PFHD - Earnings call transcript Q2 2022 | Professional Holding Corp

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Operator

Good morning, everyone and welcome to the Professional Holding Corporation Conference Call to discuss Financial Results for the 3 months ended June 30, 2022. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the conference over to the company’s General Counsel, Michael Sontag. Please go ahead.

Michael Sontag

Good morning and thank you for joining Professional Holding Corp.’s second quarter 2022 earnings call. Chairman, today’s Chief President Chief Financial Ryan and on Officer, Chief Information company Gorney; Iglesias; Abel Officer, our the call and are Executive Officer, Representing Martens. Herbert Mary Usategui; quarter close, market financial the announced Yesterday, of after we XXXX. results our for second proholdco.com. A at press our our of can be copy on found release website results The release such forward-looking with as by defined regarding events, statements in future today’s connection performance. as contains statements a or future operating the notice include discussion financial SEC may

information for release. risks, accordance comparable the as more I other and this with be to to our financial Please non-GAAP refer SEC. these in in supplemental Iglesias. Abel presented find press reconciliation certain directly will will the President discussion, the most over information measures factors can our You to GAAP. for not These considered At presented informational the about in the uncertainties filed to with financial references of also our reports measures. measures purposes include are should call non-GAAP and time, CEO, only turn In we measures a GAAP today’s substitute and

Abel Iglesias

Traditional was originations per million for portfolio here Mike quarterly $XXX $X CRE $X.XX as I proud participate residential you share. thank for you, for XX% be were XX% to and loans continues both of and that we center investor loan banking Loan all net report or originations. to quarter Bank’s quarter to and Thank million your June record C&I at investing the and over XX. income the of net am representing best with approximately Professional time in of our being offerings on and quarterly and representing Holdings’ and Professional today call. happy our loan had income

Additionally, Index, of. proud accomplishment Holding company back XXXX into Russell an was the is Corp. added Professional our extremely

of production record was offset growth annualized $XXX by was partially XX.X%, prepayments. second pay-downs loan the loan quarter of XXXX, and million For with which

our in remains we expectations on Jacksonville, underwriting bankers exceeding quality clients. continuing loan company-wide Hampshire focus are concierge new expanding office are standards our maintaining on as banking our team, with Our committed strategy while to to basis disciplined production. Tampa, Credit and individual an and with New exceptional

will loan quarter. did later, growth, Mary it As touch we credit to have add with allowance upon we any because result the our concerns of not quality. this was But

loan the XX, grew loan in production $X was production Our Total to months. over prepayments strong second markets last during an loans XX has the quarter, loan approximately across and grown growth. team or increasing to X%, XX.X% quarter continues our the June XX.X% slowed benefit added Pay-downs of and as to offerings. and annualized deliver our which billion growth

booked with a not of were are are X.XX% million the XX.X% of originations XX.X%. conservatively loan-to-value average our the quarter million. Overall, an value the and weighted second Additionally, average loans the $XX.X rate in constructive of loan book quarter, reflected this loan at last the a remains their conservative The balances weighted $X.X with through to associated on quarterly day having of although of remains allowance quarter. this reflected average income of and quarter net size end loan average weighted

XX lending reminder, C&I loans, million relationships $XX limit quarter during search a Commercial fund XX.X% and most last by XX.X% including under unsecured lending secured As the months. our and million. while the million over $XX and $XX is legal grew are our of

capitalized teams continued lending existing strong pipelines. our on PPP, our Excluding

real quarter estate up side XX Our of the months. XX% lenders, the have over Roots Deep pipeline the XX.X% CRE resulted during similarly activity on in last Networks a and strong with commercial

million, $XXX.X offsetting estate real were in commercial second originations New million. production the led by commercial of pay-downs and of payoff than originations with more and $XX.X quarter loan total

income $X.X the We $X.X quarterly $X on an also increase compared million million in of net prior million of quarter. a saw to record

Our focus on cost containment and profitability in our is evidenced results.

ratio XX.X% the of XX.X% second and XXXX. quarter XX.X% from quarter, in efficiency the the in improving second first was Our quarter for

