ACCESS Newswire
18 May 2020, 18:35 GMT+10
Successfully Completes Acquisition, Closes Initial Public Offering, and Responds to COVID-19
CORAL GABLES, FL / ACCESSWIRE / May 18, 2020 / Professional Holding Corp. (the 'Company') (NASDAQ:PFHD), the parent company of Professional Bank (the 'Bank'), today announced its first quarter 2020 financial results.
'This was an exciting quarter for the Company. We completed our initial public offering and closed our acquisition of Marquis Bancorp, Inc.,' said Daniel R. Sheehan, Chairman and Chief Executive Officer of the Company. 'While the onset of the COVID-19 pandemic has taken a toll on the greater economy, our business model has enabled us to address the needs of our clients and community.'
Results of Operations:
For the first quarter of 2020:
Financial Condition:
At March 31, 2020:
COVID-19 Operational Response and Bank Preparedness:
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
(Dollar amounts in thousands, except per share data)
Capital
The following table presents the Company's regulatory capital ratios as of March 31, 2020, and December 31, 2019. The amounts presented exclude the capital conservation buffer.
Liquidity
The Company maintains a strong liquidity position. At March 31, 2020, in addition to its balance sheet liquidity, the Company had the ability to generate approximately $206.1 million in additional liquidity through available resources.
Net Interest Income and Net Interest Margin Analysis
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.
Provision for Loan Losses
The Company's provision for loan losses amounted to $0.85 million for the first three months of 2020 compared to $(0.11) million for the first three months of 2019. The negative net allocation for the first three months of 2019 was due to a reclassification of unallocated funds of $384,000 after a provision expense of $273,000. The increase to the provision expense in 2020 reflects an increase in loan growth, increased uncertainty surrounding COVID-19, and the deteriorating general macroeconomic environment.
The Company's allowance for loan losses as a percentage of total loans was 0.55% at March 31, 2020, compared to 0.83% at December 31, 2019. This decrease reflects the loan growth resulting from the acquisition of MBI. As part of the acquisition, all Marquis loans had specific allocations marked upon the close of the acquisition and do not require a specific reserve. The Company did not record any net charge-offs for the three months ended March 31, 2020, or March 31, 2019.
Noninterest Income
Noninterest income for the three months ended March 31, 2020, was $0.9 million, a $496,000, or 137.8%, increase compared to noninterest income of $0.4 million for the three months ended March 31, 2019. An increase in swap referral fees of $263,000, or 100.0%, during the first three months of 2020 compared to none for the first three months of 2019 was the primary reason for this increase. A few large loans generated these swap referral fees, and it is uncertain whether the Company will be able to sustain any increases in the future. The Company's primary sources of recurring noninterest income are service charges on deposit accounts, mortgage banking revenue, swap referral fees, origination fees for Small Business Administration, or SBA loans, and other fees and charges.
The Company also experienced an increase in mortgage banking revenues of $83,000 or 136.1%, primarily due to originating and selling fixed rate15-year and 30-year loans to third parties and an increase in deposit account service charges of $62,000, or 38.8%. A decrease in SBA loan origination fees of $14,000, or (100.0)%, during the 2020 period compared to the 2019 period slightly offset these increases.
Noninterest Expense
Noninterest expense amounted to $9.5 million for the three months ended March 31, 2020, an increase of $3.0 million, or 45.7%, compared to $6.5 million for the three months ended March 31, 2019. Expenses associated with the acquisition of MBI were the primary reason for this increase. Additional contributing factors include increased salaries and benefits, increased employee headcount, increased occupancy and equipment expenses, and professional services expenses attributable to building the infrastructure of a publicly traded company. Generally, noninterest expense is composed of all employee expenses and costs associated with operating Company facilities, obtaining and retaining client relationships and providing banking services.
Investment Securities
The Company's investment portfolio increased by $70.7 million, or 238.5%, from $29.6 million at December 31, 2019, to $100.3 million at March 31, 2020. The investment of a portion of the proceeds from the Company's 2020 initial public offering is the primary reason for this increase. The Company invested these proceeds into liquid assets to provide more liquidity to fund loan growth, as well as securities available for sale. 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 March 31, 2020, and December 31, 2019.
Non-Performing Assets
As of March 31, 2020, the Company had nonperforming assets of $4.0 million, or 0.26% of total assets compared to nonperforming assets of $2.3 million, or 0.22% of total assets at December 31, 2019.
Allowance for Loan and Lease Losses ('ALLL')
The Company's allowance for loan losses was $7.4 million at March 31, 2020, compared to $6.5 million at December 31, 2019, an increase of 12.9%. The organic growth of the Company's loan portfolio and the anticipated decline in worldwide economic activity due the actual and projected effects of COVID-19 were primarily responsible for this increase. At December 31, 2019, the Company had an allowance for loan losses to total gross loans (net of overdrafts) ratio of 0.83%. At March 31, 2020, the Company's allowance for loan losses was 0.55% of total gross loans (net of overdrafts) and provided coverage of 391.4% of nonperforming loans. The Company believes the allowance at March 31, 2020, was adequate to absorb probable incurred credit losses inherent in the loan portfolio.
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'), including adjusted net income and adjusted net income per share, which we refer to 'non-GAAP financial measures.' The table below provides a reconciliation between these non-GAAP measures and net income and net income per share.
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 core business and performance without considering acquisition-related expenses. Management believes it is appropriate to exclude acquisition related expenses because those costs are specific to each transaction and are differentiated by the size, complexity and other specifics of each transaction, and are not indicative of the costs to operate the Company's core business. These non-GAAP measures can be useful when comparing performance with other financial institutions. These disclosures should not be considered an alternative to GAAP.
Reconciliation of non-GAAP Financial Measures (unaudited)
Dollar amount in thousands, except per share data
Acquisition related expenses are comprised of change-in-control payments to Marquis executives and advisory, legal, and regulatory fees and costs.
Additional Materials
The Company's Quarterly Report on Form 10-Q can be found on the Company's investor relations web page at https://myprobank.com/ir/ or on the SEC web page at https://www.sec.gov. There is also a slide presentation with supplemental financial information that can be accessed at https://myprobank.com/ir/. Management intends to hold regular quarterly conference calls with investors commencing after the second quarter of 2020.
Forward Looking Statements
This communication contains forward-looking statements involving significant risks and uncertainties. Several important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include the duration and extent of the COVID-19 pandemic, general economic and financial market conditions, potential business uncertainties as we integrate MBI into our operations, expectations concerning and 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 listed in our Form 10-K for the year ended December 31, 2019, and other filings with the Securities and Exchange Commission. The Company disclaims any obligations to update any such factors or to publicly announce the results of any revisions to 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 Holding Corp.
Professional Holding Corp. (NASDAQ:PFHD), is the financial holding company for Professional Bank, a Florida state-chartered bank established in 2008. 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, other professional entrepreneurs and high net worth individuals. Professional Bank currently operates through a network of five banking centers and four loan production offices in the Miami Metropolitan Statistical Area, as well as its Digital Innovation Center located in Cleveland, Ohio. For more information, visit www.myprobank.com.
Media Contacts:
Todd Templin
[email protected]
954-370-8999
Eric Kalis
[email protected]
954-370-8999
SOURCE: Professional Holding Corp.
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