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Professional Holding Corp. Reports Fourth Quarter and Full Year 2022 Results

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,

2022

September 30,

2022

December 31,

2021

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,

2022

September 30,

2022

December 31,

2021

 

December 31,

2022

December 31,

2021

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,

2022

September 30,

2022

December 31,

2021

 

December 31,

2022

December 31,

2021

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,

2022

September 30,

2022

December 31,

2021

 

December 31,

2022

December 31,

2021

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

31, 2022

 

September

30, 2022

 

December

31, 2021

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,

2022

September 30,

2022

December 31,

2021

 

December 31,

2022

December 31,

2021

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

December 31, 2022

Three Months Ended

September 30, 2022

Three Months Ended

December 31, 2021

 

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.

Contacts

Investor Relations:

Mike Sontag

General Counsel

(561)-868-9040

ir@proholdco.com

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