

 

3,091

 

 

1,800

 

Net interest income after provision for loan losses

 

19,669

 

 

18,196

 

 

16,440

 

 

 

37,865

 

 

33,281

 

 

 

 

 

 

 

 

Noninterest income

 

 

 

 

 

 

Service charges on deposit accounts

 

577

 

 

517

 

 

1,199

 

 

 

1,094

 

 

1,594

 

Income from bank owned life insurance

 

376

 

 

273

 

 

281

 

 

 

649

 

 

563

 

SBA origination fees

 

48

 

 

 

 

 

 

 

48

 

 

145

 

Swap fee income

 

 

 

112

 

 

364

 

 

 

112

 

 

573

 

Loans held for sale income

 

45

 

 

71

 

 

226

 

 

 

116

 

 

301

 

Gain on sale and call of securities

 

13

 

 

 

 

21

 

 

 

13

 

 

22

 

Other

 

722

 

 

300

 

 

211

 

 

 

1,022

 

 

223

 

Total noninterest income

 

1,781

 

 

1,273

 

 

2,302

 

 

 

3,054

 

 

3,421

 

 

 

 

 

 

 

 

Noninterest expense

 

 

 

 

 

 

Salaries and employee benefits

 

7,473

 

 

11,220

 

 

7,099

 

 

 

18,693

 

 

13,883

 

Occupancy and equipment

 

1,010

 

 

1,002

 

 

905

 

 

 

2,012

 

 

2,007

 

Data processing

 

304

 

 

314

 

 

276

 

 

 

618

 

 

566

 

Marketing

 

125

 

 

196

 

 

165

 

 

 

321

 

 

318

 

Professional fees

 

886

 

 

919

 

 

770

 

 

 

1,805

 

 

1,398

 

Acquisition expenses

 

 

 

 

 

 

 

 

 

 

684

 

Regulatory assessments

 

473

 

 

549

 

 

418

 

 

 

1,022

 

 

767

 

Other

 

2,333

 

 

2,295

 

 

1,321

 

 

 

4,628

 

 

3,119

 

Total noninterest expense

 

12,604

 

 

16,495

 

 

10,954

 

 

 

29,099

 

 

22,742

 

 

 

 

 

 

 

 

Income before income taxes

 

8,846

 

 

2,974

 

 

7,788

 

 

 

11,820

 

 

13,960

 

Income tax provision

 

1,852

 

 

555

 

 

1,457

 

 

 

2,407

 

 

2,844

 

Net income

$

6,994

 

$

2,419

 

$

6,331

 

 

$

9,413

 

$

11,116

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

Basic

$

0.52

 

$

0.18

 

$

0.47

 

 

$

0.70

 

$

0.83

 

Diluted

$

0.50

 

$

0.17

 

$

0.45

 

 

$

0.67

 

$

0.80

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

Unrealized holding gain (loss) on securities available for sale

$

(5,841

)

$

(8,468

)

$

(505

)

 

$

(14,308

)

$

(794

)

Tax effect

 

1,487

 

 

2,155

 

 

124

 

 

 

3,635

 

 

195

 

Other comprehensive gain (loss), net of tax

 

(4,360

)

 

(6,313

)

 

(381

)

 

 

(10,673

)

 

(599

)

Comprehensive income (loss)

$

2,634

 

$

(3,894

)

$

5,950

 

 

$

(1,260

)

$

10,517

 

PROFESSIONAL HOLDING CORP.

EARNINGS PER COMMON SHARE (Unaudited)

(Dollar amounts in thousands, except share data)

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding plus the effect of employee stock awards during the year.

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

March 31, 2022

June 30, 2021

 

June 30, 2022

June 30, 2021

Basic earnings per share:

 

 

 

 

 

 

Net income

$

6,994

$

2,419

$

6,331

 

$

9,413

$

11,116

Total weighted average common stock outstanding

 

13,446,335

 

13,345,565

 

13,397,747

 

 

13,396,240

 

13,419,929

Net income per share

$

0.52

$

0.18

$

0.47

 

$

0.70

$

0.83

Diluted earnings per share:

 

 

 

 

 

 

Net income

$

6,994

$

2,419

$

6,331

 

$

9,413

$

11,116

Total weighted average common stock outstanding

 

13,446,335

 

13,345,565

 

13,397,747

 

 

13,396,240

 

13,419,929

Add: dilutive effect of employee restricted stock and options

 

628,550

 

613,807

 

564,822

 

 

614,006

 

521,900

Total weighted average diluted stock outstanding

 

14,074,885

 

13,959,372

 

13,962,569

 

 

14,010,246

 

13,941,829

Net income per share

$

0.50

$

0.17

$

0.45

 

$

0.67

$

0.80

 

 

 

 

 

 

 

Anti-dilutive restricted stock and options

 

29,250

 

36,422

 

270,850

 

 

65,672

 

270,850

Explanation of Certain Unaudited Non-GAAP Financial Measures

This press release contains financial information determined by methods other than U.S. Generally Accepted Accounting Principles (“GAAP”), which we refer to as “non-GAAP financial measures.” The table below provides a reconciliation between these non-GAAP measures and net income and net income per share, which are the most comparable GAAP measures.

