Fourth Quarter 2022 Net Income of $4.3 million and Earnings per Share of $0.31 Reflecting Acquisition Related Expenses
Professional Holding Corp. (the “Company”) (NASDAQ:PFHD), the parent company of Professional Bank (the “Bank”), today reported net income of $4.3 million, or $0.31 per share, for the fourth quarter of 2022, compared to net income of $8.5 million, or $0.63 per share, for the third quarter of 2022, and net income of $4.0 million, or $0.30 per share, for the fourth quarter of 2021. Chief Financial Officer Mary Usategui noted that the Company continued to perform at a high level while incurring additional expenses related to its previously announced merger with Seacoast Banking Corporation of Florida (“Seacoast”), expected to close on January 31, 2023.
Results of Operations for the Three Months Ended December 31, 2022
- Net income decreased by $4.2 million, or 49.7%, to $4.3 million compared to $8.5 million in the third quarter, due to a decrease in net interest income of $2.2 million and an increase in noninterest expense of $2.7 million, partially offset by a decrease in provision expense of $0.5 million and an increase in noninterest income of $0.1 million. The increase in noninterest expense was due to expenses associated with one-time equity award accelerations in anticipation of the Seacoast merger and other related acquisition expenses.
- Net interest income decreased by $2.2 million, or 9.0%, to $22.6 million compared to $24.8 million in the third quarter, primarily due to an increase in the cost of funding, partially offset by an increase in the rate received on interest bearing assets. The Company’s yield on average interest earning assets increased by 42 basis points while cost of funds increased by 84 basis points compared to the prior quarter.
- Provision for loan losses expense decreased by $0.5 million, or 36.6%, to $0.9 million compared to $1.3 million in the third quarter, due to a decrease in specific reserves on two impaired loans.
- Noninterest income of $1.3 million remained relatively unchanged compared to the prior quarter.
- Noninterest expense increased by $2.7 million, or 19.8%, to $16.6 million compared to $13.9 million in the prior quarter. The increase was primarily due to expenses of $3.6 million in one-time equity award accelerations, partially offset by lower acquisition expenses of $0.5 million compared to the prior quarter in connection with the pending merger with Seacoast and the prior quarter charitable contribution to the AAA scholarship foundation.
Results of Operations for the Year Ended December 31, 2022
- Net income increased by $0.8 million, or 3.7%, to $22.1 million compared to $21.4 million for the prior year, due to an increase in net interest income of $16.0 million, partially offset by an increase in provision expense of $0.5 million, a decrease in noninterest income of $0.6 million, an increase in noninterest expense of $12.3 million, and an increase in income tax provision of $1.8 million.
- Net interest income increased by $16.0 million, or 22.1%, to $88.3 million compared to $72.3 million in the prior year, primarily due to the impact of the Federal Reserve’s target Federal Funds Rate increases in 2022 on the Company’s asset sensitive balance sheet, in addition to an increase in average loans from $1.7 billion in 2021 to $1.9 billion in 2022. Interest income also benefited from increased average balances and higher yields in our investment portfolio.
- Provision for loan losses increased by $0.5 million, or 11.5%, to $5.3 million compared to $4.7 million in the prior year primarily due to loan growth. The ratio of charge-offs to average loans was 0.03% during the year ended December 31, 2022, compared to 0.49% in the prior year.
- Noninterest income decreased by $0.6 million, or 9.1% to $5.6 million compared to the prior year. The decrease primarily reflected lower loan held for sale income of $0.4 million, lower service charges of $0.5 million on deposit accounts, and lower swap fee income of $0.6 million. These decreases were partially offset by an increase of $0.3 million in bank owned life insurance income and $0.7 million in other noninterest income. The increase in other noninterest income was comprised of $0.5 million of insurance proceeds on a previously recognized contingency and a $0.2 million loss on fixed asset disposals recorded in 2021.
- Noninterest expense increased by $12.3 million, or 26.0%, to $59.5 million compared to $47.3 million in the prior year primarily due to higher salaries and employee benefits of $5.7 million, higher other noninterest expense of $4.7 million, higher acquisition expenses of $0.8 million, and higher professional fees of $0.8 million. The increase in salaries and benefits were comprised of severance and benefit payments related to the departure of the Company’s former Chief Executive Officer, higher employee compensation costs from one-time restricted share award accelerations, increased headcount, and higher sales incentives. The increase in other noninterest expense was primarily comprised of $3.6 million in one-time SAR award accelerations, and a $0.7 million loss related to a previously recognized contingency from the first quarter.
Financial Condition
At December 31, 2022:
- Total assets increased by $114.4 million, or 4.6% to $2.6 billion, compared to September 30, 2022, primarily as a result of an increase in loans, partially offset by a decrease in cash and cash equivalents and a decrease in our securities portfolio.