X% our Additionally, on and for lending quarter. X.XX% compared return to X.XX% quarter average assets exceeded last the

developments. grow, digital our management Information on have led to balanced invite creating most Ryan I recent maintained Cleveland Ryan we team Gorney. profitability Officer, is structure. of about I’d comments only As share said, efficiency. Digital helps a by in key are not member Innovation expense team, focused The and Chief This Center Ryan? our also like to some us a but

Ryan Gorney

Thanks, Abel.

in set, bank. last that wire our engine, As while as I developing quarter, we in adjustments continue grow. across our last needs scale. drive implementation recalls puts making work manual which a we on software more tool professional and takes workflow further as to fully tool on for the we them which are errors. our first from and additional bot well tool and overtime wire as expense tracing, mentioned Digital to set and user-friendly of for thus processes down we also continue around created new easier bankers deployed, our to been wire expect and the When a defer and further and Learning Innovation is focus Cleveland piloting workflow engine, workflow call, automation human resources the processes our to institutions into clients’ will wire it earnings our cutting mentioned need I efficient The team has the efficiency workflow manual implement the to

as adopting security mobility through access Additionally, security we our to management posture as on capabilities. focus continue strengthening identity and information in enhancements cloud well and security to employee the latest employee enhancing

impact a internally salary to are utilization. software, this had software quarter we such, earnings our slight the utilizing a As developed with we associated of since capitalized this as portion

ever efficiency I organization. will more finding it that We to to and down the team bankers’ in Abel. than being The will to OPs on ways back to said, engaged drive ratio. drive hand continue the our jobs With and continue improve to focus solutions efficiency IT remains to

Abel Iglesias

you, Thank Ryan.

Our line growth remains and services top and future to our business innovation entrepreneurs. sheet continue other by professionals a center banking generating to commitment offering key to traditional balance owners operators, success. digital intend to and We

continue and clients provide we our will of management concierge discipline. our risk underwriting unique maintained brand while to customized We service to

very key track will Bank We Executive we Bank in Professional and turnover, also technology experience. into to us the provide gives attrition continue to to invest have now client professional remains to stay I reiterate driven remain have wanted talent ever results. exceptional to deliver talent, line foundation more an rate. that I and to that And move a low combined future. continues on with intact management have, experience low and than The bankers bottom the mentioned

in performance some quarter a it perspective detail pleasure the For second on is additional to introduce our overall, Usategui. our and her CFO, financial Mary

Mary Usategui

the upon you, to the Abel record Thank income from Quarterly results quarter I touched or that with begin was share. net $X million earlier. wanted Abel. $X.XX per

with categories. million from period, our the QX prior Net combination basis the in income the the on departure net or meaning to previous points interest-earning expanded year of loan and While the QX $XX.X quarter Net rate yields up margin for from X.XX% our CEO, ago improvement. in interest and XX% was as XX% previous extraordinary XX growth on X.XX% improved income increases up assets originations of interest assets over adjusted from XX.X% improved that quarter million, associated adjusted of included was $X a an higher-yielding $X former net quarter second basis, million XXXX severance the of and quarter on income in growth adjusted quarter.

increased fees and up primarily For the NIM, which PPP previous income we points XX purchase the to out quarter. backing from quarter. increased previous accounting define significantly from Non-interest also marks as NIM X.XX% basis XX.X% X.XX%,

the $XX well million proceeds previously recognition proceeds BOLI disclosed included a of of wire quarter expected This investment additional from of the insurance as as front.

to continue XX.X% remained by prior and salaries and expect decreased previous slight of CEO the repayment work capitalization former in marketplace. continue. to neutral benefits the We as quarter, expense the expenses in we were from that expense somewhat benefits talent and the software. from developed severance a quarter top do Relative a the internally non-interest we departure other quarter All on expenses, to the with of to anticipate the due first employee down prior benefit and associated quarter. trend categories salary from to increase of Turning

had of in of any As we a growth million the booked expense, up this strong and we a our is previous quarter, provision a not result from million quarter. This credits the loan result loan growth concerned of $X.X of $X.X portfolio. increase result

disclosed the was result quarter credit net on impaired any loan was charge-off Additionally, a concerns. new a this not of previously and