Management uses these non-GAAP financial measures in its analysis of the Company’s performance and believes these measures are useful supplemental information that can enhance investors’ understanding of the Company’s business and performance without considering taxes or provisions for loan losses and can be useful when comparing performance with other financial institutions. However, these non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures.

Reconciliation of non-GAAP Financial Measures

 

(Dollar amounts in thousands, except per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30,

2022

March 31,

2022

June 30,

2021

 

June 30,

2022

June 30,

2021

Net interest income (GAAP)

 

$

21,909

 

$

19,047

 

$

17,202

 

 

$

40,956

 

$

35,081

 

Total noninterest income

 

 

1,781

 

 

1,273

 

 

2,302

 

 

 

3,054

 

 

3,421

 

Total noninterest expense

 

 

12,604

 

 

16,495

 

 

10,954

 

 

 

29,099

 

 

22,742

 

Pre-tax pre-provision earnings (non-GAAP)

 

$

11,086

 

$

3,825

 

$

8,550

 

 

$

14,911

 

$

15,760

 

Total adjustments to noninterest expense (1)

 

 

 

 

(2,915

)

 

 

 

 

(2,915

)

 

(684

)

Adjusted pre-tax pre-provision earnings

(non-GAAP)

 

$

11,086

 

$

6,740

 

$

8,550

 

 

$

17,826

 

$

16,444

 

 

 

 

 

 

 

 

 

Return on average assets (GAAP)

 

 

1.03

%

 

0.36

%

 

0.99

%

 

 

0.70

%

 

0.96

%

Annualized pre-tax pre-provision ROAA

(non-GAAP)

 

 

1.63

%

 

0.57

%

 

1.33

%

 

 

1.10

%

 

1.36

%

Adjusted annualized pre-tax pre-provision ROAA (non-GAAP)

 

 

1.63

%

 

1.00

%

 

1.33

%

 

 

1.32

%

 

1.42

%

(1)

Adjustments to noninterest expense for the three months ended March 31, 2022 and the six months ended June 30, 2022 were related to severance and accelerated vesting expense related to the departure of the former Chief Executive Officer. Adjustments to noninterest expense for the six months ended June 30, 2021 were related to change in control payments to two former Marquis employees.

(Dollar amounts in thousands)

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

Total loans held for investment, net (GAAP)

 

$

1,972,091

 

 

$

1,809,161

 

 

$

1,764,460

 

Add allowance for loan loss ("ALLL")

 

 

15,142

 

 

 

13,555

 

 

 

12,704

 

Total gross loans held for investment ("LHFI")

 

 

1,987,233

 

 

 

1,822,716

 

 

 

1,777,164

 

Less Professional Bank net PPP loans ("PPP")

 

 

8,176

 

 

 

31,097

 

 

 

58,615

 

Total gross LHFI excluding net PPP loans (non-GAAP)

 

 

1,979,057

 

 

 

1,791,619

 

 

 

1,718,549

 

Add purchase accounting loan marks ("PA")

 

 

9,937

 

 

 

11,466

 

 

 

13,003

 

Total gross LHFI excluding net PPP loans (non-GAAP) + PA marks

 

$

1,988,994

 

 

$

1,803,085

 

 

$

1,731,552

 

 

 

 

 

 

 

 

ALLL as a % of LHFI (GAAP)

 

 

0.76

%

 

 

0.74

%

 

 

0.71

%

ALLL as a % of total LHFI excluding net PPP loans (non-GAAP)

 

 

0.77

%

 

 

0.76

%

 

 

0.74

%

PA marks + ALLL / LHFI excluding net PPP loans (non-GAAP)

 

 

1.26

%

 

 

1.39

%

 

 

1.48

%

(Dollar amounts in thousands)

 

Three Months Ended

 

Six Months Ended

 

June 30, 2022

March 31, 2022

June 30, 2021

 

June 30, 2022

June 30, 2021

Net interest income (GAAP)

 

$

21,909

 

$

19,047

 

$

17,202

 

 

$

40,956

 

$

35,081

 

Less: PPP net interest income recognized

 

 

(818

)

 

(1,059

)

 

(1,844

)

 

 

(1,877

)

 

(4,897

)

Net interest income excluding PPP (non-GAAP)

 

 

21,091

 

 

17,988

 

 

15,358

 

 

 

39,079

 

 

30,184

 

Less: PA premium/discounts

 

 

(1,648

)

 

(1,661

)

 

(1,192

)

 

 

(3,309

)

 

(2,460

)

Net interest income excluding PPP and PA

(non-GAAP)