- Total loans increased by $128.5 million, or 25.4%, annualized, compared to September 30, 2022. We experienced loan originations of approximately $228.8 million, of which $156.5 million funded, partially offset by paydowns and prepayments.
- Total deposits decreased by $15.1 million, or 2.7% annualized, compared to September 30, 2022, primarily due to decreases in noninterest bearing deposits and time deposits, partially offset by increases in money market and interest bearing deposit categories. Cost of deposits increased 79 basis points to 1.18% for the three months ended December 31, 2022, from 0.39% for the three months ended September 30, 2022.
- Federal Home Loan Bank advances increased $120.0 million, compared to September 30, 2022, for the use of funding loan growth and maintaining liquidity.
- As of December 31, 2022, nonperforming assets decreased $0.3 million to $1.5 million compared to $1.8 million at September 30, 2022, as a result of an impaired loan that was brought to good standing during the three months ended December 31, 2022.
Capital and Liquidity
The Company continues to remain well capitalized per regulatory requirements. As of December 31, 2022, the Company had a total risk-based capital ratio of 13.1% and a leverage capital ratio of 9.5%. The Company maintains a strong liquidity position. At December 31, 2022, in addition to its balance sheet liquidity, the Company had the ability to generate approximately $329.5 million in liquidity through available resources. Additionally, the Company retained $9.6 million in cash at the holding company.
Net Interest Income and Net Interest Margin Analysis
Net interest income was $22.6 million for the three months ended December 31, 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 December 31, 2022, the Company’s cost of funds was 1.26%.
(Dollars in thousands) |
For the Three Months Ended |
|||||||||||||||||||
December 31, 2022 |
|
September 30, 2022 |
|
December 31, 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 |
$ |
93,576 |
$ |
906 |
3.84 |
% |
|
$ |
137,355 |
$ |
747 |
2.16 |
% |
|
$ |
700,741 |
$ |
263 |
0.15 |
% |
Federal funds sold |
|
15,550 |
|
145 |
3.70 |
% |
|
|
21,895 |
|
124 |
2.25 |
% |
|
|
21,969 |
|
13 |
0.23 |
% |
Federal Reserve Bank stock, FHLB stock and other corporate stock |
|
9,316 |
|
139 |
5.92 |
% |
|
|
7,384 |
|
108 |
5.80 |
% |
|
|
7,760 |
|
106 |
5.42 |
% |
Investment securities - taxable |
|
153,657 |
|
879 |
2.27 |
% |
|
|
168,662 |
|
736 |
1.73 |
% |
|
|
129,602 |
|
290 |
0.89 |
% |
Investment securities - tax exempt |
|
24,795 |
|
207 |
3.31 |
% |
|
|
27,572 |
|
228 |
3.28 |
% |
|
|
18,694 |
|
166 |
3.52 |
% |
Loans(1) |
|
2,048,170 |
|
27,423 |
5.31 |
% |
|
|
1,979,132 |
|
25,222 |
5.06 |
% |
|
|
1,705,563 |
|
19,159 |
4.46 |
% |
Total interest earning assets |
|
2,345,064 |
|
29,699 |
5.02 |
% |
|
|
2,342,000 |
|
27,165 |
4.60 |
% |
|
|
2,584,329 |
|
19,997 |
3.07 |
% |
Loans held for sale |
|
— |
|
|
|
|
31 |
|
|
|
|
802 |
|
|
||||||
Noninterest earning assets |
|
152,349 |
|
|
|
|
156,584 |
|
|
|
|
136,892 |
|
|
||||||
Total assets |
$ |
2,497,413 |
|
|
|
$ |
2,498,615 |
|
|
|
$ |
2,722,023 |
|
|
||||||
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest-bearing deposits |
|
1,461,797 |
|
6,414 |
1.74 |
% |
|
|
1,453,653 |
|
2,170 |
0.59 |
% |
|
|
1,619,355 |
|
1,634 |
0.40 |
% |
Borrowed funds |
|
71,988 |
|
732 |
4.03 |
% |
|
|
24,447 |
|
198 |
3.21 |
% |
|
|
39,796 |
|
240 |
2.39 |
% |
Total interest-bearing liabilities |
|
1,533,785 |
|
7,146 |
1.85 |
% |
|
|
1,478,100 |
|
2,368 |
0.64 |
% |
|
|
1,659,151 |
|
1,874 |
0.45 |
% |
Noninterest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Noninterest-bearing deposits |
|
698,274 |
|
|
|
|
758,135 |
|
|
|
|
814,767 |
|
|
||||||
Other noninterest-bearing liabilities |
|
24,727 |
|
|
|
|
24,492 |
|
|
|
|
18,514 |
|
|
||||||
Stockholders’ equity |
|
240,627 |
|
|
|
|
237,888 |
|
|
|
|
229,591 |
|
|
||||||
Total liabilities and stockholders’ equity |
$ |
2,497,413 |
|
|
|
$ |
2,498,615 |
|
|
|
$ |
2,722,023 |
|
|
||||||
Net interest income |
|
$ |
22,553 |
|
|
|
$ |
24,797 |
|
|
|
$ |
18,123 |
|
||||||
Net interest spread(2) |
|
|
3.17 |
% |
|
|
|
3.96 |
% |
|
|
|
2.62 |
% |
||||||
Net interest margin(3) |
|
|
3.82 |
% |
|
|
|
4.20 |
% |
|
|
|
2.78 |
% |
||||||
________________________________________ |
|
(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 $0.8 million, $0.9 million and $1.7 million for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively. |
Net interest income was $88.3 million and the Company’s cost of funds was 0.56% for the year ended December 31, 2022.