our plus XX X.XX% total basis of the allowance, to provision allowance total allowance plus marquee expense result marks inclusive portfolio. and loan a charge-offs, to of If marks, the points. was As loan the loan was our loans

we be top to in as allowing This call, will our bottom of profit outflow. quarter’s included XXXX. and last deposits forward some mind mentioned focus we in As move high-priced earnings commitment was line

result XX% XXXX As from in in ratio QX XX% positioning for maximizing a our our loan-to-deposit improved balance net profit, of QX. sheet to

of in franchise basis improvements and our points. quarter, to XX% supported of the deposits deposits the deposit relationship-driven deposits further total banks cost non-interest-bearing professional market While during to make XX nearly slows up in quarter

portfolio. sheet continue balance maintain will we adjust ensure our the and rates top in We to to necessary our we’ll as monitor clientele

of XX in of we such, the point increase basis cost on deposit As movement QX, do expect given announcement upward Wednesday. Fed recent some

loans floating remain still we are disciplined However, impacted banking deposit we cost rising deposit We than deposit even X and asset when both rate environment. relationships. expected has have maturing cash maintained growth well balances and Maintaining sensitive having in which increase. expansion impacted but policy a rate a and NIM not in continue on positioned expect do our may the loans to year, of, pricing, less

strong As Abel declining. continued show to nonperforming credit performance quality with mentioned, assets

XX.X% capital of comprehensive prior remained value increased leverage the earnings quarter, to the with to compared boosted the book of in $XX other of loss per $XX.XX and risk-based Our capital at capital income Tangible a in despite $XX.XX accumulated X.X%. strong share levels the strong quarter. by million total ratio end

to laser-focused rising update, back deliver is to financial commitment with I’ll that the long-term hand profitability and growth. management, profitable to in it have the continue to will our benefit capital bank Abel. Our over rate And business and environment. With risk well prudent positioned we

Abel Iglesias

Mary. you, Thank

on relationships maximizing questions focus to in first sake at commitment quarter reaffirm with as this on the had that I hope improvement full continue be focus beginning my to to we’ve as bottom developing would value. be happy operational strong to credit will commitment this line Before as stellar our And Q&A, I entertain note, of results shareholder I efficiency. has On at not of a time. profitability, CEO. The result shown quality, our and but want client

Operator

KBW. with go Gailey [Operator Brady ahead. Please Instructions] question Our first is from

Brady Gailey

thanks. guys. Hi, Good morning,

Abel Iglesias

Brady. morning, Good

Brady Gailey

Professional So of dip that be the longer-term maintain achieved X% lumpy forward? going X% you and it will do could Or kind a a point achievable still back just I think quarter. wondering, was view? is in of X% from you think the ROA you before ROA X% below do it

Abel Iglesias

believe are we Brady, on We that’s that the track. goal.

in stated the we of that As achieve quarter, a we to goal is and higher. our minimum last X% said

we goal stay continue to that is true can. the to So believe to target. I

I is and forward. on think And going focused so, everybody achieving aligned that

Brady Gailey

think Alright. expect really going should expenses Professional control Or do growth you $XX.X Do with you we down in expense the flat? saw expenses expenses forward? creep some about in can held be then forward? modest going think million. And quarter expense nice some How to

Abel Iglesias

handle Mary, that.

Mary Usategui

tune you? are $XXX,XXX. – expense software disclose little say there that. We I capitalized usually a what disclose not did were how seeing. Brady, we different we’re Hi, of but quarter two than this timing-wise, bit extraordinary, We would the about that to did

develops Cleveland software implement that will to an a be credit as As expenses. and it, we ongoing

to going be stagnant is forward. not It’s to going it However, going be cyclical.

of one modeling. would that’s item that So out back I

good expense some fees The growth. employees I’d top the sorry, moving a benefits this that, be to we think, clients might quarter, solely of as XX all continue in But – structure we the just pretty salary was on other everything expense factors, $XXX much there one and retain that, considering those on than top that forward containment. cost say by again, But million. direct And I result creep we and mention did was is loan I as which other else loan high focus originations point. do growth organization. in of had record is FAS driven was