 

$

19,443

 

$

16,327

 

$

14,166

 

 

$

35,770

 

$

27,724

 

Average interest earning assets (GAAP)

 

 

2,572,318

 

 

2,599,372

 

 

2,447,242

 

 

 

2,585,771

 

 

2,218,056

 

Less: average PPP loans

 

 

(19,727

)

 

(44,585

)

 

(186,912

)

 

 

(32,088

)

 

(188,802

)

Average interest earning assets, excluding PPP

(non-GAAP)

 

 

2,552,591

 

 

2,554,787

 

 

2,260,330

 

 

 

2,553,683

 

 

2,029,254

 

Add: average PA marks

 

 

10,436

 

 

12,314

 

 

16,649

 

 

 

11,370

 

 

18,459

 

Average interest earning assets, excluding PPP and PA

(non-GAAP)

 

$

2,563,027

 

$

2,567,101

 

$

2,276,979

 

 

$

2,565,053

 

$

2,047,713

 

Net interest margin (GAAP)

 

 

3.42

%

 

2.97

%

 

2.82

%

 

 

3.19

%

 

3.19

%

Net interest margin excluding PPP (non-GAAP)

 

 

3.31

%

 

2.86

%

 

2.73

%

 

 

3.09

%

 

3.00

%

Net interest margin excluding PPP and PA

(non-GAAP)

 

 

3.04

%

 

2.58

%

 

2.50

%

 

 

2.81

%

 

2.73

%

Certain Performance Metrics

The following table shows the return on average assets (computed as annualized net income divided by average total assets), return on average equity (computed as annualized net income divided by average equity) and average equity to average assets ratios for the periods presented below.

 

Three Months Ended June 30, 2022

Three Months Ended March 31, 2022

Three Months Ended June 30, 2021

 

Six Months Ended June 30, 2022

Six Months Ended June 30, 2021

Return on average assets

1.03 %

0.36 %

0.99 %

 

0.70 %

0.96 %

Return on average equity

12.15 %

4.23 %

11.38 %

 

8.20 %

10.14 %

Average equity to average assets

8.47 %

8.48 %

8.70 %

 

8.48 %

9.44 %

Additional Materials

A slide presentation with supplemental financial information relating to this release can be accessed at https://proholdco.com.

Forward Looking Statements

“This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained in this presentation that are not statements of historical fact may be deemed to be forward-looking statements, including, without limitation, statements preceded by, followed by or including words such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” “may,” “will,” “would,” “could” or “should” and similar expressions. Forward-looking statements represent the Company’s current expectations, plans or forecasts; involve assumptions, risks and uncertainties; and are not guarantees. Several important factors could cause actual results to differ materially from those in forward-looking statements. Those factors include, without limitation, current and future economic and market conditions, including those that could impact credit quality and the ability to generate loans and gather deposits; the duration, extent and impact of the COVID-19 pandemic, including government responses to the pandemic and the potential worsening of the pandemic resulting from variants of COVID-19, on our and our customers’ operations, personnel, and business activity (including developments and volatility), as well as COVID-19’s impact on the credit quality of our loan portfolio and financial markets and general economic conditions; the effects of our lack of a diversified loan portfolio and concentration in the South Florida market; the impact of current and future interest rates and expectations concerning the actual timing and amount of interest rate movements; competition; our ability to execute business plans; geopolitical developments; legislative and regulatory developments; inflation or deflation; market fluctuations; natural disasters (including pandemics such as COVID-19); critical accounting estimates; and other factors described in our Annual Report on Form 10-K for the year ended December 31, 2021, and other filings with the Securities and Exchange Commission. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from those expressed in forward-looking statements. We caution investors not to rely unduly on any forward-looking statements and urge investors to carefully consider the risks described in our filings with the Securities and Exchange Commission, referred to above, which are available on www.proholdco.com and the SEC’s website at www.sec.gov. The Company expressly disclaims any obligation to update any of the forward-looking statements included herein to reflect future events or developments or changes in expectations, except as may be required by law.”

About Professional Bank and Professional Holding Corp.:

Professional Holding Corp. (NASDAQ:PFHD) is the financial holding company for Professional Bank, a Florida state-chartered bank established in 2008 and based in Coral Gables, Florida. Professional Bank focuses on providing creative, relationship-driven commercial banking products and services designed to meet the needs of small to medium-sized businesses, the owners and operators of these businesses, professionals and entrepreneurs. Professional Bank currently operates its Florida network through nine branch locations and two LPOs in the regional areas of Miami, Broward, Palm Beach, Duval (Jacksonville), Hillsborough and Pinellas (Tampa Bay) counties. It also has a Digital Innovation Center located in Cleveland, Ohio and a LPO in Bedford, New Hampshire that specializes in search fund lending. For more information, visit www.myprobank.com. Member FDIC. Equal Housing Lender.

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