|
|
For the Years Ended |
||||||||||||||||
|
|
December 31, 2022 |
|
December 31, 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 |
|
$ |
318,736 |
|
$ |
2,892 |
|
0.91 |
% |
|
$ |
506,993 |
|
$ |
698 |
|
0.14 |
% |
Federal funds sold |
|
|
24,274 |
|
|
354 |
|
1.46 |
% |
|
|
42,921 |
|
|
63 |
|
0.15 |
% |
Federal Reserve Bank stock, FHLB stock and other corporate stock |
|
|
7,907 |
|
|
448 |
|
5.67 |
% |
|
|
7,658 |
|
|
397 |
|
5.18 |
% |
Investment securities - taxable |
|
|
171,568 |
|
|
2,957 |
|
1.72 |
% |
|
|
93,955 |
|
|
816 |
|
0.87 |
% |
Investment securities - tax-exempt |
|
|
26,672 |
|
|
880 |
|
3.30 |
% |
|
|
19,967 |
|
|
735 |
|
3.68 |
% |
Loans (1) |
|
|
1,914,499 |
|
|
94,025 |
|
4.91 |
% |
|
|
1,692,800 |
|
|
76,912 |
|
4.54 |
% |
Total interest earning assets |
|
|
2,463,656 |
|
|
101,556 |
|
4.12 |
% |
|
|
2,364,294 |
|
|
79,621 |
|
3.37 |
% |
Loans held for sale |
|
|
338 |
|
|
|
|
|
|
1,566 |
|
|
|
|
||||
Noninterest earning assets |
|
|
149,398 |
|
|
|
|
|
|
125,967 |
|
|
|
|
||||
Total assets |
|
$ |
2,613,392 |
|
|
|
|
|
$ |
2,491,827 |
|
|
|
|
||||
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing deposits |
|
|
1,561,864 |
|
|
11,661 |
|
0.75 |
% |
|
|
1,418,487 |
|
|
5,857 |
|
0.41 |
% |
Borrowed funds |
|
|
43,173 |
|
|
1,589 |
|
3.68 |
% |
|
|
71,534 |
|
|
1,456 |
|
2.04 |
% |
Total interest-bearing liabilities |
|
|
1,605,037 |
|
|
13,250 |
|
0.83 |
% |
|
|
1,490,021 |
|
|
7,313 |
|
0.49 |
% |
Noninterest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest-bearing deposits |
|
|
751,192 |
|
|
|
|
|
|
760,738 |
|
|
|
|
||||
Other noninterest-bearing liabilities |
|
|
21,776 |
|
|
|
|
|
|
17,956 |
|
|
|
|
||||
Shareholders’ equity |
|
|
235,387 |
|
|
|
|
|
|
223,112 |
|
|
|
|
||||
Total liabilities and shareholders’ equity |
|
$ |
2,613,392 |
|
|
|
|
|
$ |
2,491,827 |
|
|
|
|
||||
Net interest income |
|
|
|
$ |
88,306 |
|
|
|
|
|
$ |
72,308 |
|
|
||||
Net interest spread (2) |
|
|
|
|
|
3.29 |
% |
|
|
|
|
|
2.88 |
% |
||||
Net interest margin (3) |
|
|
|
|
|
3.58 |
% |
|
|
|
|
|
3.06 |
% |
||||
________________________________________ |
|
(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 $4.6 million and $8.6 million for the year ended December 31, 2022, and 2021, respectively. |
Provision for Loan Losses
Provision for loan losses decreased by $0.5 million, or 36.6%, in the three months ended December 31, 2022, to $0.9 million compared to $1.3 million in the three months ended September 30, 2022, as a result of updated collateral valuations on two impaired loans, reducing the specific reserve requirement. There were no net charge-offs during the three months ended December 31, 2022, and September 30, 2022.
Investment Securities
In the three months ended December 31, 2022, the Company’s investment portfolio decreased $10.8 million, or 5.9%, to $172.9 million compared to the prior quarter. The decrease was primarily due to $10.7 million in investment calls, redemptions and paydowns coupled with an increase in unrealized losses of $0.2 million during the fourth quarter. 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).