Ryan Gorney

we’ve forward. I said other would the add only as expenses, the on focus squarely that past, controlling is thing be of mindful the profits in is going

in playing Brady. back And So be results out the going as it’s see continue with we this to the what said QX. you is can forward, in focus we now that would will and line do in that

Brady Gailey

loan in then, guys nice forward? Okay. thinking a you me, How here. going are step-up for about finally loan growth And growth

Abel Iglesias

pipe see tell balance they of attracting really But I That I a see the leveling I environment, folks it to our their very beating you it and and the now, And right got leveraging the are said, rely and off levels. now, pace strong. for normalized we happening keeping the our macro relationships that their in close deepening and healthy are stabilizing year. of marketplace. client and what’s more the not for relationships and existing market a stabilizing very, would ear share. bankers mindful we’re on But

macroeconomic as the to I’m environment. very I seeing. things But about like keeping we’re evolving eye a are and So like I in close how we’re cautious where what at.

Brady Gailey

you I a the be you kind running, it mid-double-digit look that all low been kind about if way to And have of the think to? could loan mean growth last think Is year feels it? like that stabilizes right pace and to I do where level it of stabilized range.

Abel Iglesias

That what is we’re exactly forecasting.

the at us given for point that’s there. at teens And to put this out appropriate low going I I there will be forecast it point out think think forward. this uncertainties the an in

Brady Gailey

Thanks great. guys. color, Okay, the for

Operator

ahead. is question Please with Sandler. go Stephen from next The Piper Scouten

Stephen Scouten

Good newer you guess, like loan quarter a wondering overall that could some you thanks. down seen give I’m But bit Hi, it this growth. to balances in any know added much those It mentioned morning. how expectations. I’m if exceeding particularly Hampshire maybe curious, balanced was they well the about production categories. Jacksonville, digging detail I further pretty little the across New or markets, and sort into I to markets? date Tampa of you’ve looked

Abel Iglesias

are Hampshire to – produce very levels. the level nicely They at I tracking and are continue continues So they year. well. to their They anticipated do for New guess

approximately million, tell which On be would million. on St. point the nearing side, C&I $XX they anticipated Pete at, for are about with can that shy $XX they are June Jacksonville the what just through at and Tampa, did that I They XX. quarter, breakeven. of is we this you pace

will to continue their we they So that believe strong. – pipelines are

will they breakeven the that believe the we so achieve of exceed and And end year. before

Stephen Scouten

significant basis asset Helpful, Okay. and points a Abel. slide sensitivity it like deck, move then looked up here And thanks, from the in had the XXX pretty down.

last quarter, it’s I think it up was X.X%. plus X% now

given to I’m I would wondering this Because well gone your assumptions given your just deposits? changes move So there in is down some that almost were that within how up costs would reduction quarter. or any deposit numbers thought a the of responded the have those in liquidity have

Abel Iglesias

Mary?

Mary Usategui

on was effect. the come is amount just I sitting would That’s Steve, be. really It’s reduction liquidity it We were deposits latter. say our down. as in of can the Hey, had an a quite portfolio, that significant of asset-sensitive

Our gone loan book has up.

in so modeling. the And major the factor. were no driving changes There assumption that’s

Stephen Scouten

a are What that. modeling? on follow-up deposits your you sensitivity to beta just within on your guys And asset perspective Okay. assuming from

Mary Usategui

per we significant – do a But deposit that deposit se. of cost creep disclosing not up. expect We’re

do expansion even creep. However, deposit expect cost the still some we with NIM of

be some monitor put XX% of we a out some expect to ratio we we’re high little do deposit more seeing comfortable to now competitors there of pretty to with a rates. We’re And that from starting that our bit feel increase. going loan-to-deposit and XX%, our cost

Abel Iglesias

of it’s we’re little Yes. seeing the add become have a some to deposit that we’re fairly and going what the perhaps I side. marketplace in play defense that to would offense that, apparent on to bit with

focus now foreseeable that to in marketplace. just we’re we’re relationships again basis But cost seeing for going going it forward going do to question exception and So by on the an here seeing the increase. the type with some accounts bank, in maintaining I future deposit we’re and start in the on we’re no seeing to our an what retaining start and going increase believe that but

Stephen Scouten

not able start Well, it. a this place, with Got the in so reduction costs. to congrats Starting strong from deposit on a banks quarter quarter. many were

Abel Iglesias

Thank you.

