Record Quarter for Net Income and Loan
Production Results in Earnings per Share of $0.52
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220728005936/en/
Investor Relations: Michael C. Sontag General Counsel
(561)-868-9040 ir@proholdco.com
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