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 December 31, 2022, September 30, 2022, and December 31, 2021:
(Dollars in thousands) |
|
December 31, 2022 |
|
September 30, 2022 |
|
December 31, 2021 |
|||||||||||||||
|
Amount |
|
Percent |
|
Amount |
|
Percent |
|
Amount |
|
Percent |
||||||||||
Loans held for investment: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial real estate |
|
$ |
1,059,754 |
|
|
49.7 |
% |
|
$ |
997,478 |
|
|
49.8 |
% |
|
$ |
902,654 |
|
|
50.8 |
% |
Residential real estate |
|
|
500,269 |
|
|
23.5 |
% |
|
|
452,521 |
|
|
22.6 |
% |
|
|
377,511 |
|
|
21.2 |
% |
Commercial (non-PPP) (1) |
|
|
405,824 |
|
|
19.0 |
% |
|
|
397,725 |
|
|
19.8 |
% |
|
|
325,415 |
|
|
18.3 |
% |
Commercial (PPP) |
|
|
1,902 |
|
|
0.1 |
% |
|
|
2,618 |
|
|
0.1 |
% |
|
|
58,615 |
|
|
3.3 |
% |
Construction and land development |
|
|
133,093 |
|
|
6.2 |
% |
|
|
128,570 |
|
|
6.4 |
% |
|
|
91,520 |
|
|
5.1 |
% |
Consumer and other |
|
|
32,517 |
|
|
1.5 |
% |
|
|
25,983 |
|
|
1.3 |
% |
|
|
21,449 |
|
|
1.2 |
% |
Total loans held for investment, gross |
|
|
2,133,359 |
|
|
100.0 |
% |
|
|
2,004,895 |
|
|
100.0 |
% |
|
|
1,777,164 |
|
|
100.0 |
% |
Allowance for loan losses |
|
|
(17,336 |
) |
|
|
|
|
(16,485 |
) |
|
|
|
|
(12,704 |
) |
|
|
|||
Loans held for investment, net |
|
$ |
2,116,023 |
|
|
|
|
$ |
1,988,410 |
|
|
|
|
$ |
1,764,460 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans held for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans held for sale |
|
$ |
— |
|
|
— |
% |
|
$ |
— |
|
|
— |
% |
|
$ |
165 |
|
|
100.0 |
% |
Total loans held for sale |
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
165 |
|
|
|
|||
________________________________________ |
|
(1) |
Includes search fund lending of $100.1 million, $99.2 million, and $84.0 million for December 31, 2022, September 30, 2022, and December 31, 2021, respectively. |
Nonperforming Assets
As of December 31, 2022, the Company had nonperforming assets of $1.5 million, or 0.06% of total assets, compared to nonperforming assets of $1.8 million, or 0.07% of total assets, at September 30, 2022.
Allowance for Loan and Lease Loss (“ALLL”)
The Company’s allowance for loan losses increased $0.9 million, or 5.2%, to $17.3 million at December 31, 2022, compared to September 30, 2022, primarily due to loan production. The Company’s allowance for loan losses as a percentage of total loans held for investment was 0.81% at December 31, 2022, compared to 0.82% at September 30, 2022. There were minimal changes to qualitative loss factors and 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) |
|||||||||
|
December 31,
|
September 30,
|
December 31,
|
||||||
ASSETS |
|
|
|
||||||
Cash and due from banks |
$ |
12,495 |
|
|
43,863 |
|
$ |
38,469 |
|
Interest earning deposits |
|
142,614 |
|
|
113,641 |
|
|
545,521 |
|
Federal funds sold |
|
9,996 |
|
|
15,762 |
|
|
13,477 |
|
Cash and cash equivalents |
|
165,105 |
|
|
173,266 |
|
|
597,467 |
|
Securities available for sale, at fair value - taxable |
|
144,422 |
|
|
150,517 |
|
|
175,536 |
|
Securities available for sale, at fair value - tax exempt |
|
22,197 |
|
|
26,863 |
|
|
18,765 |
|
Securities held to maturity (fair value December 31, 2022 – $170, September 30, 2022 – $178, December 31, 2021 – $242) |
|
183 |
|
|
194 |
|
|
236 |
|
Equity securities |