Operator

go question from Raymond with Joe next Please is James. ahead. Yanchunis The

Joe Yanchunis

for Thanks taking my questions. there. Hi,

your have you’re optimal like as So in after successfully you of range kind you’d discussed, improving like that? the you do feel now to right just loan-to-deposit where ratio,

Abel Iglesias

No. grow. see and expand like to We’d to continue that

that and given of And loans. we our we – where see believe so will, pipelines it the

as said again, expense to in we the not credit at Now comments, going quality. our opening we’re do that of

we our happening mindful We’re the loan the book of it we’d we continue going in that that believe we your to grow very to to to be, grow what’s and very with continue But economy. question, like to will. see answer to disciplined and way

Joe Yanchunis

Okay. about deposit we costs, expect And then from should deposit some here? prior growth comments with your increasing

Abel Iglesias

lot our That’s evolves. how But the And bringing our obviously, will it of loan our are where active. their do are of deposits. book Yes. bank, bankers And part on with, a and incentive. with have they into at low-cost specifically pipeline is to incented deposits

And in loan-to ratio seen as to say along closed. creep haven’t should deposits bringing deposit up, to I starts increase your activity mean, in accounts it. your so I listen, needs we with

Our down. deposits came

not relationships Our gone have away.

Some of the been this tax for have may payments quarter. – deposit

needed on didn’t figure not obviously I our that the that Some that was have retain. perhaps to of existing we clients we’re seeing for up is their more it focused But churn. we relationship one us paying retained importantly, and deposits believe relationships. And

keeping we’re relationships, here. retaining accounts We’re

we It’s expand case, to on certainly I for as continues we So an important data the that can going And us that deposits that’s to as believe keep important. point think be on. long forward. eye think I

Joe Yanchunis

be lot bankers the income minimis should are your to of de Perfect. if Alright. And said quarter then at last income question, bring for given not change so, I the there rate in when was deposits. hole? any And guess a expect this we that March from incentivizing whole a kind to that rising environment, of point? to initiatives of swap my pretty you’re fee you plug kind I believe

Abel Iglesias

Well, yes. our But we don’t environment, are to will start in income generate much We us and additional I that the that going given front, team. for we’ve the expanded very active swap from SBA area. we mean, rate expect the fee lending SBA believe forward.

low – address quarter in sheet. on the statements XXs, of just the At dynamic your in balance time, management this comment ratio me high dynamic last briefly deposits. loan-to-deposit was the our the with to XXs, regards previous the Let balance sheet, the

want be we’re chasing This up and not open market – deposits can here. reiterate, up while to we deposits, I can again, deposits to put a we in high-cost So so. We is and we a bring immediately. can rate let’s honest where want good do

about We’re very careful that.

what think deposits funding maintain will do will Now in And bring again, needs if of in fund with and a right comments I my the then to our we needs. to are it’s new to we our accordingly. past levels we and slow our regards pipeline loan at and loan-to-deposits, and that so keep sign, is incent very to we on be important we where to our liquidity deposits, able react have to will pipeline,

Joe Yanchunis

appreciate. Understood. a I quarter. Congrats great on

Abel Iglesias

you. Thank

Operator

remarks. would conference This I concludes Abel back for any closing over like to the session. question-and-answer Iglesias our turn to

Abel Iglesias

analysts is thanking motivated highly I’d management team and to Well, our morning. this everyone. long-term shareholder I like thank want for to value. participating you. energized to execute on I’d and and that to our conclude reiterate plans investors our like thank creating by

feel the us. you to in questions Mike much, to past, Sontag, with everyone. Thank or General our said free very additional Mary or discussions please contact we As schedule with Counsel,

Operator

now concluded. has for you attending presentation. Thank today’s The conference

You disconnect. may now

Professional Holding (PFHD) 30 Jul 222022 Q2 Earnings call transcript