|
6,119 |
|
|
6,182 |
|
|
6,638 |
|
Loans, net of allowance of $17,336, $16,485, and $12,704 as of December 31, 2022, September 30, 2022, and December 31, 2021, respectively |
|
2,116,023 |
|
|
1,988,410 |
|
|
1,764,460 |
|
Loans held for sale |
|
— |
|
|
— |
|
|
165 |
|
Premises and equipment, net |
|
7,399 |
|
|
7,867 |
|
|
9,020 |
|
Bank owned life insurance |
|
54,935 |
|
|
54,534 |
|
|
38,485 |
|
Goodwill and intangibles |
|
25,519 |
|
|
25,579 |
|
|
25,766 |
|
Other assets |
|
47,411 |
|
|
41,465 |
|
|
27,573 |
|
Total assets |
$ |
2,589,313 |
|
$ |
2,474,877 |
|
$ |
2,664,111 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||||
Deposits |
|
|
|
||||||
Demand – noninterest bearing |
$ |
684,822 |
|
$ |
758,042 |
|
$ |
674,003 |
|
Demand – interest bearing |
|
306,817 |
|
$ |
308,167 |
|
|
310,362 |
|
Money market and savings |
|
1,051,947 |
|
$ |
976,766 |
|
|
1,121,330 |
|
Time deposits |
|
129,594 |
|
$ |
145,316 |
|
|
265,693 |
|
Total deposits |
|
2,173,180 |
|
|
2,188,291 |
|
|
2,371,388 |
|
Federal Home Loan Bank advances |
|
120,000 |
|
|
— |
|
|
35,000 |
|
Official Checks |
|
7,241 |
|
|
5,350 |
|
|
4,125 |
|
Other borrowings |
|
— |
|
|
— |
|
|
10,000 |
|
Subordinated debt |
|
24,498 |
|
|
24,467 |
|
|
— |
|
Accrued interest and other liabilities |
|
19,017 |
|
|
18,905 |
|
|
12,074 |
|
Total liabilities |
|
2,343,936 |
|
|
2,237,013 |
|
|
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 15,147,950 and outstanding 14,101,414 shares as of December 31, 2022, issued 14,769,354 and outstanding 13,811,084 shares at September 30, 2022, issued 14,393,750 and outstanding 13,446,400 shares at December 31, 2021 |
|
151 |
|
|
148 |
|
|
144 |
|
Class B Non-Voting Common stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding on December 31, 2022, September 30, 2022, and December 31, 2021 |
|
— |
|
|
— |
|
|
— |
|
Treasury stock, at cost |
|
(18,642 |
) |
|
(16,214 |
) |
|
(16,003 |
) |
Additional paid in capital |
|
222,451 |
|
|
216,703 |
|
|
212,012 |
|
Retained earnings |
|
58,268 |
|
|
54,006 |
|
|
36,120 |
|
Accumulated other comprehensive loss |
|
(16,851 |
) |
|
(16,779 |
) |
|
(749 |
) |
Total stockholders’ equity |
|
245,377 |
|
|
237,864 |
|
|
231,524 |
|
Total liabilities and stockholders' equity |
$ |
2,589,313 |
|
$ |
2,474,877 |
|
$ |
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 |
|
Years Ended |
|||||||||||||
December 31,
|
September 30,
|
December 31,
|
|
December 31,
|
December 31,
|
|||||||||||
Interest income |
|
|
|
|
|
|
||||||||||
Loans, including fees |
$ |
27,423 |
|
$ |
25,222 |
|
$ |
19,159 |
|
|
$ |
94,025 |
|
$ |
76,912 |
|
Investment securities - taxable |
|
879 |
|
|
736 |
|
|
290 |
|
|
|
2,957 |
|
|
816 |
|
Investment securities - tax-exempt |
|
207 |
|
|
228 |
|
|
166 |
|
|
|
880 |
|
|
735 |
|
Dividend income on restricted stock |
|
138 |
|
|
108 |
|
|
107 |
|
|
|
448 |
|
|
397 |
|
Other |
|
1,052 |
|
|
871 |
|
|
275 |
|
|
|
3,246 |
|
|
761 |
|
Total interest income |
|
29,699 |
|
|
27,165 |
|
|
19,997 |
|
|
|
101,556 |
|
|
79,621 |
|
|
|
|
|
|
|
|
||||||||||
Interest expense |
|
|
|
|
|
|
||||||||||
Deposits |
|
6,414 |
|
|
2,170 |
|
|
1,634 |
|
|
|
11,661 |
|
|
5,857 |
|
Federal Home Loan Bank advances |
|
489 |
|
|
— |
|
|
183 |
|
|
|
626 |
|
|
751 |
|
Subordinated debt |
|
243 |
|
|
198 |
|
|
43 |
|
|
|
939 |
|
|
378 |
|
Other borrowings |
|
— |
|
|
— |
|
|
14 |
|
|
|
24 |
|
|
327 |
|
Total interest expense |
|
7,146 |
|
|
2,368 |
|
|
1,874 |
|
|
|
13,250 |
|
|
7,313 |
|
|
|
|
|
|
|
|
||||||||||
Net interest income |
|
22,553 |
|
|
24,797 |
|
|
18,123 |
|
|
|
88,306 |
|
|
72,308 |
|
Provision for loan losses |
|
851 |
|
|
1,343 |
|
|
1,880 |
|
|
|
5,285 |
|
|
4,740 |
|
Net interest income after provision for loan losses |
|
21,702 |
|
|
23,454 |
|
|
16,243 |
|
|
|
83,021 |
|
|
67,568 |
|
|
|
|
|
|
|
|
||||||||||
Noninterest income |
|
|
|
|
|
|
||||||||||
Service charges on deposit accounts |
|
558 |
|
|
542 |
|
|
504 |
|
|
|
2,194 |
|
|
2,741 |
|
Income from bank owned life insurance |
|
401 |
|
|
400 |
|
|
281 |
|
|
|
1,450 |
|
|
1,125 |
|
SBA origination fees |
|
25 |
|
|
90 |
|
|
94 |
|
|
|
163 |
|
|
260 |
|
Swap fee income |
|
215 |
|
|
— |
|
|
128 |
|
|
|
327 |
|
|
909 |
|
Loans held for sale income |
|
— |
|
|
6 |
|
|
89 |
|
|
|
122 |
|
|
551 |
|
Gain on sale and call of securities |
|
91 |
|
|
— |
|
|
16 |
|
|
|
104 |
|
|
39 |
|
Other |
|
54 |
|
|
185 |
|
|
178 |
|
|
|
1,261 |
|
|
562 |
|
Total noninterest income |
|
1,344 |
|
|
1,223 |
|
|
1,290 |
|
|
|
5,621 |
|
|
6,187 |
|
|
|
|
|
|
|
|
||||||||||
Noninterest expense |
|
|
|
|
|
|
||||||||||
Salaries and employee benefits |
|
8,300 |
|
|
8,003 |
|
|
8,044 |
|
|
|
34,996 |
|
|
29,277 |
|
Occupancy and equipment |
|
1,005 |
|
|
1,001 |
|
|
987 |
|
|
|
4,018 |
|
|
3,929 |
|
Data processing |
|
476 |
|
|
257 |
|
|
313 |
|
|
|
1,351 |
|
|
1,182 |
|
Marketing |
|
(78 |
) |
|
565 |
|
|
(103 |
) |
|
|
808 |
|
|
635 |
|
Professional fees |
|
1,043 |
|
|
830 |
|
|
743 |
|
|
|
3,678 |
|
|
2,830 |
|
Acquisition expenses |
|
504 |
|
|
957 |
|
|
— |
|
|
|
1,461 |
|
|
684 |
|
Regulatory assessments |
|
255 |
|
|
254 |
|
|
433 |
|
|
|
1,531 |
|
|
1,681 |
|
Other |
|
5,091 |
|
|
1,986 |
|
|
2,483 |
|
|
|
11,705 |
|
|
7,048 |
|
Total noninterest expense |
|
16,596 |
|
|
13,853 |
|
|
12,900 |
|
|
|
59,548 |
|
|
47,266 |
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes |
|
6,449 |
|
|
10,824 |
|
|
4,633 |
|
|
|
29,093 |
|
|
26,489 |
|
Income tax provision |
|
2,187 |
|
|
2,351 |
|
|
673 |
|
|
|
6,945 |
|
|
5,125 |
|
Net income |
$ |
4,262 |
|
$ |
8,473 |
|
$ |
3,960 |
|
|
$ |
22,148 |
|
$ |
21,364 |
|
|
|
|
|
|
|
|
||||||||||
Earnings per share: |
|
|
|
|
|
|
||||||||||
Basic |
$ |
0.31 |
|
$ |
0.63 |
|
$ |
0.30 |
|
|
$ |
1.64 |
|
$ |
1.61 |
|
Diluted |
$ |
0.29 |
|
$ |
0.60 |
|
$ |
0.29 |
|
|
$ |
1.56 |
|
$ |
1.54 |
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income: |
|
|
|
|
|
|
||||||||||
Unrealized holding loss on securities available for sale |
$ |
(96 |
) |
$ |
(7,176 |
) |
$ |
(1,080 |
) |
|
$ |
(21,581 |
) |
$ |
(2,161 |
) |
Tax effect |
|
24 |
|
|
1,819 |
|
|
265 |
|
|
|
5,479 |
|
|
530 |
|
Other comprehensive loss, net of tax |
|
(72 |
) |
|
(5,357 |
) |
|
(815 |
) |
|
|
(16,102 |
) |
|
(1,631 |
) |
Comprehensive income |
$ |
4,190 |
|
$ |
3,116 |
|
$ |
3,145 |
|
|
$ |
6,046 |
|
$ |
19,733 |
|
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 |
|
Years Ended |
||||||||
|
December 31,
|
September 30,
|
December 31,
|
|
December 31,
|
December 31,
|
|||||
Basic earnings per share: |
|
|
|
|
|
|
|||||
Net income |
$ |
4,262 |
$ |
8,473 |
$ |
3,960 |
|
$ |
22,148 |
$ |
21,364 |
Total weighted average common stock outstanding |
|
13,567,280 |
|
13,498,007 |
|
13,202,477 |
|
|
13,465,286 |
|
13,308,682 |
Basic earnings per common share |
$ |
0.31 |
$ |
0.63 |
$ |
0.30 |
|
$ |
1.64 |
$ |
1.61 |
Diluted earnings per share: |
|
|
|
|
|
|
|||||
Net income |
$ |
4,262 |
$ |
8,473 |
$ |
3,960 |
|
$ |
22,148 |
$ |
21,364 |
Total weighted average common stock outstanding |
|
13,567,280 |
|
13,498,007 |
|
13,202,477 |
|
|
13,465,286 |
|
13,308,682 |
Add: dilutive effect of employee restricted stock and options |
|
784,800 |
|
742,008 |
|
666,908 |
|
|
708,693 |
|
592,168 |
Total weighted average diluted stock outstanding |
|
14,352,080 |
|
14,240,015 |
|
13,869,385 |
|
|
14,173,979 |
|
13,900,850 |
Dilutive earnings per common share |
$ |
0.30 |
$ |
0.60 |
$ |
0.29 |
|
$ |
1.56 |
$ |
1.54 |
|
|
|
|
|
|
|
|||||
Anti-dilutive restricted stock and options |
|
167,784 |
|
16,874 |
|
4,380 |
|
|
196,160 |
|
285,487 |
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 |
|
Years Ended |
|||||||||||||
|
December 31,
|
September 30, 2022 |
December 31,
|
|
December 31,
|
December 31,
|
|||||||||||
Net interest income (GAAP) |
|
$ |
22,553 |
|
$ |
24,797 |
|
$ |
18,123 |
|
|
$ |
88,306 |
|
$ |
72,308 |
|
Total noninterest income |
|
|
1,344 |
|
|
1,223 |
|
|
1,290 |
|
|
|
5,621 |
|
|
6,187 |
|
Total noninterest expense |
|
|
16,596 |
|
|
13,853 |
|
|
12,900 |
|
|
|
59,548 |
|
|
47,266 |
|
Pre-tax pre-provision earnings (non-GAAP) |
|
$ |
7,301 |
|
$ |
12,167 |
|
$ |
6,513 |
|
|
$ |
34,379 |
|
$ |
31,229 |
|
Total adjustments to noninterest expense (1) |
|
|
(5,042 |
) |
|
(957 |
) |
|
— |
|
|
|
(8,914 |
) |
|
(684 |
) |
Adjusted pre-tax pre-provision earnings (non-GAAP) |
|
$ |
12,343 |
|
$ |
13,124 |
|
$ |
6,513 |
|
|
$ |
43,293 |
|
$ |
31,913 |
|
|
|
|
|
|
|
|
|
||||||||||
Return on average assets (GAAP) |
|
|
0.68 |
% |
|
1.35 |
% |
|
0.58 |
% |
|
|
0.85 |
% |
|
0.86 |
% |
Annualized pre-tax pre-provision ROAA (non-GAAP) |
|
|
1.16 |
% |
|
1.93 |
% |
|
0.95 |
% |
|
|
1.32 |
% |
|
1.25 |
% |
Adjusted annualized pre-tax pre-provision ROAA (non-GAAP) |
|
|
1.96 |
% |
|
2.08 |
% |
|
0.95 |
% |
|
|
1.66 |
% |
|
1.28 |
% |
(1) |
Adjustments to noninterest expense for the three months ended December 31, 2022, were comprised of $4.5 million in one-time equity award accelerations, and $0.5 million in acquisition expenses. Adjustments for the year ended December 31, 2022, were comprised of $4.5 million in one-time equity award accelerations, $1.5 million in acquisition expenses and $2.9 million in severance and accelerated vesting expense related to the departure of the former Chief Executive Officer. Adjustments to noninterest expense for the three months ended September 30, 2022, were related to acquisition expenses. Adjustments to noninterest expense for the year ended December 31, 2021, were related to change in control payments to two former Marquis employees. |
(Dollar amounts in thousands, except per share data) |
|
December
|
|
September
|
|
December
|
||||||
Total loans held for investment, net (GAAP) |
|
$ |
2,116,023 |
|
|
$ |
1,988,410 |
|
|
$ |
1,764,460 |
|
Add allowance for loan loss |
|
|
17,336 |
|
|
|
16,485 |
|
|
|
12,704 |
|
Total gross loans held for investment |
|
|
2,133,359 |
|
|
|
2,004,895 |
|
|
|
1,777,164 |
|
Less Professional Bank net PPP loans |
|
|
1,902 |
|
|
|
2,618 |
|
|
|
58,615 |
|
Total gross LHFI excluding net PPP loans (non-GAAP) |
|
|
2,131,457 |
|
|
|
2,002,277 |
|
|
|
1,718,549 |
|
Add purchase accounting loan marks |
|
|
8,047 |
|
|
|
8,480 |
|
|
|
13,003 |
|
Total gross LHFI excluding net PPP loans (non-GAAP) + PA marks |
|
$ |
2,139,504 |
|
|
$ |
2,010,757 |
|
|
$ |
1,731,552 |
|
|
|
|
|
|
|
|
||||||
ALLL as a % of LHFI (GAAP) |
|
|
0.81 |
% |
|
|
0.82 |
% |
|
|
0.71 |
% |
ALLL as a % of total LHFI excluding net PPP loans (non-GAAP) |
|
|
0.81 |
% |
|
|
0.82 |
% |
|
|
0.74 |
% |
PA marks + ALLL / LHFI excluding net PPP loans (non-GAAP) |
|
|
1.19 |
% |
|
|
1.24 |
% |
|
|
1.48 |
% |
(Dollar amounts in thousands) |
|
Three Months Ended |
|
Years Ended |
|||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
|
December 31,
|
December 31,
|
|||||||||||
Net interest income (GAAP) |
|
$ |
22,553 |
|
$ |
24,797 |
|
$ |
18,123 |
|
|
$ |
88,306 |
|
$ |
72,308 |
|
Less: PPP net interest income recognized |
|
|
(32 |
) |
|
(200 |
) |
|
(1,269 |
) |
|
|
(2,110 |
) |
|
(8,246 |
) |
Net interest income excluding PPP (non-GAAP) |
|
|
22,521 |
|
|
24,597 |
|
|
16,854 |
|
|
|
86,196 |
|
|
64,062 |
|
Less: PA premium/discounts |
|
|
(442 |
) |
|
(1,504 |
) |
|
(1,442 |
) |
|
|
(5,255 |
) |
|
(6,024 |
) |
Net interest income excluding PPP and PA (non-GAAP) |
|
$ |
22,079 |
|
$ |
23,093 |
|
$ |
15,412 |
|
|
$ |
80,941 |
|
$ |
58,038 |
|
Average interest earning assets (GAAP) |
|
|
2,345,064 |
|
|
2,342,000 |
|
|
2,584,329 |
|
|
|
2,463,656 |
|
|
2,364,294 |
|
Less: average PPP loans |
|
|
(2,147 |
) |
|
(4,796 |
) |
|
(72,728 |
) |
|
|
(17,662 |
) |
|
(141,511 |
) |
Average interest earning assets, excluding PPP (non-GAAP) |
|
|
2,342,917 |
|
|
2,337,204 |
|
|
2,511,601 |
|
|
|
2,445,994 |
|
|
2,222,783 |
|
Add: average PA marks |
|
|
8,286 |
|
|
9,178 |
|
|
14,051 |
|
|
|
10,040 |
|
|
16,124 |
|
Average interest earning assets, excluding PPP and PA (non-GAAP) |
|
$ |
2,351,203 |
|
$ |
2,346,382 |
|
$ |
2,525,652 |
|
|
$ |
2,456,034 |
|
$ |
2,238,907 |
|
Net interest margin (GAAP) |
|
|
3.82 |
% |
|
4.20 |
% |
|
2.78 |
% |
|
|
3.58 |
% |
|
3.06 |
% |
Net interest margin excluding PPP (non-GAAP) |
|
|
3.81 |
% |
|
4.18 |
% |
|
2.66 |
% |
|
|
3.52 |
% |
|
2.88 |
% |
Net interest margin excluding PPP and PA (non-GAAP) |
|
|
3.73 |
% |
|
3.90 |
% |
|
2.42 |
% |
|
|
3.30 |
% |
|
2.59 |
% |
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
|
Three Months Ended
|
Three Months Ended
|
|
Years Ended December 31, 2022 |
Years Ended December 31, 2021 |
|||||
Return on average assets |
0.68 |
% |
1.35 |
% |
0.58 |
% |
|
0.85 |
% |
0.86 |
% |
Return on average equity |
7.03 |
% |
14.13 |
% |
6.84 |
% |
|
9.41 |
% |
9.58 |
% |
Average equity to average assets |
9.64 |
% |
9.52 |
% |
8.43 |
% |
|
9.01 |
% |
8.95 |
% |
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. On August 8, 2022, the Company and Seacoast announced that they have signed a definitive agreement under which Seacoast will acquire the Company. The transaction has been approved by the shareholders and regulatory authorities. The transaction is expected to be completed on January 31, 2023. For more information, visit www.myprobank.com. Member FDIC. Equal Housing Lender.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230127005038/en/
Contacts
Investor Relations:
Mike Sontag
General Counsel
(561)-868-9040
ir@proholdco.com
